Q: What’s the outlook for broadband Internet speeds? Should we expect them to keep getting faster?
A: There is every reason to believe broadband speeds will continue to get faster. It was less than 10 years ago when 256 (kilobits per second) was considered “broadband speed.” And now 1.5 (megabits per second) is basically the introductory residential broadband speed, with 5 Mbps, 10 Mbps or faster becoming increasingly commonplace. Our CEO, Jim Crowe, likes to say, “Today’s broadband is tomorrow’s narrowband.”
Today, Level 3 carries a significant portion of the world’s Internet traffic, and 60 percent of that traffic is video. Delivering a high-quality video experience over the Internet requires high speeds.
Q: Will Level 3 benefit from the broadband expansion provisions in the economic stimulus bill?
A: Everyone benefits from broadband expansion. Consumers and businesses will both reap rewards. This bill promises to bridge the digital divide and bring broadband to huge swaths of the country where it wasn’t available before.
The Level 3 network travels through many of those unserved and underserved communities that have been targeted by the stimulus bill for expansion of broadband access. However, it’s too early to know for sure whether and how Level 3 may directly benefit.
Q: Even though Level 3 recently reported its first quarterly profit since 2003 and a healthier balance sheet, your shares have gotten hammered, down about 83 percent since last June. Why’s that?
A: We believe our stock price right now is more reflective of the global economic situation than of the company’s performance. In spite of the challenging business environment, we continued to grow core communication services revenue in 2008.
When we started the business 10 years ago, we invested heavily in building a network that is close to customers who demand high bandwidth. That investment makes it possible for Level 3 to accommodate the explosive growth we’re seeing in Internet-based services today. And don’t forget, Level 3 lived through the telecom bust of 2001-02. The company is much better positioned today, and the marketplace is more stable.
Edited for length and clarity from an interview by staff writer Steve Raabe.
