XO Claims Level 3/Global Crossing Acquisition Will Create a ‘Global Colossus’

Level 3 Communications is one of the world’s six Tier 1 Internet operators. Once dubbed “the best funded start-up in history,” Level 3 Communications was founded on the idea that reliable, scalable and cost-effective networks were the future of the communications business.

Global Crossing currently serves over 700 Internet service providers, mobile operators, and carriers, as well as 40% of Fortune 500 companies. Whether you require data, voice, or multimedia solutions – including audio, video and web conferencing – Global Crossing has the technology and dedicated professionals to meet your needs.

Back in April, Level 3 revealed an agreement to purchase Global Crossing in a $3 billion deal that would produce a communications company with pro forma combined 2010 revenues of more than $6 billion. The acquisition would also give rise to a company with connections to over 70 countries and ownership in over 50 countries. According to Level 3, the merger would allow Level 3 to better serve governments, enterprises, carriers and content providers within Europe as well as Latin and North America.

According to the FCC, XO Communications believes that the merger between the two top communications companies will generate a “’global colossus’ that will dominate the market, leading to significantly higher prices and decreased service quality and innovation for other IBPs and their customers.” XO believes that the acquisition is not in the public’s interest, and hopes that the Federal Communications Commission will stop the transaction.

In the meantime, Global Crossing has announced that the United States DOJ has asked for more information from Level 3 and Global Crossing in relation to the possible acquisition. According to Global Crossing, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the US DOJ has issued a “second request” for additional information.

XO’s concerns that merging two of the leading Internet backbone providers will create a “global colossus” are not going unheard. In another filing with the Federal Communications Commission, the DOJ stated that they, along with the FBI and the DHS are presently looking into the issue “for any national security, law enforcement, and public safety issues,” and have asked the FCC to defer any action until the agencies can complete their findings and advise the FCC of the appropriate action to take.

Both Global Crossing and Level 3 previously announced that the acquisition should be completed by year’s end, and as of last Tuesday, did not expect any changes in the schedule.