Vendor lineage

Lumen, CenturyLink, Level 3 and Global Crossing

A rural Louisiana phone company that ended up owning one of the internet's largest backbones.

This is one company by succession and four or five by history. It was incorporated in 1968 as Central Telephone and Electronics Corporation, renamed Century Telephone Enterprises in 1971, and spent four decades as CenturyTel - a rural local exchange carrier headquartered in Monroe, Louisiana, growing by buying other rural carriers. It is now Lumen Technologies, and it operates AS3356.

The rural-carrier era is the least glamorous and most instructive part. Buying small local exchange carriers one at a time is unfashionable, capital-intensive and slow, and by 2008 it had made CenturyTel one of the largest rural operators in the United States - which is to say, large enough to buy things that were much better known than it was.

Embarq followed in 2009, the former Sprint wireline business, itself descended from United Telephone. Sources differ on the price: $5.8B stock-for-stock in one account, roughly $11.6B in another, and the difference is almost certainly whether debt is counted. The merged company took the name CenturyLink.

Qwest came in 2011 for about $12.2B, and Qwest was itself a Bell company by descent - US West, formerly Mountain Bell, serving fourteen western and midwestern states. That made CenturyLink the third largest wireline operator in the country behind Verizon and AT&T.

Then Level 3, completing on 1 November 2017. Announced at $25.6B, commonly reported at around $34B once debt is included. Level 3 was founded in 1985, based in Broomfield, Colorado, and was the largest competitive local exchange carrier in the United States and one of the largest fibre operators anywhere - the company whose autonomous system number, AS3356, appears in more traceroutes than almost any other.

And Level 3 had itself been assembling. WilTel, Broadwing, Looking Glass, Progress Telecom, TelCove, TW Telecom in 2014, and Global Crossing in 2011 - which is the entry inside this entry worth reading.

Global Crossing was founded in March 1997 by Gary Winnick and David L. Lee to lay submarine cable, and during the 1999 bubble it was valued at $47B. It never had a single profitable year. In 2002 it filed one of the largest bankruptcies in history, its executives were accused of covering up an accounting scandal, and in 2011 Level 3 bought what remained for $3B including the assumption of $1.1B in debt. Its chief executive at the time was John Legere, who later ran T-Mobile.

Global Crossing had also bought Impsat, the Latin American network operator, which is how fibre built for Argentina, Brazil and the region ended up inside a Louisiana rural carrier by way of a Bermudan bankruptcy.

In 2022 Lumen sold its local exchange operations in twenty states to Brightspeed, keeping a western footprint and the fibre business. So the company spent fifty years acquiring rural telephone lines and then sold most of them, having used them to buy a global backbone.

Founding stories

1985

Kiewit Diversified Group, which became Level 3

Omaha, Nebraska · Founders: Peter Kiewit Sons'

A construction company's holding vehicle for everything that was not construction. That parentage is not incidental: Kiewit's expertise was in digging, and the network its subsidiary eventually built reflected it. James Crowe had already built MFS Communications inside the same group - the company that acquired UUNET and was sold to WorldCom for $14.3B - and in 1997 he started again, recruiting eighteen of his former executives back out of WorldCom and selling the group's non-telecommunications assets to pay for the fibre.

The timeline

Named after a layer
The renaming points at Layer 3 of the OSI model - the routing layer. A telecommunications company named itself after the part of the stack it intended to serve, at a moment when its competitors were still selling circuits.
Genuity, and AS1
Buying Genuity brought with it the first autonomous system number ever allocated, which had belonged to BBN - the company that built the ARPANET. The network operates on AS3356 and has held AS1 ever since without using it.
The acquired company's chief executive takes over
The merger completed on 1 November after the Department of Justice required divesting twenty-four fibre routes across thirty city pairs and three metro Ethernet markets. Level 3's chief executive became the combined company's chief operating officer and then its chief executive a year later, under a succession arranged before the deal closed.

