LEVEL 3 DIVES DEEPER INTO VOICE

Level 3 will announce two new services this week, including one that allows carriers to handle customer-originated calls for the first time.

The more conventional of the two, a service called (3)Tone, is a hosted voice application designed to replace PBX, IP PBX and Centrex systems. Level 3 claims that the new service can save enterprise users as much as 40% in combined capex and opex. It also marks the company's first move into a voice origination service after years of having it on the product roadmap.

“We've been successful in one part of the voice market,” said Jack Watters, president of global softswitch services for Level 3. “We're moving from defense to offense.”

The second service, (3)VoIP Marketplace, is a version of a service from Telverse, which Level 3 acquired earlier this year. The (3)VoIP Marketplace allows high-volume users to maintain a local presence in several markets, regardless of their physical locations. Geared largely to call centers, the service converts calls to IP and sends them across Level 3's backbone for delivery to the customer.

Despite the focus of both services on the enterprise, Level 3 will continue to market through wholesale channels.

“We aren't going to enter the enterprise directly,” Watters said. “The verticals we like a lot are the system integrators, the RBOC, the PTTs and the IXCs.”

The timing on the announcement of both products is significant. While big U.S. carriers have shown a renewed interest in softswitching technology — Verizon and Qwest have been deploying it as Class 4 replacements — none have made a significant commitment to retail VoIP services. Telverse at one time was on the verge of winning a contract to host a significant portion of Qwest's IP voice service, according to a Qwest source.

However, the RBOC was scared off, in part because of Telverse's size. With its acquisition by Level 3, the company has expanded presence in 73 local U.S. markets and a brand that the RBOCs already know.

“Telverse was a pretty small company and didn't have the scale,” said Watters.

Level 3, however, isn't going to be alone in that market. Vonage, which has started partnering with cable operators and ISPs, is preparing its own move into the business market early next year with designs on hosting services for larger carriers, said Lou Holder, executive vice president of product development for the company. Last year, the company ran a trial with BellSouth, hosting IP voice services for residential and small office/home office users throughout the RBOC's southeast footprint.

“We got some very good data from that,” Holder said. “[Letting us be the host] is a good way for those types of carriers to trial the service and build quickly to 100,000 subscribers,” Holder said. At that point, they start to look at the build or buy decision.”