We are an international facilities-based provider of a broad range of integrated
communications services. A facilities-based provider is a provider that owns
or leases a substantial portion of the plant, property and equipment necessary
to provide its services. We have created our international communications network
by constructing our own assets and through a combination of purchasing other
companies and purchasing or leasing facilities from others. We designed our
network to provide communications services that employ and take advantage of
rapidly improving underlying optical, Internet Protocol, computing and storage
technologies.
Our company was incorporated as Peter Kiewit Sons’, Inc. in Delaware
in 1941 to continue a construction business founded in Omaha, Nebraska in 1884.
In subsequent years, we invested a portion of the cash flow generated by our
construction activities in a variety of other businesses, including, among other
things, the communications business. In 1998, our historical construction business
was split off from the remainder of our operations. In conjunction with the
split-off, we changed our name to “Level 3 Communications, Inc.,”
and the entity that was split-off and held the prior construction business was
named “Peter Kiewit Sons’, Inc.”
Level 3’s vision is to be the trusted connection to the networked world.
We seek to achieve this vision by focusing on:
maximizing the value of our network for our customers by expanding the breadth
and depth of our local to global network, and connecting our customers to their
digital ecosystem of data and applications;
delivering an exceptional and consistent customer experience by innovating to
improve the efficiency and scalability of our operating platform; and
generating profitable growth by expanding our enterprise customer base and layering
value-added services onto existing network and operational capabilities.
We strive to create a culture and business environment that makes it easy for
customers to do business with us, and providing high-performing, reliable and
secure services on our local-to-global network with superior price value. We
focus on operational excellence to streamline our systems and business processes
to deliver a superior customer experience, and to reduce overhead costs and
transactional costs for ourselves and for our customers.
We believe that we can be successful by making our customers the focal point
of all we do. Our value proposition is structured to be fully aligned with helping
our customers meet their growth, efficiency and security business challenges
both today and in the future and across the globe wherever our services are
available.
We believe that advances in optical and Internet Protocol, or IP, technologies
have facilitated, and will continue to facilitate, decreases in unit costs for
communications service providers that are able to most effectively take advantage
of these technology advances. We believe that, over time, rapidly improving
technologies and high demand elasticity will continue to drive this market dynamic.
Enterprises are increasingly moving their content and applications to third
party providers of on-demand server and storage resources to reduce the costs
and complexity of their information technology, or IT, operations. Since these
server and storage resources can be offsite in any location and are often virtualized
(as opposed to residing on dedicated hardware in a known location) they are
referred to as “Cloud Services.” We believe that this migration
of enterprise data and applications to the Cloud will drive increased demand
for our high-performing, reliable and secure network services.
Today’s market drivers can be broken into three categories as they pertain
to our core business strategy:
Growth. We expect digital data creation and the associated demand for bandwidth
to keep growing, as business relationships and supply chains become increasingly
digital, and end users increasingly expect to be able to access their data and
applications anytime and anywhere. Cloud application adoption continues to grow
for all businesses, especially our enterprise customers. Mobility and Internet
connected device proliferation continue to increase the rate at which content
- especially video - is consumed, which in turn results in increased demand
for higher bandwidth to enable that delivery and consumption. A rapidly increasing
numbers of smart homes, cars, and everyday objects are getting connected to
the network (the “Internet of Things”), further increasing demand
for scalable and secure bandwidth. Globalization trends continue as customers
look for growth from emerging markets, particularly with respect to enterprise
customers. Additional opportunities for growth are present as a result of changing
regulatory requirements in industries such as healthcare, consumer privacy,
and financial services.
Efficiency. As traffic volumes grow, our customers are not only under pressure
to keep up with this growth but also to do so more efficiently. Accordingly,
our product and technology teams take advantage of the scale and capabilities
of our network and continuously innovate to deliver cost-effective services
that meet customer needs.
Security. Cyber threats continue to escalate, which affects both us and our
customers. As more enterprise customer data and applications move to the Cloud,
and as more and more consumer devices and personal information become reachable
through the Internet, maintaining a secure network and collection of systems
and processes is more important than ever.
Technology innovation in Internet Protocol and optical networking technologies
has resulted in improvement in the functionality of applications supported by
these technologies. We believe that this rapid innovation will continue well
into the future across a number of different aspects of the communications marketplace.
