Level 3 to acquire tw telecom; AT&T wins gigabit broadband bid

This week in telecom news, Level 3 Communications announced its $5.7 billion acquisition of tw telecom; AT&T won its bid to bring gigabit broadband to two cities in North Carolina.

This week in telecom news, Level 3 Communications announced its intention to acquire tw telecom. The deal positions the company to better compete against larger providers, as their networks are largely complementary. In addition, AT&T announced it successfully completed talks to roll out gigabit broadband in two North Carolina cities. The carrier is waiting on approval from four other North Carolina cities to further its expansion.

The Federal Communications Commission (FCC) is now investigating interconnection deals between content providers and Internet service providers (ISPs) following the public Netflix and Verizon dispute over who was responsible for Netflix customers experiencing slow service. While the FCC doesn't plan to issue regulations, FCC Chairman Tom Wheeler said it hopes to bring transparency to the issue. Verizon and AT&T have filed court briefs to support Microsoft's fight against a U.S. search warrant that would give the government access to Microsoft's Ireland-based data center.

Read on for more details on this week's telecom news.

AT&T wins gigabit broadband bid

AT&T beat seven other ISPs in a bid to bring gigabit broadband service to two cities in North Carolina.

Officials in Durham and Winston-Salem ratified an agreement with AT&T to roll out a fiber network with speeds capable of up to 1 Gbps. AT&T plans to roll out services in the coming weeks, an AT&T spokesperson told Ars Technica.

The North Carolina Next Generation Network (NCNGN) group coordinated the bidding process and recommended AT&T over seven other ISPs, including Time Warner Cable. The NCNGN group is composed of six municipalities and four universities, according to Light Reading. The deal with AT&T is non-exclusive, so NCNGN has the option of making deals with other broadband partners.

AT&T previously deployed a gigabit broadband network in Austin, Texas in December under its U-verse brand, and will expand to Dallas this summer. The provider plans to rollout gigabit broadband deployments to 100 other cities and municipalities; it is waiting for ratification from four other North Carolina cities: Carrboro, Cary, Chapel Hill and Raleigh.

How fast is 1 Gbps? According to AT&T, consumers could download 25 songs in one second, download a television show in three seconds, and download an HD movie in 36 seconds.

Complementary matchmakers' dream: Level 3 to acquire tw telecom

In an effort to gain local and enterprise customers, long-time wholesaler Level 3 Communications announced Monday that it plans to buy tw telecom in a deal valued at $5.7 billion. The two companies complement each other, as they serve different customer bases, which will enable them to compete with larger providers.

Level 3, headquartered in Broomfiled, Colorado, has long operated one of the largest content delivery networks. Level 3 President and CEO Jeff Storey said the move will enable Level 3 to offer a broader set of products, including managed services using its IP/optical network.

Tw telecom is based in Littleton, Colorado and provides managed services that include business Ethernet, VoIP and VPN services. Tw telecom was created 20 years ago as a joint venture of U.S. West and Time Warner Inc. The provider offers services to corporate and government customers in 75 U.S. metro areas and has more than 30,000 miles of fiber optic lines connecting more than 20,000 buildings, according to its 2013 annual report.

By combining the companies, Level 3 will gain a deeper metropolitan footprint, providing its global customers with more local connections if they do business in North America. Tw telecom will gain access to Level 3's owned network and data centers in more than 60 countries, as well as its undersea cable. In 2013, 63% of Level 3's revenues came from North America, and all of tw telecom's sales were based in the U.S.

Pending regulatory approval, the acquisition is expected to close in Q4. --Kate Gerwig

FCC investigating content provider and ISP interconnect deals

The FCC is investigating agreements between content providers and ISPs following the Netflix spat with Verizon over streaming speeds. Public interest groups have also called on the FCC to investigate these interconnection deals as the commission revises its net neutrality rules, according to The Hill.

Netflix signed interconnection deals with Verizon and Comcast to ensure a better connection to their networks. Netflix recently began displaying network congestion error messages that blamed their customers' ISPs when experiencing slow service. Verizon threatened legal action on June 5, and Netflix announced it would discontinue the messages, but stood by its claim that Verizon was responsible for the downgrade in service.

Wheeler said the commission has begun collecting the confidential terms of these interconnection deals in the hope of bringing some transparency to the issue. Wheeler said the commission is only collecting information to get to the bottom of the speed issue and won't be making any regulatory decisions.

"The bottom line is that consumers need to understand what is occurring when the Internet service they've paid for does not adequately deliver the content they desire, especially content they've also paid for," he said in a statement. "In this instance, it's about what happens where the ISP connects to the Internet. It's important that we know -- and that consumers know."

Comcast and Netflix were supportive of the FCC's actions, but Verizon had reservations.

"Internet traffic exchange has always been handled through commercial agreements," a spokesperson for Verizon told The Verge. "This has worked well for the Internet ecosystem and consumers. We are hopeful that policy makers will recognize this fact and that the Internet will continue to be the engine of growth of the global economy."

Carriers back Microsoft over email warrant

Verizon and AT&T have filed court briefs supporting Microsoft in its challenge of a U.S. search warrant it was served to access? customer emails stored in a Dublin, Ireland, data center.

The warrant was issued last December by a magistrate judge in New York to give the U.S. government access to the data center. Microsoft lost its appeal of the warrant in April, but continues to fight on the grounds that the Fourth Amendment, which protects against unreasonable search and seizure, should apply. Microsoft argued that the government should rely on mutual legal assistance treaties to gain access to the data, according to ZDNet.

Verizon and AT&T filed amicus curiae "friend of the court" briefs -- since they are not involved in the litigation -- expressing concern that U.S. demands for data stored abroad could alienate overseas customers of U.S. providers.

"Foreign customers will respond by moving their business to foreign companies without a presence in the United States," Verizon said in its filing.

The magistrate rejected Microsoft's initial appeal by saying the warrant was covered under the Electronic Communications Privacy Act because part of the search would occur in the U.S.

AT&T said the ruling threatens to eliminate global boundaries for law enforcement. "This practice rests on an understanding that when it comes to data storage and privacy protections, location matters," the carrier said in the filing.

Cisco and Apple also filed a joint brief last week in support of Microsoft, expressing concern that the magistrate was ignoring foreign laws and improperly applying U.S. law.

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