Last week I posted a summary of where Level 3’s enterprise footprint is concentrated, this week it is the wholesale footprint – again gleaned from the new Level 3 interactive map. From their breakdown, I count as their wholesale footprint all wireless switching centers, neutral colocations, carrier hotels, and local central offices. This is the more traditional Level 3 footprint and the one they know best.
I have grouped some markets into their Metropolitan Statistical Areas as defined by the US Census Bureau – for example for New York I include White Plains, Central New Jersey, and Princeton. Why? Because it is easier to compare things on a common basis, just in case I can get similar data from other sources at some point. And actually, it turned out to be easier to do that than I thought initially. So without further ado, here are the top 20 LVLT wholesale markets:
| City | State | Wholesale Bldgs |
|---|---|---|
| New York | NY | 303 |
| Dallas/FtWorth | TX | 144 |
| Atlanta | GA | 131 |
| Chicago | IL | 128 |
| San Francisco | CA | 125 |
| Philadelphia | PA | 113 |
| Los Angeles | CA | 109 |
| Washington | DC | 89 |
| Miami/South FL | FL | 87 |
| Denver | CO | 68 |
| Seattle | WA | 52 |
| Orlando | FL | 49 |
| Louisville | KY | 45 |
| Houston | TX | 41 |
| Tampa | FL | 36 |
| Detroit | MI | 32 |
| Pittsburgh | PA | 32 |
| Boston | MA | 31 |
| Raleigh/Durham | NC | 31 |
| Jacksonville | FL | 29 |
You can see that this is a much more obvious list than it was for the Enterprise business. The biggest internet hubs are their strongest markets. In fact, the only three on this list which seem higher than I expected are Philadelphia, Pittsburgh, and Louisville, which were all large Telcove markets. The presence of 4 Florida markets in the top 20 is of course a result of the combined Level 3, Progress, and Telcove footprints there – each of which was substantial.
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Categories: Internet Backbones · Mergers and Acquisitions
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If we do it by state:
NY 303
CA 234
FL 201
TX 185
PA 145
GA 131
IL 128
DC 89
CO 68
WA 52
KY 45
MI 32
MA 31
NC 31
just looking for an area to post about Level 3
Biggest hinderance
Dark Fiber- Without bandwidth/fiber glut the Level 3 wholesale strategy would have been successful. To date and publically Level 3 has XO, Savvis, Verizon, Comcast, COX, Internet 2 , NCAR all on national dark fiber deals. (a couple of unannounced I am sure are in this equation)Without the need to sell dark fiber due to fiber glut these would all be accounts growing and generating enormous revenue growth as each would be buying 10G waves as bandwidth demands have grown. This was the Level 3 plan without accounting for or knowledge that there would be a fiber glut.
Biggest Mistake
Level 3 should have kept there team and continued a startegy of assimilating companies.
When Level 3 performed early M&A like Genuity or managed modem startegy was to buy and absurb the company laying off there workforce. This startgey kept Level 3 with a very focused and tight team working the Level 3 way of doing business. ( some would argue cronyism, no talent guys getting promoting , crappy way of doing busines etc. but what this did was keep a focused team working together. When Wiltel M&A occurred is when the wheels came off. KOH fired a high ranking Level 3 OPS guy and placed aWiltel guy in the attempt to truly obtain best practices and allow for a situation of best person available gets the job rather then Level 3 guys gets job because we bought you. Theory says this is a good idea but the reality is based on placement of senior leader of a group and there lineage, Wiltel or Level 3 that group became a power circle of the legacy company and really it was not about best person gets job. It was about hire all my old friends from my legacy company to protect them from getting screwed by the other guy from the other company. This created a very divided work force with deep routed anger as good people were let go from boths sides based on leader in charge and began the unraveling of Level 3 ability operate. Then as additional M&A occurred MNS was created which then created a 3rd or 4th circle of influence as Looking Glass or Telcove leaders held Senior significant roles and created power circles based on there old teams. System decisions were made that were conflicting and groups operated independently and were not uniform in there approach as each had an idea on how to do things based where they came from, with multiple small islands of power the failure was the ability to truly align workforce and strategy. There is no right or wrong way between any of the comapnies but a uniform way walking and talking the same language is what I feel would have been the winning stragtegy. Level 3 way and the Level 3 people shoul have been the choice and would have prevented the big operations meltdown that led to KOH and Level 3 failure as they were the buying company and had the largest workforce and influence on each of the M&A. To this day there still is an alignmnet issue but I think that the walls are slowly being dismantled and the team is getting on the same page again which is good news. Point is the mistake that was made set the comapnyt back several years.
Thanks for that long and thoughtful analysis, Anonymous. It sounds like you were there.
While I don’t really know if it would have helped or hurt to do things the way you suggest they should have, I definitely agree that Level 3’s integration troubles had a lot to do with personnel issues. Perhaps moreso than to the mechanistic explanation the company gives, or perhaps the personnel issues were simply the root cause of those poor integration decisions we heard so much about last winter.