We believe that decreases in communications services costs and prices enable
the development of new bandwidth intensive applications, which, over time, result
in even more significant increases in bandwidth demand. In addition, we believe
that communications services are direct substitutes for other existing modes
of information distribution from sources such as traditional broadcast entertainment
as well as distribution of software, audio and video content using physical
media delivered through physical transportation systems. An example of this
dynamic is the use of the Internet for the distribution of video. We believe
that as communications services improve more rapidly than traditional content
distribution systems, demand for Internet delivered video will continue to grow
rapidly. We also believe that high elasticity of demand for both new applications
and the substitution for existing distribution systems will continue for the
foreseeable future.
We offer a broad range of communications services. All of our services can
be purchased by any of our customers, but some services may not be available
in all locations or jurisdictions. The following is an overview description
of some of the services that we offer.
Core Network Services. The following are the communications services that are
included in our financial reporting of Core Network Services revenue.
IP and Data Services. Data services include Internet Services, virtual private
network (“VPN”), content delivery network (“CDN”), media
delivery, Vyvx broadcast service and Managed Services.
Internet Services. We offer wholesale and content provider customers with high
speed access to the Internet over one of the largest international Internet
backbones. Using largely our own intercity and metropolitan networks in North
America, Europe and Latin America, we provide customers with high performance,
reliability and scalability. Access to the Internet is enabled through interconnection
among our customers across our network as well as interconnections with other
Internet service provider “peers.”
The service is available stand-alone or in conjunction with managed services
offerings, such as Managed Router where we deploy and manage a router that is
on the customer premise or our network-based Distributed Denial of Service,
or DDoS, Mitigation, which protects our business customers from Internet based
DDoS attacks.
11
Table of Contents
VPN Service. Built on our optical transport network, we offer customers the
ability to create private point-to-point, point-to-multipoint, and full-mesh
networks based on IP VPN, Virtual Private LAN service, or VPLS, Ethernet Virtual
Private Line, or EVPL, or MPLS VPN technologies. These services allow service
providers, enterprises and government entities to replace multiple networks
with a single, cost-effective solution that simplifies the transmission of voice,
video, and data over a single or converged network, while delivering high quality
of service and security. These services are used for service provider and corporate
data and voice networks, data center networking, disaster recovery and out-of-region
or redundant customer connectivity for other service providers. VPN services
are sold stand-alone or in conjunction with our managed services offerings.
Level 3 Ethernet Services or E-Services. Provide customers with geographically
diverse, data intensive networks; scale, flexibility and reliability in order
to meet existing and future networking demands. Level 3 E-Services encompasses
E-Line and E-Access.
Level 3 E-Line service is a Layer 2 point-to-point and point-to-multipoint data
service for enterprise network connectivity (Ports 100Mb-10Gb, EVC 2Mb to 6Gb).
Level 3 E-Access service is a Layer 2 Carrier Grade Ethernet network-to-network
interface (NNI) to enable Service Providers like carriers, data centers and
cloud providers to resell Level 3 Ethernet services to their enterprise customers.
Level 3SM E-Line Service with Adaptive Network Control offers secure, high availability
and scalable network connections with dynamic bandwidth making it ideal for
providing high-speed connections among corporate headquarters, data centers
and other business locations around the world to migrate legacy networks and
equipment to Ethernet, expand existing WANs and get new applications online
faster.
Adaptive Network Control provides added capabilities that are layered on to
network services to provide greater visibility, flexibility and control of applications
traffic traversing your Metro or Wide Area Network:
Enhanced Management is real time visibility of end-to-end network performance
metrics to assist planning, trouble shooting and fine tuning your network for
optimal performance. Available for all managed locations and backed by comprehensive
service level agreements.
Dynamic Bandwidth Capacity, which is the ability to make real-time bandwidth
adjustments via the Company’s MyPortal customer portal to address fluctuating
traffic demands.
CDN Services. Our content delivery network services combine our IP network,
Gateway facilities and patented technology that directs a requestor or end user
to the best location or server cluster in our network to retrieve the requested
content based on location and network conditions. Our CDN service provides customers
with improved performance, economics, scalability, reliability and reach for
their web applications. Our caching and download services provide efficient
http delivery of large files such as video, software, security patches, audio
and graphics to mass audiences. Our streaming service can be used to deliver
high performance streams, either live or on-demand, to end users using leading
proprietary protocols. Each service set provides flexible features to enable
customers to control their content delivery to ensure quality end-user experience,
security, freshness and targeting. We also offer storage solutions enabling
customers to upload and store content to our network as part of an optimized
delivery platform. In addition to our delivery services, our patented Intelligent
Traffic Management service enables customers to set rules to dynamically route
traffic to meet failover or dual vendor objectives.
