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

To: Mark O. Halverson who wrote (3646)	1/13/2011 12:05:34 PM
From: FJB	Respond to of 3873

Renesys: Level 3 Leads, Global Crossing, NTT, Tinet Surge (informative charts at link) renesys.com January 12th, 2011 (1 hour ago) by Rob Powell Renesys has put out its traffic rankings for the end of 2010, and the field continues to shift. In general, the trend is the old guard treading water or even dropping, with the alternative US carriers and Asian and European PTTs rising in response. I always find Renesys’s year-end graphs fascinating, even if they track traffic rankings which doesn’t necessarily translate to progress in revenue or EBITDA. But it does give insight into who is aggressive in the rough and tumble world of wholesale IP transit, and who is backpedaling. Level 3 is now way out in front, their battle with the revenue growth monkey sitting on their back has not affected their presence in this alternate dimension. But Global Crossing is now in clear second and still rising. They have been quiet for a few months in terms of PR, but had a traffic surge in December that suggests they’ve been busy. Sprint’s low capex rates are showing up in spades, the former front runner has fallen to third and seems likely to drop below a surging NTT soon if it hasn’t already. Tinet continue to rise, reaching seventh and within easy striking distance of the top tier. And below the top 13 Renesys usually tracks, XO and Hurricane Electric have moved up to challenge Qwest and Cogent. And of all those rising the most in the rankings, what do they have in common? Hmmm, one commonality is that it is usually those who don’t operate wireless networks. Those who do are spending their effort chasing other dollars, and not as much on expanding the scope of their data backbones. But I wonder how much of the effect of shifts in the CDN marketplace on the transit world are detectable with these metrics. Will Level 3's win at Netflix translate into a surge in early 2011 on this graph? -------------------------------------------------------------------------- Conclusions The US old guard of AT&T, Sprint, Verizon and Qwest are treading water or declining. And as if to highlight that fact, Telecom Italia, Deutsche Telekom and France Telecom (AS5511) all became transit-free during the year. The first two gained peering from Sprint, while the latter acquired peering from Verizon. Transit-free networks are also sometimes called Tier 1, although that term is becoming less and less meaningful in the increasingly complex business relationships found on today's Internet. Internet transit is an increasingly tough business in developed markets as prices continue their downward spiral. The emerging markets of Africa, Asia and the Middle East with their relatively low Internet penetration and higher margins remain a bright spot, although they too are coming under pricing pressure in certain geographies. These markets still offer enormous potential, and providers willing and able to service them are growing and rising in our rankings. Those that do not service these areas are being left behind. We expect the transit-free cartel to continue its expansion as emerging markets gain influence. In conclusion, those providers with a strong global footprint and a diverse set of offerings are continuing to rise in the rankings. And those organizations with popular content or captive end-users will find themselves increasingly in the driver's seat when it comes to pricing negotiations. When it comes to the Internet, the only constant is change and we can expect more turmoil in 2011 as the market continues its rapid evolution. Stay tuned.