Global network operator Level 3 Communications (NYSE:LVLT, news, filings) said today that it is playing an important role in California’s $66.6M Central Valley Next Generation Broadband Infrastructure Project. The buildout, which is partly funded by $46.6M in stimulus funds, is creating 1,300 miles of fiber infrastructure throughout 18 counties in the Central Valley – a.k.a the place they grow everything.
To the left here is the network map for the CVNGBIP buildout, a larger version of which you can find on the project’s website. As part of the effort, CVIN and CENIC will use 300 route miles from Level 3, which if you zoom in you can see includes segments of both the original Level 3 and WilTel networks. CENIC and Level 3 have been partners for a long time since the creation of CalREN of course.
It sometimes seems strange that we are still talking about the start of construction for stimulus projects some two years after the actual stimulus was voted on, but that’s government funding for you.
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Are you suggesting that this is the same $14-$15MM grant money contract which LVLT had in a PR ages ago?
Umm, no this would be separate from Level 3’s own individual stimulus awards.
O.K. Now you’re talking Powell! 🙂
Do you think this contract represents approx. 20 percent of the $66MM construction project costs being referenced then? And, how much future recurring revenues, etc.?
I highly doubt it. The price of a few strands of longhaul fiber on rather non-unique routes is likely a very small portion of the buildout – most of that money goes into capex for the actual digging that will have to be done on the middle mile fiber. As to the details on whether payment is up front or recurring – who knows…
As you probably know, I am the first to admit the errors of my ways for saying something that is wrong. Since I seem to have misunderstood your commentary with its corresponding implications, I apologize!
Thank you for clarification, along with your opinion on the mostly immaterial financial nature behind this morning’s $66MM construction project announcement.
I don’t think you are right, but the negative sound bites seem to be working for some people this morning. Since the 300 miles in this project represents more than 20 percent of the total distance(1,300), how much of the $66MM do you think is theirs in “new funding” without referencing their own “matches” in order to garner future “residual” communication service revenues?
Rob, if you can’t answer questions like this, you shouldn’t be implying the things you do in your commentary.
Let me be more clear. You are implying this is an old contract just getting started construction wise, with no new “revenue” being supplied compared to past announcements where monies may or may not have been received.
http://level3.mediaroom.com/index.php?s=23600&item=65890
I have said nor implied nothing of the sort, you are connecting completely separate dots without cause. Level 3’s stimulus wins were for the expansion of a few amplifier huts in rural areas into PoPs, not for the buildout of a new fiber network asset at all. CENIC and CVIN won a separate contract, which is for middle mile bandwidth that needs some connecting glue – fiber that Level 3 will be providing.
NTIA award to Level 3 is on their website at www2.ntia.doc.gov
California is $3.3m of total $13.7m award to (3) before any company match.
Either way, this is make busy work. If the market wanted to connect these locations, the market would have demanded and funded same. Instead, the government borrowed money from China and others and then decided to build what the market didn’t justify. Level3 should get out of the crony-cap business….
Hmmm, turn down a profitable job for the sake of political purity? Somehow I doubt that is going to become standard practice in the US telecommunications business. Heck, it isn’t even standard practice in Congress… 🙂
Issue is opportunity cost. L3 would be better off to allocate resources to profitable/successful customers who grow. Like all “stimulus” this is a one time, non-growing opportunity. Which tax covers the renewal? Compare future value of this mandate against the (50?) buildings that TWTC could put on net for same expenditure of time & money
This project will result in a commercially viable network and result in 100’s on on-net building. It will also make affortable broadband availalble in areas that have low cost land and and abundance or workers, making it easierr to attract businesses to these regions.