Under terms of the agreement, San Francisco-based DSLnetworks, an aggregator of digital subscriber line (DSL) connections, will buy at least $35 million in network services from Level 3 over three years.
As previously reported, the deal marks the first time Level 3, a start-up communications carrier, will be able to offer DSL connections to its ISP and business customers. Although DSLnetworks will directly sell the DSL services, the two companies will work together for sales and marketing.
Level 3 is building a 16,000-mile, international, long-haul fiber-optic network with smaller metropolitan area networks in 50 markets. But until now, the company had not been able to offer so-called last-mile connections, the link between a customer's home or office and the service provider.
"Our core competency is engineering, building and maintaining fiber-optic networks. It's not managing the last-mile services," said Geoff Jordan, director of global strategic alliances for Level 3, which has its headquarters in Broomfield, Colo.
For DSLnetworks, the partnership means a single backbone network provider. The company has bought network capacity from Exodus Communications and several regional competitive phone companies. The deal allows DSLnetworks to sell DSL and broader networking services to its ISP, application service provider (ASP) and other customers.
DSLnetworks buys DSL connections on a wholesale basis from major DSL providers such as Covad Communications, NorthPoint Communications and Rhythms NetConnections. The company then wholesales the connections and value-added services to ISPs and ASP resellers. DSLnetworks also sells DSL connections on a retail basis to large businesses.