Internet Company Buys UK Firm, Expands to Continent

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LONDON - Level 3, a year-old communications and information services company, recently launched a UK subsidiary and bought BusinessNet, an Internet Service Provider for 300 clients in the City of London, the UK's financial center. The purchase price was not revealed.


The company, Omaha, NE, is engaged in a five-phase business plan to build a fiber optic network linking 50 US and 21 international cities over the next four to six years. Plans call for Level 3 to open other subsidiaries in Frankfurt, Paris and Amsterdam by the third quarter and to soon select another European city for a fifth subsidiary. said Level 3's British spokesman, James Tyler.


"We are building the first end-to-end network designed for Internet protocol-based services," said Tyler "Every layer will be optimized for packet switching, and we envisage putting in a metro link as well as a local link," he said.


By building the network from scratch, Tyler commented, the company enjoys a lower cost structure than companies that already have technology in place.


"We use new technology and don't have an existing older infrastructure to support," he said. "Incumbents have massive amounts of capital invested in that sort of technology."


ISPs are a key customer segment for Level 3, but other target customers include large and medium-sized corporate clients that need large-scale capacity. "We're also selling to people who will resell our services," Tyler said, "and we will offer a full range of communications applications from raw bandwidth and data services to voice, though we won't offer an Internet-based voice product until we are happy with the quality."


Level 3 is currently in phases one and two, which call for a 2,000-mile network across Europe and openings in the five European cities and one other city yet to be determined.


The first two phases are prefunded. "We don't start building without the money in place," Tyler said. "We have $4 billion in the bank to build the first two stages of our business plan." Until construction is completed, Level 3 will use a network of leased wires at home and abroad.


The company organized its US and international growth plans to run in tandem. "From day one we have been an international company with global vision because we knew that markets in both the US and Europe are big," he said. "But bear in mind that deregulation in Europe is recent and, as a result, its whole price and cost structure is behind the US.."


Level 3 plans to sell clients in the City of London other products in addition to the financial and Internet Protocol services.


As yet, Tyler said, the company does not have any British clients of its own but is in "the final stages of customer trials. We have various products about to launch but need to test them to make sure that all procedures are in place."


Emphasizing that Level 3 was looking at all markets, including Asia, Tyler noted that the company "has obtained access on cross-Atlantic cables and has joined with several other telecom companies to build a cross-Pacific cable."


Jim Crowe started Level 3 after the company he founded, MFS, was taken over by WorldCom. He had built MFS from a $500 million startup to a $14 billion firm.
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