Level 3 Communications To Shut Down Legacy Voice Service

Level 3 Communications Inc. (NYSE:LVLT) has sought permission from the U.S. telecom regulator Federal Communications Commission (FCC) to discontinue its legacy voice services based on outdated TDM (time division multiplexing) technology. The service is expected to shut down effective Aug 25, 2016 subject to the FCC’s approval. All affected users will be shifted to high-speed IP-based network before the termination of the legacy voice system.

Telecom service providers are moving toward IP-based network as more and more enterprise customers are opting for IP-enabled cloud services. Apart from Level 3 Communications, national telecom carriers like Verizon Communications Inc. (NYSE:VZ) and Sprint Corp. (NYSE:S) are on the same path. Verizon is awaiting the FCC’s nod to stop providing postpaid calling card and personal 800 services while Sprint wants FCC approval to shut down its long-distance voice network.

Level 3 Communications’ legacy voice service mainly consists of Analog PBX Trunk service and Digital PBX Trunk Service. Level 3 Communications has a strong presence in several fields of enterprise networking including data networks, content distribution, managed services, securities, voice cloud and cloud connection. The company stands to benefit from the ongoing trend of large enterprise customers shifting to IP and fiber-based network architecture.

With growing demand for bandwidth for implementing converged IP-based networks, Level 3 Communications’ growth prospects are on a solid footing. Level 3 Communications is enhancing its bandwidth capability and flexibility to enable customer MNCs to adjust bandwidth according to their requirements. By gradually expanding its footprint overseas, the company is now threatening to overtake European market leaders like Orange SA (NYSE:ORAN) and BT Global Services, a division of BT Group (LON:BT) Plc. (NYSE:BT) .

Level 3 Communications currently carries a Zacks Rank #3 (Hold).