LEVEL 3 BUYING GLOBAL CROSSING

Level 3 Communications Inc., the Colorado-based provider of broadband services, agreed to buy Global Crossing Ltd. in a deal valued at about $1.9 billion.

Level 3, based in Broomfield, will acquire Global Crossing in an all-stock transaction worth $23.04 a share, based on Level 3’s closing stock price on April 8, the companies said in a statement today. The value of the purchase is $3 billion, including the assumption of $1.1 billion in debt, they said.

The combination will create a business with fiber-optic networks on three continents, allowing it to provide local, national and international communications services, the companies said. They would have had combined revenue of $6.26 billion in 2010.

“This is a transformational combination that we believe will deliver significant value to investors, customers and employees,” Jim Crowe, chief executive officer of Level 3, said in a statement.

IS COMCAST EXTORTING SERVICE PROVIDERS WHO DELIVER VIDEO?

Level 3, who recently signed a deal to become the primary provider for streaming Netflix content, was pressured by Comcast to pay a "recurring fee" "to transmit Internet online movies and other content to Comcast's customers who request such content." After a few days of negotiating, Level 3 paid the fee, ensuring uninterrupted service for Netflix subscribers.

Thomas Stortz, Level 3's chief legal officer, said this in a statement earlier today:

Level 3 believes Comcast's current position violates the spirit and letter of the FCC's proposed Internet Policy principles and other regulations and statutes, as well as Comcast's previous public statements about favoring an open Internet. While the network neutrality debate in Washington has focused on what actions a broadband access provider might take to filter, prioritize or manage content requested by its subscribers, Comcast's decision goes well beyond this. With this action, Comcast is preventing competing content from ever being delivered to Comcast's subscribers at all, unless Comcast's unilaterally-determined toll is paid - even though Comcast's subscribers requested the content. With this action, Comcast demonstrates the risk of a ‘closed' Internet, where a retail broadband Internet access provider decides whether and how their subscribers interact with content.

Comcast claims that their "toll" has nothing to do with Netflix or video traffic in general but rather with the amount of traffic Level 3 is pushing off onto Comcast's intertubes. In a statement tonight the company said:

We are happy to maintain a balanced, no-cost traffic exchange with Level 3. However, when one provider exploits this type of relationship by pushing the burden of massive traffic growth onto the other provider and its customers, we believe this is not fair.

Indeed, recent reports suggest that Netflix is responsible for a fairly absurd amount of bandwidth, and as Wired points out, the contracts that dictate who is responsible for carrying what traffic are largely left undisclosed to the public. Comcast's statements (unsurprisingly) shift the debate from one of net neutrality to the esoteric and largely uninteresting business of service providers negotiations.

Regardless, Level 3 says they'll be taking the matter to government regulators soon—hopefully there will be sufficient outrage at some point in the process to get Comcast to back down. [Gizmodo]