Level 3 (was: "legacy" Wiltel/Looking Glass bandwidth)

Deepak Jain deepak at ai.net
Thu Jul 2 13:50:17 CDT 2009


Without continuing the L3 pile-on, one can easily glean from their public filings that they have never properly filled out their management depth in acquisition absorption and/or sufficiently empowered those folks. The billions in revenue lost from acquisitions like Genuity and others have told this story more than once. 

L3 is not alone in this. Worldcomm's failure to integrate acquisitions led to a much larger operational cash need than VZ has shown for the same assets (verio, lots of other names here). This is because VZ understands how traditional businesses acquire others, better, in my opinion. 

Unfortunately, L3 has shown little interest in making the "real world, tough business" cuts in heads and absorbing the real (internal) pain of acquisitions and seems to have a pretty laissez-faire attitude towards its customers, even at its senior management levels (Cxx). I think this will be (and has been) the biggest problem for them. Even a possible merger/JV with Sprint may not be sufficient to solve that. Their resolution of billing disputes is much more typical of WCOM than VZ. 

They are a big fish in lots, and lots, of markets. They enjoy being able to dictate pricing in them. IMO, however, they don't have the maturity of (say, AT&T or others) to take that big fish status and leave you still happy with the service. (colloquially: if [good companies] are going to take advantage, at least they don't make it more painful than necessary).

Operationally, where you have options (because of pricing, locality, etc) it's long-term good to support competitors, diversity in connectivity, etc. History has shown time and time again that when an industry consolidates a lot of business with a certain vendor, bad things can and do occur.

Deepak Jain
AiNET






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