Media Delivery Service. We offer media delivery service to customers seeking
to manage, protect and monetize content delivered over the Internet. Our media
delivery service extends support for online distribution models and operation
by providing customers with means to ingest and digitize live video content
and to manage the organization and presentation of both live and on demand video
to end users via a content management system. Additionally, support for content
monetization via paid and advertising supported models is provided. Our media
delivery services leverage our content delivery network for the delivery of
managed content to end users.
Vyvx Broadcast Service. We offer various services to provide audio and video
feeds over fiber or satellite for broadcast and production customers. These
services vary in capacity provided, frequency of use (that is, may be provided
on an occasional or dedicated basis) and price.
Managed Services. This category includes our complete portfolio of advanced
performance and managed services, including professional services. Our teams
of professionals work with customers to design and customize solutions that
match their strategy and can help customers increase network efficiency, reduce
overall operational costs, supplement skill sets, or provide specialist knowledge.
Services included Managed Router, Application Performance Management, Managed
WAN Optimization, Managed Ethernet Services and a variety of other professional
services to meet customer needs. Managed Services are purchased in conjunction
with our other network services.
Cloud and IT Services. Our multi-disciplinary cloud services draw on many products
across our products that are described above. Our Cloud and IT-based services
include Level 3 Cloud Connect Solutions, Communications as a Service and Data
Center Services. These solutions are focused on the transport and delivery of
enterprise data and applications.
Level 3 Cloud Connect Solutions. Level 3 Cloud Connect Solutions create a secure,
reliable path for customers to realize the efficiency, scalability and flexibility
of the cloud, providing a private network that connects enterprises with leading
cloud and data center providers around the world, including Amazon Web Services
(AWS), Google Cloud Platform and Microsoft Azure ExpressRoute.
Communications as a Service (CaaS). Our Communications as a Service (CaaS) product
offering delivers a Session Initiated Protocol, or SIP, based audio collaboration
and on-net web conferencing over a virtual private network using a hosted model.
Transport and Fiber Services. Transport services include wavelengths, private
lines, transoceanic services, and dark fiber, as well as related professional
services. These services are available across our metropolitan and intercity
fiber network. Wavelength services provide unprotected point-to-point connections
of a fixed amount of bandwidth with Ethernet or SONET interfaces. Wavelength
services are available at a range of speeds from 1 Gbps to more than 100 Gbps.
This service offering targets customers that require significant amounts of
bandwidth, desire more direct control and provide their own network management.
Private line services are also point-to-point connections of dedicated bandwidth
but include SONET or Synchronous Digital Hierarchy (SDH) protection to provide
resiliency to fiber or equipment outages. Private line services are available
in a wide range of speeds with electrical, optical and Ethernet interfaces.
We also provide transport services within our transatlantic cable system connecting
North America, Europe and Latin America as well as via leased bulk capacity
on other transoceanic systems. International backhaul transport services, interconnecting
cable landing stations and our terrestrial North American, European and Latin
American networks, are also available.
Our dark fiber service provides carriers, service providers, government entities
and enterprises a fiber solution when unique applications, control or scale
requirements make this service desirable. This includes fiber, colocation space
in our Gateways and in our network facilities, power and physical operations
and maintenance of the fiber and associated infrastructure. Professional services
related to our transport and fiber services include network architectural design,
engineering, installation and turn-up, ongoing network monitoring and management
services, and field technical services.
Voice Services. We offer a broad range of local and enterprise voice services
including VoIP (Voice over Internet Protocol) services and traditional circuit-switch
based services. Our local and enterprise voice services include VoIP enhanced
local service, SIP Trunking, local inbound service, Primary Rate Interface (“PRI”)
service, long distance service, toll free service and a comprehensive suite
of audio, web and video collaboration services. The following is a general description
of our voice services. Some of the following services are also offered to our
wholesale voice customers. For financial reporting purposes, voice services
also include our collaboration services that are described below.
VoIP Enhanced Local. Our VoIP enhanced local service is a VoIP service that
enables broadband cable operators, IXCs, voice over IP providers, and other
companies operating their own switching infrastructure to launch IP-based local
and long-distance voice services via any broadband connection.
SIP Trunking. SIP Trunking is a VoIP-based local phone service offered to medium
and large enterprises as a replacement for traditional fully featured enterprise
TDM voice services. SIP Trunking allows customers with an IP PBX to manage calls
to and from the PSTN without having to purchase traditional access lines dedicated
to voice.
Local Inbound. Our local inbound service terminates traditional telephone network
originated calls to Internet Protocol termination points. This one-way service
is sold primarily to customers, such as call centers, conferencing providers,
voice over IP service providers and enterprises to only receive calls at their
locations. The customers can obtain telephone numbers from us or port-in local
telephone numbers that the customer already controls. These local calls are
then converted to IP and transported over our backbone to a customer’s
IP voice application at a customer-selected IP voice end point.
