LUCENT, LEVEL 3 PARTNER TO MAKE "SOFTSWITCH" VOICE TECHNOLOGY THE FOUNDATION OF NEXT GENERATION BROADBAND NETWORKS
Industry Leaders Sign Agreement with $1 Billion Potential To Deploy Lucent Software Switches in Level 3 IP Network
BROOMFIELD, CO and MURRAY HILL, NJ, JUNE 23, 1999 – Level 3 Communications, Inc. (Nasdaq:LVLT), today announced a minimum four year, $250 million strategic agreement with Lucent Technologies (NYSE:LU) to purchase Lucent systems, including breakthrough software switches or "softswitches." The agreement has the potential to grow to $1 billion over five years, the companies said. Under the agreement, Lucent will provide
Level 3 its Lucent Technologies Softswitch, a Bell Labs-developed software switch for IP networks that combines the reliability and features that customers expect from the public telephone network with the cost effectiveness and flexibility of IP technology. With the Lucent Softswitch, Level 3 will provide a full range of IP-based communications services indistinguishable in quality and ease of use from services on traditional circuit voice networks.
In addition, the companies also agreed to collaborate on future enhancements of softswitches and gateway products to support next-generation broadband services for business and consumers that will combine high-quality voice and video communications with Internet-style Web data services. "The Lucent Softswitch, together with Level 3's IP Network, will bring customers the best of both the traditional telephone network and the Internet ubiquity and reliability combined with rapid cost reductions and innovative new services," said James Q. Crowe, president and chief executive officer of Level 3. "Customers will be able to get the same quality of service, but at lower cost, and they can further benefit from the continuously improving price-performance of Internet technology." "The Lucent Softswitch will deliver high-quality voice over the Level 3 IP network. It will let us provide the kind of services our customers want from circuit-switched networks, and it lays a foundation on which our entrepreneurial partners will build a new generation of innovative broadband services." Crowe said.
"With Level 3's IP Network and Lucent's Softswitch, Level 3's IP Voice service will sound and act just like traditional telephone voice service," said Rich McGinn, chairman and chief executive officer of Lucent Technologies. "People will use it by picking up a phone - any phone - and dialing a telephone number, just like today. In essence, this network will deliver the much talked about promise of convergence based on IP technology. Together, we're going to usher in a new era of IP-based telephony services for Level 3 customers," McGinn added.
Level 3's Voice Service Level 3?s IP Voice Service will not be the kind of voice service that is currently offered over Internet networks. All of those services require the customer to dial long strings of numbers, require extended call setup times, or require the customer to purchase special equipment and software - and often result in a call that is of low quality. Level 3's IP Voice Service will offer customers voice quality comparable to traditional telephone networks, but with the cost advantages of IP. Level 3's IP Voice will be a service that can be used simply by picking up your existing phone and dialing just as you would with any other call. The key is to connect the signaling and database systems that operate the public telephone network to Level 3's IP network, using Lucent's Softswitch technology.
Level 3's network will translate circuit-based messages from its business customers to IP for cost-efficient transport and then, if required, convert them back to circuit-based messages for delivery over the public telephone network. Initially, Level 3 will offer long distance IP Voice service. When Level 3 offers its local IP Voice service, the softswitch will enable Level 3 to offer its customers Advanced Intelligent Network services - such as call waiting, call forwarding, billing and operator assistance - over either traditional or IP networks.
A key feature of the softswitch is its ability to provide traditional telephone system quality and reliability at all times. If reliability on the IP network drops below the quality of the traditional network, the traffic is simply switched over to the traditional network. Programming interfaces that will be supplied with the Lucent Softswitch will enable Level 3 and independent software vendors to quickly create new IP-based services that operate across both traditional and IP networks.
Also under the agreement, Level 3 can purchase Lucent's 7R/E Packet Gateway, which converts voice signals into packets for Level 3's IP-based long distance network. Additionally, Level 3 is also testing Lucent's IP Exchange Systems and DEFINITY IP Solutions, Lucent's recently announced IP-enabled enterprise communications systems. Lucent's IP Exchange Systems is a family of next-generation communications systems that converge voice, data and fax traffic over a company's local area network (LAN), wide area network (WAN) and the Internet. DEFINITY IP Solutions provides IP capabilities to Lucent's flagship enterprise communications server, allowing large businesses to send voice and fax traffic over their LANs, WANs and the Internet while retaining the features, functionality and reliability of the DEFINITY system.
Softswitch Consortium Level 3 and Lucent are founding members of the International Softswitch Consortium, a recently announced organization that focuses exclusively on interconnecting IP networks and traditional telephone networks. The Consortium will promote worldwide compatibility and interoperability, plus be a catalyst in stimulating independent software vendors to develop value-added services for service providers and network users.
About Lucent Technologies
Lucent Technologies, headquartered in Murray Hill, N.J., designs, builds and delivers a wide range of public and private networks, communications systems and software, data networking systems, business telephone systems and microelectronics components. Bell Laboratories is the research and development arm for the company. For more information on Lucent Technologies, visit the company's Web site at www.lucent.com.
News Media Conference Call Scheduled A news media conference call concerning this announcement is scheduled for today, June 23, at 1:00 P.M. Eastern Time. Jim Crowe, Level 3 president and CEO, and Rich McGinn, Lucent chairman and CEO, will be participating on the call. To access the call, please dial 800-288-9626 for the U.S., and 612-332-1214 for international participants. No access code is required. A replay of the news media conference call will be available. To access the replay number please dial 800-475-6701 or 320-365-3844 for international callers. The access code is "457085." Financial Analyst Conference Call Scheduled A conference call for financial analysts concerning this announcement is scheduled for today, June 23 at 2:00 P.M. Eastern Time. Jim Crowe, Level 3 president and CEO, and Rich McGinn, Lucent chairman and CEO, will be participating on the call. To access the call, please dial 800-553-0288 for the U.S., and 612-332-1210 for international participants. No access code is needed A replay of the analyst conference call will be available. To access the replay number dial 800-475-6701 or 320-365-3844 for international callers. The access code is "457086."
About Level 3 Communications
Level 3 Communications, Inc. (NASDAQ: LVLT), an international communications company, operates one of the largest Internet backbones in the world, connecting 180 markets in 18 countries. The company serves a broad range of wholesale, enterprise and content customers with a comprehensive suite of services including: Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, voice and voice over IP services, content delivery and media distribution services. These services provide the building blocks to enable Level 3’s customers to meet their growing demands for advanced communications solutions. The company’s Web address is www.Level3.com.
"Level 3 Communications,” "Level 3," the red 3D brackets and the Level 3 Communications logo are registered service marks of Level 3 Communications, LLC in the United States and/or other countries. Level 3 services are provided by wholly owned subsidiaries of Level 3 Communications, Inc. Any other service, product or company names recited herein may be trademarks or service marks of their respective owners.
Forward-Looking Statement
Some of the statements that we make in this press release are forward looking in nature. These statements are based on management’s current expectations or beliefs. These forward looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside our control, which could cause actual events to differ materially from those expressed or implied by the statements. The most important factors that could prevent us from achieving our stated goals include, but are not limited to our ability to: successfully integrate acquisitions; increase the volume of traffic on our network; defend our intellectual property and proprietary rights; develop new products and services that meet customer demands and generate acceptable margins; successfully complete commercial testing of new technology and information systems to support new products and services; attract and retain qualified management and other personnel; and meet all of the terms and conditions of our debt obligations. Additional information concerning these and other important factors can be found within Level 3’s filings with the Securities and Exchange Commission. Statements in this press release should be evaluated in light of these important factors. Level 3 is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
