Cox Communications is using wavelengths from Level 3 to bind US services... tip of the iceberg?

June 17, 2003

3 Min Read
Cox Makes Waves With Level 3

Level 3 Communications Inc. (Nasdaq: LVLT) says Cox Communications Inc. (NYSE: COX) is the latest cable-based carrier to rely on its wavelength services (see Cox Pix Level 3).

Level 3 said Cox is using multiple 2.5-Gbit/s wavelengths for extra bandwidth on several U.S. routes, including a coast-to-coast link. Terms of the agreement weren't disclosed.

The news spotlights the growing use of wavelength services as an alternative to installing high-speed private lines or laying dark fiber, particularly for carriers whose big-bandwidth requirements, coupled with shrinking pocketbooks, are forcing them to check all choices. It also reflects the growing importance of differentiators like easy provisioning and nationwide reach.

"We've historically seen wavelength solutions come in anywhere from 30 to 60 percent cheaper than comparable private-line offerings," says Seth Libby, senior analyst at Yankee Group.

Libby says the Cox/Level 3 pairing is no surprise. Cox and other cable MSOs, along with wireless service providers, are among the main buyers of wave services and will continue to be for the foreseeable future. MSOs have loads of multimedia traffic, and wireless providers have high volumes, forcing both to go looking for pipes greater than 10 to 15 Gbit/s, which he says is typically the minimum required to justify a move to waves from high-speed private lines.

Level 3 confirms this view. Spokesman Paul Lonnegren says supplying wave services to the likes of Cox is "absolutely" a strategic direction for Level 3. Even though Level 3 has made just one other announcement about wholesale wave services -- a "multiyear, multi-million-dollar agreement" to supply waves to Asian carrier Reach Global Services Ltd. late last year (see Level 3 Extends REACH and Wave Services: Is Growth for Real?) -- Lonnegren says Level 3's sold similar services to AOL Time Warner Inc. (NYSE: AOL) and Adelphia Communications Corp. (Nasdaq: ADLAC), "among others."

Beyond this information, Level 3 isn't willing to provide much detail on the services it's furnishing Cox and others. One thing: Level 3 confirms it's using OPTera gear from Nortel Networks Corp. (NYSE/Toronto: NT) as the basis for its wave services.

Cox isn't saying much, either. At press time, a planned interview with a spokesperson had failed to materialize.

But in a prepared statement, Cox's VP of network planning Dick Mueller cites the carrier's management system as a key differentiator in choosing Level 3. Called ONTAP, this system enables customers like Cox to use a Web interface to order additional capacity and links on the private-line or wavelength services they obtain from Level 3.

This kind of Web-enabled provisioning system seems relatively rare, if not unique. A spotcheck of other carriers offering wavelength services, including Looking Glass Networks Inc., SBC Communications Inc. (NYSE: SBC), and Sprint Corp. (NYSE: FON), reveals most don't include a description of this type of management on their Websites, and none has confirmed offering them at press time. Another carrier, BellSouth Corp. (NYSE: BLS), offers a Web interface for provisioning, but wave services are offered only within the RBOC's nine-state region, not nationwide.

Level 3 offers nationwide reach with its wave services.

Still, wave services, while increasingly popular, aren't without risks. Today's offerings are mostly point-to-point, and even though costs are saved relative to private lines, extra bandwidth must be ordered because waves don't come with protection circuits, as Sonet services do.

Savings may still accrue for Cox, compared to legacy offerings, says Yankee's Libby. "Cox has ordered a lot of links and multiple city pairings," he notes. "I'm sure they got a substantial discount."

— Mary Jander, Senior Editor, Light Reading

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