Summary
1. In April 2008, we wrote an article entitled, “Is There Still a Chance that Level 3’s Wholesale Business Could Be the Answer? 2. We asked the question, “Is it possible that this [wholesale] business just took longer to take hold than what Level 3 planned?” 3. “Significant changes in the marketplace” would be necessary -- and this deal with Telefonica could be a sign of that starting to happen.
Analysis
Level 3’s shift to more of a retail strategy was critical to its survival. However, it would sure make life a lot easier for the carrier if the wholesale side really does pick up steam. The wholesale business is a lot less intense in terms of execution. And it certainly beats selling off IRUs.
The heavy dependence by both AT&T and Verizon is certainly an endorsement of Level 3’s capabilities. Evidently, it still has the lowest cost network. The relatively new COO’s experience in the MSO space may help to spur additional wholesale growth in that sector. Especially once the economy gets out of the recession, it will be interesting to see what happens in terms of new wholesale market developments for Level 3.
