Just over four years into a 20-year agreement, France Telecom SA is abandoning a U.S. dark-fiber network it rented from Level 3 Communications Inc. -- and replacing it with a network of lit fibers, also from Level 3, the companies announced Tuesday.
Now, France Telecom will buy private line, wavelength and collocation services from Level 3, a move which the French operator expects will allow it to deliver the same quality of service but at a more competitive price.
The dark fibers comprising the original network, for which France Telecom paid in advance, will revert to Level 3. As a result of the contract cancellation, Level 3 will recognize US$40 million in deferred noncash termination revenue in the first quarter of 2005, and will cease recognizing the amortized prepaid revenue, it said.
Level 3 expects that monthly cash payments from France Telecom for collocation services and use of the lit network will exceed the payments previously made for service and support of the dark fiber network, it said.