Businessmodel of Level 3 Communications

Customer Segments

Level 3 has a segmented market business model, with customer groups that have slightly different needs. The company targets its offerings at enterprise, government, and carrier customers.

Value Proposition

Level 3 offers four primary value propositions: accessibility, innovation, risk reduction, and brand/status.

The company creates accessibility by providing a wide variety of options. Its comprehensive portfolio includes fiber and infrastructure solutions; IP-based voice and data communications; wide-area Ethernet services; video and content distribution; and data center and cloud-based solutions. This wide range of services enables it to provide an end-to-end offering.

The company has embraced innovation throughout its history. Its groundbreaking efforts include:

• Being the first communications service provider to introduce a global MPLS network
• Being the first global provider with IPV6 natively deployed
• Being the first provider to introduce VoIP and MPLS
• Being the first provider to implement a converged IP solution The company reduces risk by maintaining high safety and security standards. It operates phone and e-mail hotlines through which customers can report telephone abuse. Reported incidents are addressed by a dedicated Call Annoyance team. Level 3 also operates a Compliance Line, a phone line through which its employees can report suspected violations of standards or policies by the firm. It also strongly encourages workers to discuss such issues with its Chief Ethics and Compliance Officer.

The company has established a powerful brand due to its success. It is the largest competitive local exchange carrier (CLEC) and the third largest provider of fiber-optic Internet access in the U.S. Its services platform features metro assets that reach over 500 markets in over 60 countries worldwide. These countries are located in North America, Europe, Latin America, and select Asian cities.

Channels

Level 3’s main channel is its direct sales team, which operates worldwide. It also sells its offerings through third-party sales agents. The company promotes its offering through its website, social media pages, and participation in conferences.

Customer Relationships

Level 3’s customer relationship is primarily of a self-service nature. Customers utilize its services while having limited interaction with employees. The company’s website features a “Resources Library” that includes useful resources such as white papers, case studies, user guides, infographics, eBooks, information guides, and videos. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

Level 3’s business model entails designing, developing, and delivering its services to customers.

Key Partners

Level 3 maintains key partnerships with the suppliers that provide it with the equipment and services it needs to manage its operations. The suppliers must provide new and scalable technology.

The company also maintains important alliances with the following types of partners:

• Channel Partners – Includes value-added resellers, systems integrators, and managed service providers with master and sub-agent agreements that sell the company’s services on their own
• Solution Providers – Includes value-added resellers, systems integrators, and managed service providers that work directly with Level 3 sales teams to sell the company’s services
• Alliances Partners – Includes cloud, data center, security, and UC&C providers that work with the company to develop joint, complete solutions to offer its customers
• Referral Partners – Includes eligible companies and individuals that help promote the company’s offerings by referring business leads in exchange for a commission Partners are provided with a portfolio of IP, VoIP, and transport services. They are also given access to the Business Partner Portal, which offers resources such as forms and training/marketing tools.

Key Resources

Level 3’s main resources are its physical resources, namely its communications network. The network includes the following as of December 2015:

• 106,000 intercity route miles in North America, Europe, and Latin America
• Metropolitan fiber networks in 350 markets containing approximately 67,000 route miles
• Eight million square feet of Gateway and transmission facilities in North America, Europe, and Latin America
• Over 360 co-location and data center facilities worldwide
• 33,000 route miles of subsea optical fiber cable systems Level 3 places a high priority on its intellectual property, which includes over 1,000 patents and patent applications in the U.S. and around the world. The patent portfolio covers technologies ranging from voice and data services to content distribution to networking and transmission equipment. Lastly, Level 3 has important human resources in the form of engineers and customer service personnel.

Cost Structure

Level 3 has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is network access costs. Other major drivers are network-related expenses, sales/marketing expenses, and administration costs.

Revenue Streams

Level 3 has one revenue stream: revenues generated from the monthly fees it collects from customers for the services it provides.