Level 3 launches next phase of its VoIP strategy

March 16, 2004
March 16, 2004 Broomfield, CO--Level 3 Communications today announced that it is launching the next phase of its voice strategy in the U.S. and Europe.

March 16, 2004 Broomfield, CO--Level 3 Communications today announced that it is launching the next phase of its voice strategy in the U.S. and Europe. The company's aggressive VoIP rollout will include the introduction of two new residential VoIP services at the Spring 2004 VON Conference & Expo being held March 28 through April 1 in Santa Clara, CA.

"Over the course of the last several quarters, we have successfully launched a variety of IP-based voice services, all of which address large existing voice markets and which exploit the inherent technological advantages of Level 3's network," said James Q. Crowe, chief executive officer of Level 3.

"Following the introduction of these residential VoIP services, Level 3 will have what we believe is the broadest suite of VoIP services in our industry. Demand for VoIP is growing, as broadband penetration rates rise and adoption rates increase among businesses and consumers. Our history as a VoIP pioneer, combined with the scope of our offerings and our wholesale strategy, position Level 3 well to capitalize on this trend," said Crowe.

Level 3's VoIP strategy calls for service offerings across three key areas:

• Wholesale services sold directly to carriers and other voice service providers;
• Enterprise services designed for small and medium sized businesses, sold through local phone companies, value-added resellers and other distribution channels, and;
• Consumer services aimed at the residential market, sold through cable operators, ISPs and other communications companies in a position to sell voice services to the home.

Level 3's VoIP services leverage the company's extensive softswitch platform, which has carried more than 300 billion minutes of voice and data calls since 1999. It delivers the reliability and quality required for voice services, and the network offers coverage to more than 300 of the largest markets in the United States.

"Level 3 introduced the world's first carrier-quality VoIP termination service in 1999, and today we have industry-leading experience in building scalable, highly reliable IP voice services," said Sureel Choksi, president of Softswitch Services for Level 3. "We also derive an important advantage from our wholesale strategy. Our customers appreciate the fact that we are not vying with them for the business of the end-user. We believe that will prove to be a significant differentiator for Level 3 as demand for VoIP services continues to increase."

Among key target segments, Level 3 has seen growth in its new and enhanced suite of wholesale VoIP services, which include (3)Voice Termination, (3)VoIP Local Inbound (formerly MARKETPLACE) and (3)VoIP Toll Free services. The (3)VoIP Local Inbound and (3)VoIP Toll Free services are sold to call centers, conferencing providers and other companies looking to leverage the lower total cost of ownership and expanded capabilities of IP. The termination service, meanwhile, enables carriers to terminate long-distance calls in North America across the Level 3 network, and can also be used as a platform to deliver other voice services to business and enterprise customers.

Since releasing these services in September 2003 and January 2004, wholesale voice traffic has increased by more than 50%. "The growth in our wholesale VoIP services has been spurred by strong interest in the solutions we provide to conferencing and call center operators, and by the recent activation of VoIP termination service for one of the world's largest carriers," said Choksi. "We are encouraged by our growing funnel of customer opportunities."

Next week, at the Channel Partners Conference & Expo in Las Vegas, Level 3 will announce the expansion of its channel partner program to broaden the base of providers who will market (3)Tone Business voice services.

The (3)Tone Business offering provides low cost, highly reliable local and long-distance voice services for small and medium-sized businesses and is ideal for a variety of market segments, including real estate, retail, construction, banking and health care.

(3)Tone Business is an enhanced communications service that can deliver combined capital and operating savings of as much as 40% over traditional alternatives. The service, which was introduced in September 2003, leverages Level 3's national, IP-based network.

Level 3's new residential VoIP services, to be formally unveiled later this month, will be offered in more than 300 markets across the U.S. by year's end. The services will allow U.S. cable operators, ISPs and enhanced service providers to offer IP-based local and long-distance communications services to consumers with broadband connections. The services will offer national coverage, enable local number portability, and will meet 911 and E911 interconnection standards across the U.S.

"Given the rapid growth of residential broadband, we believe there will be robust demand for a low cost, highly reliable VoIP service that our customers can market to consumers as an alternative to traditional local phone services," said Choksi.

Level 3 also plans to introduce voice services in Europe during the second half of 2004.

"We have completed a program of detailed market assessments across Europe," said Brady Rafuse, president of Level 3's operations in Europe. "We have identified areas in both the residential and business markets across Europe where Level 3 can offer a strongly differentiated set of services to both our channel partners and their end customers. We are planning a country by country rollout of services to begin later this year."

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