Industry Leaders Sign Agreement with $1 Billion Potential To Deploy Lucent Software Switches in Level 3 IP Network. Level 3 Communications, Inc. (Nasdaq: LVLT), today announced a minimum four year, $250 million strategic agreement with Lucent Technologies (NYSE: LU) to purchase Lucent systems, including breakthrough software switches or "softswitches." The agreement has the potential to grow to $1 billion over five years, the companies said. Under the agreement, Lucent will provide Level 3 its Lucent Technologies Softswitch, a Bell Labs-developed software switch for IP networks that combines the reliability and features that customers expect from the public telephone network with the cost effectiveness and flexibility of IP technology. With the Lucent Softswitch, Level 3 will provide a full range of IP-based communications services indistinguishable in quality and ease of use from services on traditional circuit voice networks. In addition, the companies also agreed to collaborate on future enhancements of softswitches and gateway products to support next-generation broadband services for business and consumers that will combine high-quality voice and video communications with Internet-style Web data services. "The Lucent Softswitch, together with Level 3's IP Network, will bring customers the best of both the traditional telephone network and the Internet -- ubiquity and reliability combined with rapid cost reductions and innovative new services," said James Q. Crowe, president and chief executive officer of Level 3. "Customers will be able to get the same quality of service, but at lower cost, and they can further benefit from the continuously improving price-performance of Internet technology." "The Lucent Softswitch will deliver high-quality voice over the Level 3 IP network. It will let us provide the kind of services our customers want from circuit-switched networks, and it lays a foundation on which our entrepreneurial partners will build a new generation of innovative broadband services," Crowe said. "With Level 3's IP Network and Lucent's Softswitch, Level 3's IP Voice service will sound and act just like traditional telephone voice service," said Rich McGinn, chairman and chief executive officer of Lucent Technologies. "People will use it by picking up a phone -- any phone -- and dialing a telephone number, just like today. In essence, this network will deliver the much talked about promise of convergence based on IP technology. Together, we're going to usher in a new era of IP- based telephony services for Level 3 customers," McGinn added. Level 3's Voice Service Level 3's IP Voice Service will not be the kind of voice service that is currently offered over Internet networks. All of those services require the customer to dial long strings of numbers, require extended call setup times, or require the customer to purchase special equipment and software -- and often result in a call that is of low quality. Level 3's IP Voice Service will offer customers voice quality comparable to traditional telephone networks, but with the cost advantages of IP. Level 3's IP Voice will be a service that can be used simply by picking up your existing phone and dialing just as you would with any other call. The key is to connect the signaling and database systems that operate the public telephone network to Level 3's IP network, using Lucent's Softswitch technology. Level 3's network will translate circuit-based messages from its business customers to IP for cost-efficient transport and then, if required, convert them back to circuit-based messages for delivery over the public telephone network. Initially, Level 3 will offer long distance IP Voice service. When Level 3 offers its local IP Voice service, the softswitch will enable Level 3 to offer its customers Advanced Intelligent Network services -- such as call waiting, call forwarding, billing and operator assistance -- over either traditional or IP networks. A key feature of the softswitch is its ability to provide traditional telephone system quality and reliability at all times. If reliability on the IP network drops below the quality of the traditional network, the traffic is simply switched over to the traditional network. Programming interfaces that will be supplied with the Lucent Softswitch will enable Level 3 and independent software vendors to quickly create new IP-based services that operate across both traditional and IP networks. Also under the agreement, Level 3 can purchase Lucent's 7R/E Packet Gateway, which converts voice signals into packets for Level 3's IP-based long distance network. Additionally, Level 3 is also testing Lucent's IP Exchange Systems and DEFINITY IP Solutions, Lucent's recently announced IP-enabled enterprise communications systems. Lucent's IP Exchange Systems is a family of next-generation communications systems that converge voice, data and fax traffic over a company's local area network (LAN), wide area network (WAN) and the Internet. DEFINITY IP Solutions provides IP capabilities to Lucent's flagship enterprise communications server, allowing large businesses to send voice and fax traffic over their LANs, WANs and the Internet while retaining the features, functionality and reliability of the DEFINITY system. Softswitch Consortium Level 3 and Lucent are founding members of the International Softswitch Consortium, a recently announced organization that focuses exclusively on interconnecting IP networks and traditional telephone networks. The Consortium will promote worldwide compatibility and interoperability, plus be a catalyst in stimulating independent software vendors to develop value- added services for service providers and network users. About Level 3 Communications Level 3 Communications, Inc., is a communications and information services company that is building the first international network optimized for Internet Protocol technology. The Level 3 network combines local, long distance, and undersea networks, connecting customers end-to-end across the U.S. and in Europe and Asia. The company expects to complete its planned network construction in phases beginning in the first quarter of 2000. In the interim, Level 3 is offering service in the U.S. and Europe using a combination of company owned facilities and leased network connections. Level 3's common stock is traded on The Nasdaq National Market (U.S.) under the symbol LVLT. Its World Wide Web address is (http://www.Level3.com). About Lucent Technologies Lucent Technologies, headquartered in Murray Hill, N.J., designs, builds and delivers a wide range of public and private networks, communications systems and software, data networking systems, business telephone systems and microelectronics components. Bell Laboratories is the research and development arm for the company. For more information on Lucent Technologies, visit the company's web site at http://www.lucent.com. News Media Conference Call Scheduled A news media conference call concerning this announcement is scheduled for today, June 23, at 1:00 P.M. Eastern Time. Jim Crowe, Level 3 president and CEO, and Rich McGinn, Lucent chairman and CEO, will be participating on the call. To access the call, please dial 800-288-9626 for the U.S., and 612-332-1214 for international participants. No access code is required. A replay of the news media conference call will be available. To access the replay number please dial 800-475-6701 or 320-365- 3844 for international callers. The access code is "457085."
Financial Analyst Conference Call Scheduled
A conference call for financial analysts concerning this announcement is scheduled for today, June 23 at 2:00 P.M. Eastern Time. Jim Crowe, Level 3 president and CEO, and Rich McGinn, Lucent chairman and CEO, will be participating on the call. To access the call, please dial 800-553-0288 for the U.S., and (USA) 612-332-1210 for international participants. No access code is needed. A replay of the analyst conference call will be available. To access the replay number dial 800-475-6701 or 320-365-3844 for international callers. The access code is "457086." Forward Looking Statement The statements made by Level 3 and Lucent in this press release may be forward looking in nature. Actual results may differ materially from those projected in forward looking statements. Level 3 believes that its primary risk factors include, but are not limited to: substantial capital requirements; development of effective internal processes and systems; the ability to attract and retain high quality employees; changes in the overall economy; technology; the number and size of competitors in its markets; law and regulatory policy; and the mix of products and services offered in its target markets. Additional information concerning these and other potential important factors can be found within Level 3's filings with the U.S. Securities and Exchange Commission. Statements in this release should be evaluated in light of these important factors. ots Original Text Service: Level 3 Communications, Inc. Internet: http://www.newsaktuell.de Contact: Media: Josh Howell, (USA) 303-926-3197, josh.howell@Level3.com, or Investors: Ron Vidal, (USA) 303-926-3575, investor.relations@Level3.com, both of Level 3 Communications, Inc.; or Media: Dick Muldoon of Lucent Technologies, (USA) 908- 953-7526, email@example.com Web site: http://www.lucent.com Web site: http://www.level3.com