[NANOG] Level3 not honoring Broadwing contracts?

Mailman List Mirror (Read Only)
1

In 2006, I signed a 3 year contract with Broadwing for a 1 cabinet
colocation with 6Mbs dedicated for under $1,000/mo. A few weeks ago,
about halfway through this contract, I get a letter from Level 3's
"Director of Colocation" that they are going to raise my price by several
hundred dollars a month.

I spoke with my new Level 3 rep, and he just notified me that their legal
deparment confirms that all they have to do is give me 30 days notice to
increase their price.

This does not make sense to me. I am bound to a 3 year contract, where I
have to pay them the rest of the term if I were to leave early, but they
can jack up the price by 40-50% during that time, arbitrarily? I do not
see that provision in my contract, and would rather avoid legal expenses
if possible. Has anyone else had to deal with this sort of thing from
Level 3?

TIA,

James Smallacombe PlantageNet, Inc. CEO and Janitor
up@3.am http://3.am

2

This sounds fairly accurate, it's all in how the contract is written.

Jeff

3

James,

There should be a clause in the contract that allows you to cancel services
if they change the terms and conditions of the agreement.

I know that doesn't help you much, but at least it gives you an out.

Randy

4

Even if the provision Randy desribes isn't written in there, there is a
fair amount of law that supports it. IANAL, but basically you can't
agree to something like a price change you have no idea of in advance,
so you can't agree to a 3-year term on it, (or 18 months) in advance.

But as a practical matter, if they gave you 30 days to leave, you
probably wouldn't sue them anyway... 3 years in litigation for damages
you could easily (in most cases) avoid won't win you anything.

But if you are looking for Level 3 to make any sense, you are going to
be waiting a long, long, long time with the rest of us.

They have never successfully "sold" much in their brief history. They
have successfully acquired lots, and lots, and lots of revenue and then
burned it off fabulously quickly. And there isn't even much value in
short selling their shares.... alas.

My $0.02,

DJ

Randy Epstein wrote:

5

Yea, we were a Telcove customer and recently talked to our new Level3
salesperson (200 miles away). He basically told us they wouldn't be
selling us anything new in the future (at any price) but it probably
wouldn't matter because they would also be "rerating" our colo charges
too. This in a datacenter that is at least 1/2 empty.

It was clear from the conversation that he never considered for a
moment that we might actually pay the new rate. He just assumed we
were gone as soon as it happened. Obviously I don't have a business
degree because I don't understand the business model of buying up
business and then going out of your way to chase off their customers.
The Level3 higher ups must see something I don't.

Chris

6

From recent threads, the increasing price of power and cooling makes
me think that colo providers would far rather have half the tenants
paying double the price than have to retrofit facilities that are full
to meet increasing demands for watts in and out.

Joe

7

Date: Tue, 29 Apr 2008 11:18:07 -0400
From: Joe Abley

From recent threads, the increasing price of power and cooling makes
me think that colo providers would far rather have half the tenants
paying double the price than have to retrofit facilities that are
full to meet increasing demands for watts in and out.

But the facility Chris referenced is half-full -- at best. Not only is
space plentiful, but cooling and electrical have plenty of reserve. The
price still would be reasonable at a higher rate.

The funny thing is, the facility is in a market so small that I doubt
the DC's aggregated revenues meets L3's typical _per-customer_ minimum
volume requirements. :wink: Perhaps L3 wanted the telco side of Telcove,
and just plans to scuttle the IP stuff -- which has some pretty stupid
"backhaul everything to ATL even though DFW is far closer" routing
topology, anyhow. *shrug*

Life goes on.

Eddy

8

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But if you are looking for Level 3 to make any sense, you are going to
be waiting a long, long, long time with the rest of us.

They have never successfully "sold" much in their brief history. They
have successfully acquired lots, and lots, and lots of revenue and
then
burned it off fabulously quickly.

Yea, we were a Telcove customer and recently talked to our new Level3
salesperson (200 miles away). He basically told us they wouldn't be
selling us anything new in the future (at any price) but it probably
wouldn't matter because they would also be "rerating" our colo charges
too. This in a datacenter that is at least 1/2 empty.

