Level 3 Communications Question #2-Pete Wilson

Level 3 Communications was able to raise so much capital due to the fact that Jim Crowe was so smart and saw the potential opportunity of Level 3 in which he could established a company to build a state of the art fiber-optic network. Level 3 quickly raised 3 billion dollars. By 2001 Level 3 raised 13 billion dollars. This was because Crowe had a very clear strategic plan. The goal was to raise money, rapidly build a high capacity fiber-optic network that linked major cities in the United States, and then cut prices to attract demand from major users of fiber-optic networks, including Internet service providers such as AOL.

Crowe was also a big advocate of strategic focus, believing that Level 3 should concentrate exclusively on carrying Internet traffic for service providers and corporations. The financial model was straightforward; because most of the costs of the business were fixed (the costs of building out the network), profitability would be highly leveraged to volume. Once the fixed costs were covered, it would be like printing money. Basically, Crowe was very business savy and created this very productive network in which millions of businesses and people around the world could use in order to communicate with one another.