Helping hands: Level 3, McCaw companies seal cost-sharing pact

Several carrier operations controlled by telecom magnate Craig McCaw now share another common bond: Under a deal forged last week, they all will tap into the fiber backbone of Level 3 Communications for their interconnection needs.

The McCaw organizations-including wireless carrier Nextel Communications, competitive local exchange carrier Nextlink Communications and McCaw's holding company Eagle River Investments-have formed an entity called Internext to coordinate the interconnection effort. Internext will contribute $700 million for rights to 24 dark fibers and its own conduit along Level 3's entire 15,000 mile intercity network.

For Level 3, Internext's involvement defrays some of the expense of what the company expects to be a $2.2 billion network build.

"Both companies will benefit because both will be able to construct their national networks at a lower cost," said Josh Howell, senior vice president at Level 3.

The deal should prove to be a boon for the McCaw properties as well. All the carrier organizations that fall under Internext-including the Teledesic satellite venture, which is partly held by Eagle River-require long-haul capabilities to connect their facilities and keep from becoming dislocated islands, said Wayne Perry, CEO of Nextlink. The CLEC will contribute its network-building know-how to the deal.

"Because of our fiber expertise and the need to interconnect the intercity sites, [Nextlink] will be the lead on the construction side," Perry said.

For competitive reasons, the deal prevents Internext from leasing or selling fiber to unaffiliated companies for the next four years. But Howell pointed out that the wealth of opportunity in the industry means that staying out of each other's way isn't always necessary.

"Everyone in this industry is a competitor and a customer of each other," he said. "There's plenty of room at the table for everyone."