The Broadwing Norristown facility is perhaps 25% used....a lot of empty
space there. I have no idea what they are thinking...maybe Level 3 has
big plans for it, or wants it shut down, because it's hard to see how it's
profitable at a utilization rate that low.

It was clear from the conversation that he never considered for a
moment that we might actually pay the new rate. He just assumed we
were gone as soon as it happened. Obviously I don't have a business
degree because I don't understand the business model of buying up
business and then going out of your way to chase off their customers.
The Level3 higher ups must see something I don't.

This letter had the "director's" name, but no way to contact him. No
phone number, no email address. I basically had to make several phone
calls to find my rep, since my original BWing rep was long gone.>

James Smallacombe PlantageNet, Inc. CEO and Janitor
up@3.am http://3.am

9

We would disagree. In fact, if we had not done so already this would
have convinced us to take the previous poster's advice and built our
own facility (just across the hall).

Chris

10

We are getting rid of our rack at L3's Norristown facility next month
too. At the old price it was a good deal. At four times the price,
we'll move our two PRIs left to another facility. Our AS5300 is using
maybe 150W total. The rest of the rack is empty.

-Robert

Tellurian Networks - Global Hosting Solutions Since 1995
http://www.tellurian.com | 888-TELLURIAN | 973-300-9211
"Well done is better than well said." - Benjamin Franklin

11

Every indication from talk with former Level3 employees is that they
bought Telcove for the metro fiber footprint and the huge 70,000 voice
line and data contract with the state of Pennsylvania.

Now they are in the process of getting rid of anyone below some
internally-set amount of business, in one way or another.

They will then focus on the "NFL cities" for colocation and only provide
bandwidth/transport/other network services to everyone else.

--Patrick

12

They will then focus on the "NFL cities" for colocation and only provide
bandwidth/transport/other network services to everyone else.

Can we discuss how ridiculous the "NFL cities" model is? Yes, I get it.
NFL cities meet a certain size criteria in terms of business,
population, talent, etc. [feel free to replace NFL cities by: Tier "1"
Cities/Metros, Major passenger or cargo airports, historic Train
locations, Blockbuster Locations, Fedex depots, etc]

But when you compare your business plan to *every* other
National/International player that has the EXACT same plan and city
map... um... where is your differentiation? (Even if one calls its NFL
cities and one calls it "Major Airports")

The ridiculous part of the plan is that a) it does not obviate the need
for in-between depots of connectivity [for regens, ROADMs, etc] and b)
each city has a different specific mix of data/colo/IP/voice/what have
you based on local demographics (and incumbents)... and there is no
planning of right-sizing capex and revenue.

Oh well, I think I'll be concerned when a company actually has a real
business plan rather than something recycled from the bottom of a box of
Cracker Jack's.

Operational Content: While there are significant opex costs to removed
by making places like WDC, SFO, JFK/LGA, LAX and others great hubs of
interconnectivity there is a) an over-concentration of SPOFs and
vulnerability to localized infrastructure threats, and b) hyper
competition in some markets and gross under competition in others. The
profits many of these carriers seek may come from running a few colos in
"2nd tier" cities at much higher prices than they can charge in the "1st
tier" cities.

But then again -- if these guys had to show profits, they wouldn't be
the guys they are today... They might even have executives with a proper
business pedigree (you know MBAs or better from places that don't
advertise on billboards and at professional sporting events) and not
need to piss away billions in revenues to meet their use guidelines.

Does Level3 have a stadium yet? I think they need one to brand so they
can finally file for that BK that's been hanging around their neck for
years.

Deepak Jain
AiNET

13

Update to below (sorry for top-post, but not everone needs to read the original post).

Thanks in part to the pro-bono efforts of two very good attorneys: Nachman Yaakov Ziskind, (awacs@ziskind.us) (nanog list member who kindly emailed me when I sent this to the list) and my father in law, Level 3 has acknowledged that my contract is still in term and will honor their contract until it expires in August of 2009.

The contract has a provision for paying only the undisputed portion of disputed invoices, provided formal notice is given, so I followed it and CC'd the director of colo services who sent me the original letter of intent to raise my pricing, along with Mr. Ziskind's letter and it got taken care of.

Thank you to everyone who responded to this last month. If anybody else is having similar issues and would like more information, please don't hesitate to contact me off-list.