U.S. Consumers Open to Switching to Internet Phone Service

Home / Newsroom / Press Releases / 2005 / U.S. Consumers Open to Switching to Internet Phone Service

U.S. Consumers Open to Switching to Internet Phone Service

Research Study Shows 71 Percent of Respondents Would Consider Move to VoIP

San Jose, CA – March 7, 2005 – Level 3 Communications, Inc. (Nasdaq:LVLT) today announced that it has released the results of a research study on the consumer adoption of Voice over IP (VoIP), also known as Internet telephone calling.

The study, which surveyed more than 1,400 adult consumers throughout the United States, shows that 71 percent of respondents are open to considering Internet calling services. However, while many consumers are interested in VoIP, they require more information before adopting the services. Level 3 released the research results in conjunction with the Spring 2005 VON (Voice on the Net) Conference and Expo.

Additional survey highlights include:

Young adults, minorities and recent college graduates may be the next wave to adopt VoIP. Survey data show those aged 18-34 (36 percent), Hispanics (39 percent) and recent college graduates (35 percent) have higher levels of interest in VoIP than the market as a whole.
Nearly 73 percent of surveyed respondents would prefer to purchase VoIP as part of a bundle of telecom services. The most desirable bundle, according to the survey, was VoIP bundled with broadband, a fact which seems to play to the hands of cable companies as they increasingly compete with incumbent telephone operators.
Of those who are “definitely” interested in VoIP, respondents identified “cost savings” as one key factor in making the switch to VoIP. A discount on broadband services, guarantees about quality and new features not available via traditional phone service also appeared prominently.
When asked to rate their interest in specific VoIP features, messaging/screening features and enhanced wireless capabilities topped the list. Call screen, call alerts and 911 personal information were also near the top of the list.
Early adopters of VoIP are 50 percent more likely to consider switching providers than the market as a whole.

“Our survey results highlight the immense interest that Internet calling is generating among U.S. consumers,” said Cynthia Carpenter, vice president of marketing for VoIP services at Level 3. “We feel strongly that as education on Internet calling increases, consumer adoption will grow more rapidly. Therefore, we are focused on increasing consumer awareness of Internet calling and the benefits it delivers through direct, vendor-neutral education. Among other things, consumers need to be aware that all VoIP services are not created equal and that the levels of quality, reliability and safety can vary.”

“Additionally, the results show that meaningful savings and high quality service, delivered by a trusted brand, are the key ingredients to mainstream VoIP adoption,” added Carpenter. “Interestingly, the survey also indicates that potential buyers view heavily discounted services with skepticism. We believe these findings point to value and consistent service quality, rather than “rock bottom prices,” as the primary drivers of mass market VoIP adoption.”

While the survey indicates that costs savings and a broadband bundle are the most critical drivers of initial interest, advanced features and integration with other elements of the on-line experience seem key to getting consumer to actually make the jump to VoIP, a dynamic which may give ISPs with large existing customer bases a powerful head start in marketing VoIP services.

Methodology
The Level 3 VoIP Consumer Attitude & Usage Study was conducted by Marketing Advocates, Inc. (www.marketingadvocates.com) in December 2004. A total of 1,402 adults completed the online survey. Results are accurate to within approximately + or – 4 percent at a 95 percent confidence level. For more details about the key findings of the study and more information about VoIP, please visit www.Level3.com.

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.