Wholesale: Level 3 Tops $2 Billion in Dark Fiber Sales

Posted: 02/2001

Level 3 Tops $2 Billion in
Dark Fiber Sales
By Josh Long

In a cash-parched market, Level 3 Communications Inc. (www.level3.com)
complemented its $5 billion portfolio of available cash through year 2000 sales
of dark fiber and related services valued at more than $2 billion.

Last November, the carrier’s carrier announced dark fiber agreements with
McLeodUSA Inc. (www.mcleodusa.com) and XO
Communications Inc. (www.xo.com) in North
America and Europe.

Level 3 won’t have to wait around for a good portion of the money because the
company receives cash as the fiber segments are delivered to the customer. Level
3 will receive payments of related services, such as collocation, power, fiber
operation and maintenance services during the course of the long-term
agreements.

Integrated communications provider McLeodUSA will buy additional
infrastructure from Level 3 in North America as part of its plan to offer
next-generation network services in populated metros.

"We basically looked at McLeod’s assets, and in [the company] we have
connectivity to a few Tier 1 cities and quite a few Tier 2 and Tier 3
cities," says Larry Murphy, director of business development at McLeodUSA.

McLeodUSA executives say that in contrast to building their own
infrastructure, the fiber agreement saves at least one year in provisioning and
does not hamper their ability to purchase more ad-vanced fiber when a new
generation is rolled out.

"We can focus our efforts on building the facilities and infrastructure
in order to provide services," Murphy says.

XO Communications, meanwhile, has purchased fiber on Level 3’s intercity
network in Western Europe, metropolitan fiber in Paris, metro conduits in other
European markets and capacity on Level 3’s trans-Atlantic fiber optic cable.

XO wants the empty conduits in European countries so it can readily pull
fiber through the manholes when the market demands new bandwidth, says Mike
Read, president and managing director of XO Europe.

"We are only pulling cable into the fibers when we think it is
appropriate," Read says. "Lots of people have [built their networks]
fast, and lots of people have gone bankrupt."