Level 3 buys Sprints dial-up unit

Level 3 Communications has acquired Sprint’s wholesale dial-up Internet access business for $34 million in cash, giving Level 3 a larger managed-modem footprint in second-tier and third-tier markets.

The deal is the latest in Level 3’s two-year string of dial-up acquisitions from other carriers, including ICG, McLeod USA and Genuity. Though industry watchers generally question the future of dial-up access as broadband becomes more dominant, the carrier’s softswitch infrastructure underlying its managed-modem services also supports a growing voice business, according to Sureel Choksi, president of softswitch services at Level 3.

The Sprint acquisition includes the company’s ISP dial-up customers, but Sprint will continue to provide remote access dial-up service directly to enterprise and small business customers.

Level 3 and Sprint have struck a transition services agreement that calls for the migration of all of Sprint’s wholesale dial-up access customers to the Level 3 network by mid-2005. During the transition, a portion of the money collected from these customers will be applied against the overall acquisition price, according to a statement from Level 3.

Under a separate agreement, Level 3 will continue to provide Sprint with dial-up services.