Enterprise Long Distance. Our long distance service portfolio consists of local
and long distance transport and termination services. Medium and large enterprises
purchase our long distance services for their corporate calling or outbound
contact center needs. All Level 3 long distance services are offered at the
customer’s option over circuit switch or softswitch technologies.
Enterprise Toll Free. Our toll free service terminates toll free calls that
are originated on the traditional telephone network. These toll free calls are
carried over either a circuit switch or softswitch network and delivered to
customers in Internet Protocol or traditional TDM format.
Collaboration Services. We offer a comprehensive suite of audio, web and video
collaboration services, which include the following services:
Audio Conferencing. Ready-Access®, our on-demand/reservation less audio
conferencing service, provides toll free access in key business markets worldwide.
We also provide operator-assisted, full-service conference calls where participants
can access our service by dialing in on either a toll or a toll-free number,
or by being dialed out to by an operator.
Web Conferencing. Our Ready-Access Web Meeting is fully integrated with Ready-Access
audio conferencing for on-demand collaboration, allowing customers to manage
their calls on-line, change account options, share presentations with participants
and record entire meetings, including visuals. eMeeting is a full-featured Web
conferencing application that allows customers to collaborate and share documents,
presentations, applications, data and feedback with polling and instant messaging
features. Live Meeting service uses technology licensed from Microsoft®
to allow multiple attendees to participate in meetings using only their computer,
a phone, and an Internet connection. We have integrated Ready-Access as an audio
conferencing component into Live Meeting.
Videoconferencing Service. Our videoconferencing service provides video over
IP and ISDN platforms, using multi-point bridging to connect multiple sites.
Enhanced options available with our videoconferencing services include scheduling,
recording and hybrid meetings that combine our audio and video services.
Colocation and Data Center Services. Colocation and Data Center services include
data center facilities and services including cloud, hosting, and application
management solutions. Our data center facilities offer high quality, data center
space where customers can locate servers, content storage devices and communications
network equipment in a safe and secure technical operating environment. In addition,
we offer high-speed, reliable connectivity to our network and to other networks,
including metro and intercity networks, the traditional public switched telephone
network and the Internet. Our data center services range from dedicated hosting
and cloud services to more complex managed solutions, including disaster recovery,
business continuity, applications management support, and security services
to manage mission critical applications.
Security Services. Also reported in this category, Level 3 Security Solutions
can be used to enable customers to address the growing threat of cyber-attack
and allow customers to create a secure network, safeguard brand value, enable
business continuity, and avoid complexity and cost. Our Security Services include:
Secure Access which provides secure and encrypted connectivity for mobile users
or remote offices; Cloud and Premises based Managed Firewall and Unified Threat
Management Services including Intrusion Prevention and Detection service and
Web Content filtering; network-based Distributed Denial of Service (DDoS) Mitigation,
which protects against Internet based DDoS attacks; and Security Consulting
services for Governance, Risk Management and Compliance. Security Services are
sold stand-alone or in conjunction with Data Services.
Wholesale Voice Services. Our Wholesale Voice Services include voice termination
and toll free service. These services share many of the same features as the
local and enterprise voice services described above.
Voice Termination. Our wholesale long distance offer include domestic and international
voice termination services targeted to IXCs, wireless providers, local phone
companies, cable companies, resellers and voice over IP providers.
Toll Free. As with Enterprise Toll Free, Level 3’s wholesale Toll Free
service terminates toll free calls that are originated on the traditional telephone
network. Customers for these services include call centers, conferencing providers,
and voice over IP providers.
We believe that it is important to streamline and simplify our processes and
systems. To pursue our business strategies, we have developed and are continuing
to develop and implement a set of integrated software applications designed
to automate our operational processes. These development activities also relate
to the integration of the systems that were used by the companies that we have
acquired. Through the development of our business support systems, we believe
that we have the opportunity to obtain a competitive advantage relative to traditional
telecommunications companies. In addition, we recognize that for the success
of certain of our services that some of our business support systems will need
to be easily accessible and usable directly by our customers.
We are currently developing and deploying a unified set of simplified processes
and systems that have been designed to streamline and synchronize our service,
sales and operational functions. These processes and systems have been designed
to provide improved capability in service catalog management, sales opportunity
management, customer management, quoting, order entry, order workflow, physical
and logical network inventory management, service management, and financial
management.
%
4.25% 