Flagship products and solutions

The IP backboneAS3356, one of the most densely connected networks on the internet, reaching most of it without paying anyone for transit. It is the asset everything else in the company is now organised around.
Enterprise fibre and wavelengthsDedicated capacity between customer sites and data centres, sold to the organisations for whom the public internet is not an acceptable path.
Edge computing and security servicesCompute placed in the network rather than in a region, and DDoS mitigation delivered from a backbone large enough to absorb attacks - the same argument content delivery networks make, from the other direction.
Local exchange servicesThe rural telephone business the company spent fifty years assembling, most of which has since been sold.

Key innovations

Conduit, not cableThe network was built by burying empty conduit and pulling fibre through it, so capacity could be upgraded later without digging the route again. That is a construction company's answer to a telecommunications problem, and it is the reason a network designed in the late nineties is still competitive - the expensive part was the trench, and the trench was built to be reused.
Building for packets when the money was in circuitsOptimising for internet protocol rather than for switched voice was a bet against the industry's own revenue base at the time. Naming the company after the routing layer was a way of saying so out loud.
Selling the rest of the company to fund the networkThe start-up capital came from liquidating a construction group's unrelated holdings. Infrastructure at this scale cannot be funded incrementally out of revenue, and the companies that tried during the same period are on this timeline as bankruptcies.
Assembling a backbone from the failures of othersAlmost every major asset arrived from a company that could not sustain it alone. Building it new was ruinous; buying it after the fact was affordable. That is the actual economics of the fibre era, and this company is the clearest example of the side that survived it.

Main markets

Enterprises, governments, content providers and other carriers, plus the residential and business lines remaining after the 2022 divestiture. The customer for the backbone is anybody moving enough traffic to care which network carries it.

It competes with the other large backbone operators and, increasingly, with the hyperscalers' private networks - which now carry a substantial share of the world's traffic on infrastructure they built themselves rather than bought.

Analyst standing

Assessments centre on the debt taken on to assemble the network against the value of owning fibre routes that nobody would fund building again today. The asset is genuinely difficult to reproduce; the balance sheet is the argument.
The longer view is that a construction subsidiary in Nebraska and a rural telephone company in Louisiana between them ended up owning one of the internet's principal backbones, and neither set out to. The routes existed because somebody was willing to dig, and the digging turned out to be the durable part.

Acquisitions

2009 Embarq $5.8B stock-for-stock, or ~$11.6B depending on the source
The former Sprint wireline business, serving eighteen states.
- 1899 United Telephone (origin, not a purchase) — Embarq descended from United Telephone, which became Sprint's local operations before being spun out - so this deal bought a lineage older than the buyer.
The merged company was renamed CenturyLink.
Sources disagree on the figure; both are given rather than one chosen. The gap is most likely debt.
2011 Qwest Communications ~$12.2B
Fourteen western and midwestern states, long-haul fibre and enterprise customers.
- 1984 US West / Mountain Bell (by descent) — Qwest was a Bell company by lineage, having merged with US West in 2000 - itself one of the regional operators created when the Bell System was broken up.
The third largest US wireline operator, behind Verizon and AT&T.
2017 Level 3 Communications $25.6B announced; ~$34B commonly reported with debt
The largest US competitive local exchange carrier and operator of AS3356, one of the internet's principal backbones. Completed 1 November 2017.
- 2011 Global Crossing $3B including $1.1B assumed debt — Valued at $47B in 1999, never profitable in any year, bankrupt in 2002 in one of the largest filings in history, and sold for a fraction of its peak twelve years later. It had itself acquired Impsat, the Latin American operator - which is how regional fibre for Brazil and Argentina entered this lineage. Founded by Gary Winnick and David L. Lee, March 1997.
- 2014 TW Telecom — Metro fibre and Ethernet across US markets, which is where a large part of Lumen's data centre footprint came from.
- 2005 WilTel Communications — One of several long-haul networks Level 3 consolidated during the post-bubble years, when capacity built for 1999 demand was selling for a fraction of its cost.
The combined company became Lumen Technologies, and the backbone is the reason the name is known outside Louisiana.
The two figures reflect equity value versus enterprise value; both appear in reputable coverage.

Lumen Technologies ↗

Sources