Level 3 says CenturyLink merger won’t affect wholesale voice service lines

A map of CenturyLink and Level 3's network
Two VoIP providers are worried about the impact the CenturyLink-Level 3 merger will have on their ability to purchase wholesale services. Image: CenturyLink

Level 3 is refuting claims made by competitive VoIP providers Telnyx and Bar Tell that its pending merger with CenturyLink means it will no longer provide wholesale access tandem voice or its customer-owned telephone number (COTN) products.

The service provider said neither it nor CenturyLink have made a decision on whether the new company will continue to sell Telnyx or other providers these services.

“It is therefore unclear upon what basisbeyond the incorrect assertions set forth in the April 17 Telnyx Letter—the Filers make the claim that Level 3 is declining to sell the services in question,” Level 3 said in an FCC filing (PDF). “Further, as Level 3 stated in its response to the April 17 Telnyx Letter, the transaction through which CenturyLink, Inc. proposes to acquire Level 3 has no bearing on Level 3’s ability or willingness to offer the products in question to the Filers, or to any other company.”

RELATED: CenturyLink’s Level 3 acquisition faces challenges from California consumer advocacy groups

David Casem, CEO of Telynx, told FierceTelecom in an interview that he disagrees with Level 3's statement. 

"Level 3 has declined to sell these services and they have said so in their responses to our ex-parte in the docket," Casem said. 

In late 2016, Telnyx conducted discussions regarding Level 3's access tandem services. Following this initial meeting, a Level 3 sales representative that was responsible for Telynx account, said the product would be put on hold because Level 3 did not know they would sell COTN after the merger was completed.

Level 3’s COTN product is a nonstandard product that allows interconnected VoIP providers and other providers that have obtained their own telephone numbers to route traffic through Level 3’s network. The service provider said that it has entered into contracts to provide COTN to a very small number of customers, which it said it did “after individualized negotiations and as part of larger, strategic, multi-product relationships.”

“Level 3 has not made COTN widely available because, among other reasons, meaningful systems development work would be required before the COTN product could be effectively scaled and offered to a broader range of customers,” Level 3 said. 

Telynx uses Level 3 for PSTN fallback, which is a requirement under the FCC’s 15-70 order. The 15-70 order establishes an authorization process to enable interconnected VoIP providers that choose direct access to request numbers directly from the numbering administrators.

Additionally, the order sets forth several conditions designed to minimize number exhaust and preserve the integrity of the numbering system. Finally, the order also modifies FCC’s rules in order to permit VoIP Positioning Center (VPC) providers to obtain pseudo-Automatic Number Identification (p- ANI) codes directly from the Numbering Administrators for purposes of providing E911 services.

Barr Tell and Telynx said in separate FCC filings that the proposed transaction would eliminate available choices for interconnected VoIP and other IP communications services. Other providers that have an interest in using Level 3’s services, include Telengy, VoIP Innovations, FracTEL, and commio. 

Casem said that this group of providers only represents a small portion of the entire VoIP service provider industry segment that's concerned about having available COTN and related services. 

"More than a third now, and there are more coming, of the VoIP providers that have authorization under the 15-70 order have petitioned the FCC under this docket," Casem said. "This is not just two providers shooting across the bows of Level 3 and CenturyLink, but a third of the providers in this space saying there's a real problem here and raising the issue with the FCC."

Telnyx currently provides IP communications services, including interconnected VoIP services, to IP communications services providers and enterprise customers. 

Today, Telynx purchases its inbound, outbound and E911 services are purchased from other providers and resells them it its customers. Today, the main wholesale providers for its unbundled inbound voice service are Level 3, Peerless and Inteliquent.

Following the close of its purchase by Onvoy and GTCR, Inteliquent told Telnyx that it “was raising the price of wholesale switching and transport services for customer owned telephone numbersits Host Switch productby 700%, and that it would cease offering Host Switch as of May 1, 2018.” 

According to Telnyx, members of Level 3’s sales team said that it would not sell product to Telnyx because after merging CenturyLink, the combined company would no longer offer the product to other providers. What this would mean would be that Peerless would be the only provider to offer this service nationwide.

Telynx told the FCC in a filing (PDF) that the FCC should require “that after the merger is approved Level 3 (or its successor entity) continue to offer at reasonable prices and on a nationwide basis wholesale switching and transport services for customer owned telephone numbers.”

Casem said that if the new CenturyLink refuses to provide COTN services to Telynx and other VoIP providers that it would compromise what the FCC set in the 15-70 order. 

"The reality is if this merger happens and Level 3 does not offer these services, and it's unlikely that they will unless they are obligated to do so under the FCC's order, it's going to totally reverse course on everything that was trying to be accomplished by the 15-70 order," Casem said. "This will ultimately reach consumers and businesses because it will eliminate the capability for anyone to offer these services for anyone that does not have a CLEC license in all 50 states in the country."

Barr Tel agreed, saying in a separate FCC filing that the regulator should ensure that the new company should provide affordable wholesale voice services to competitive providers.

“If it is to grant the Applications, the Commission should condition the grant on a specific, enforceable merger condition that ensures continuity and fairness in the offering and pricing of these wholesale services to enable competition in the communications marketplace,” Barr Tell said in an FCC filing (PDF). “Specifically, the Commission should require that after the merger is approved Level 3 (or its successor entity) continue to offer at reasonable prices and on a nationwide basis wholesale switching and transport services for customer owned telephone numbers.”

Level 3 countered that CenturyLink has not made a decision on whether the new company will offer a wholesale access tandem product or COTN, either as a specialized, custom-built product or a more widely available product, after completing their merger.

Since there’s no basis for the claim that the merger will reduce the availability of these services, Level 3 said that the FCC should deny Barr Tell and Telynx’s request that it should continue to offer access tandem services or COTN “as a condition of the Commission’s approval of the Transaction.”

Level 3 added that the “request that Level 3 be required to sell a non-standard, not generally available product as a condition of the Commission’s approval of the Transaction should be denied.”

This article was updated on July 18 with additional information from Telynx and Level 3.