Level 3 eyeing stimulus funding

Not all large national telecom carriers are backing away from applying for broadband stimulus money as Qwest did last week. Level 3 Communications (NASDAQ: LVLT) will participate in the applying for the first round of stimulus funding, the deadline for which was extended to this week.

Edward Morche, senior vice president of the Federal Markets Group for Level 3 Communications, said last week that his company would partner with cable companies, LECs, wireless providers or state and local governments in seeking to offer broadband access in unserved and underserved areas, building off its national network.

“When we built our national fiber optic network, we had to put in regeneration nodes, to re-amplify the signal, in tier 2, tier 3and tier 4 markets,” Morche said. “If you look at where we have those regeneration nodes – and there are about 500 of them – we are looking at a couple of dozen that we could use [to apply for stimulus funding] for the first round.”

From Level 3’s position, Morche said, it would make more sense for stimulus funding to go to create a facilities-based competitor to existing service providers, not only to provide more choices for end users but also to create more route diversity for network survivability.

“You can never provide for the long-term health of the network without providing a diverse network,” Morche said. “Enterprises won’t move their facilities into some of these areas if there is only a single network to serve them. They are not going to relocate a headquarters office or a regional office or a call center to an area where there is no physical diversity of networks, just one network going east and one going west.”

Level 3 believes its network is uniquely qualified to provide that diversity “because we built our network last, and we put it where other folks aren’t,” Morche said. Level 3 also faces a very different business model because it is not an incumbent, and therefore not forced to immediately open its network to competitors when it extends that network farther into a rural area. What Level 3 can provide is both wholesale access and direct sales to enterprises, Morche said.

“What would the good be for stimulus funding if it’s not to build a sustainable economic model that brings more competition locally, and more economic development and more jobs?” Morche asked. “We think we are in a position to do that.”