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Technology Stocks : (LVLT) - Level 3 Communications -- Ignore unavailable to you. Want to Upgrade?

To: FiloF who wrote (2103)	7/13/1999 3:53:00 PM
From: SteveG	Respond to of 3873

Qwest and Level 3: Different peas, same pod [from nwfusion.com ] By David Rohde Network World, 07/12/99 Apart from its proposed purchase of US West and Frontier, Qwest is often linked in the public mind with another new long-distance entrant, Level 3. How often have you read the phrase "new broadband carriers like Qwest and Level 3"? Wall Street Journal writers must have the words saved as one of those keyboard macros. One reason we try not to reach for that lazy linkage at Network World (all right now, no searching online to prove me wrong) is that Qwest and Level 3 are really very different companies. Many people scratched their heads after Qwest bid for US West, asking why on earth Qwest would muddle its story with a legacy Bell carrier. Well, don't tell Qwest CEO Joe Nacchio I told you this, but behind all the talk of being the next-generation broadband carrier, Nacchio has built something rather resembling a regular telephone company. If you go to Qwest and ask to make phone calls, you'll get long-distance off good old circuit switches. If you ask for data service, likely as not you'll walk away with frame relay. If on the other hand you ask for a nice, robust IP virtual private network, they'll tell you they haven't quite defined it yet but will in the next 30 to 60 days (they've been saying that for months, actually). Of course Qwest does have a phenomenal OC-48 nationwide network and is poised to carry great gobs of IP traffic for enterprises, ISPs and application service providers - plus IP voice via Cisco's new Virtual Switch Controller. But Qwest doesn't care what kind of service it sells as long as it puts traffic on its network and revenue in its pockets. Qwest even provides the network for Exxon to sell prepaid calling cards to its customers at gas stations. Level 3, on the other hand, is much more of a pure IP-only company out to serve the new needs of both carriers and Web-centric enterprises. But Level 3's purist strategy carries with it a couple of problems. First, Level 3 is not exactly burning up the enterprise request-for-proposal circuit. It has little to offer vs. the AT&T/MCI/Sprint model of unified contracts for all voice and data services with increasingly large discounts for higher-volume commitments. Second, Level 3's ongoing drumbeat about an imminent, supercheap IP voice service is getting tiresome. A couple of weeks ago, Level 3 announced it had just chosen Lucent's new Softswitch platform to provide IP voice with full feature functionality. My question: If you've just chosen the switch, how close can the service be? Level 3 needs to be careful here. Public IP telephony is definitely chopping costs for certain consumer services, such as specialty carriers marketing to ethnic communities in the U.S. for calls back to the old country. But enterprises don't want some untested 3- or 4-cent IP phone service to replace their current 5- or 6-cent (and dropping) circuit-switched plans. They want phone calls for nothing - say, voice over their own excess WAN capacity. That demand should challenge Level 3's strategy. And if it doesn't put any profits on the bottom line, Level 3 might have to look at some Qwest-like opportunism.

To: FiloF who wrote (2103)	7/13/1999 7:29:00 PM
From: JMD	Read Replies (2) \| Respond to of 3873

FiloF, let me add my plea for help as well. Grubman is a very good analyst IMO and covers the telecom sphere in depth--he was among the first on the Street to pick up Qualcomm (at least 1 1/2 years ago)--and I'm convinced was the only one to figure out what CDMA might mean if it prevailed as the wireless interface standard. That said, this report appears to have been written late at night after too many expressos. I'm new to LVLT, and I'm not used to gaining any enlightenment from the NY Times on things technological, but if any of the pros on this thread would translate, I too would be most appreciative. TIA, Mike Doyle