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Optical/IP

Verizon, Level 3 Win $1.8B WITS Deal

The U.S. General Services Administration (GSA) awarded Verizon Enterprise Solutions and Level 3 Communications Inc. (NYSE: LVLT) its Washington Interagency Telecommunications System 3 (WITS 3) contract this week, giving the carriers what is essentially a hunting license to compete for the business of federal agencies in Washington. (See GSA Chooses Verizon, Level 3, Level 3 Wins WITS Contract, and VZB Awarded WITS Contract.)

The WITS contract will allow Level 3 and Verizon Business to offer traditional voice and data services, as well as converged voice over IP (VOIP), video teleconferencing, and Internet access to more than 90 federal agencies with a total of 795,000 federal users.

The contract could be worth up to $1.8 billion over eight years, with a minimum revenue guarantee of $20 million. It includes a four-year base contract and four one-year options.

The new GSA contract is a follow-on to the WITS2001 contract, which expires in January 2008. Under that deal, Verizon Business was chosen as the sole service provider in 2000.

However, the new contract opens bids up to competition between the two service providers, a situation both claim to like, even though having no competitors would seem a preferable circumstance.

Susan Zeleniak, VP of federal markets for Verizon Business, says "Competition is always good. The advantage we have is we have a good reputation with customers in this contract already. We have experience in this area. Our relationships with the government gives us an advantage, and we look forward to continuing that."

Jerry Hogge, SVP and general manager of Level 3's federal group, says, "This series of contracts that the GSA has put in place have been groundbreaking, in terms of bringing in more competitors. Bringing competition in should benefit the GSA and all its users."

Earlier this year, Level 3 and Verizon were among the winning service providers chosen to compete for federal business through the GSA's Networx and Networx Enterprise programs. (See Networx Numbers Big for VZ, AT&T, Qwest, GSA Awards Contracts, and 5 Carriers Win Networx Enterprise Contracts.)

— Ryan Lawler, Reporter, Light Reading

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