XO wins ruling against Level 3 Communications

XO Communications today announced that the Court of Chancery of the State of Delaware has ruled in favor of XO Communications’ complaint for declaratory judgment and injunctive relief preventing Level 3 from interfering with XO Communications’ business operations and directing Level 3 to specifically perform its duties and obligations under its fiber agreements with XO Communications.

Last year, XO Communications filed a complaint with the Court to force Level 3 to cooperate with XO Communications as it lit fiber acquired from Level 3. In its ruling on November 2, 2007, the Court determined that XO Communications has the unfettered right to light fiber it acquired from Level 3 and required Level 3 to provide XO Communications the power and access it needs in order to continue to light fiber for its own network use and use of third party customers.

“We are very pleased with the Court’s decision, which confirmed XO’s right to these facilities and Level 3’s obligations to provide services under the agreement,” said Carl Grivner, chief executive officer of XO Communications. “This decision will remove any uncertainty regarding XO’s rights to its fiber plant, and will spur the continued expansion in the capabilities of the XO nationwide fiber optic network. With rising demand for bandwidth by businesses and service providers, XO Communications is at the epicenter of today’s broadband boom, providing high-capacity network services to domestic and international telecom companies, cable companies, content providers and mobile wireless service providers.”

In 1998, the two companies entered into an agreement to collaboratively develop a fiber optics network. Level 3 was to lay the fiber network while XO Communications purchased an indefeasible right of use in part of that network. Subsequently through other related agreements, XO Communications also agreed to purchase wavelength services from Level 3. Level 3 argued that these related agreements stripped XO of its right to light the fiber it had acquired from Level 3. The court disagreed with Level 3’s position and determined that the subsequent agreements did not “in any way modify, alter, terminate, or suspend the rights XO acquired to light fiber it acquired from Level 3, or to provide, for its own purposes or to third parties, wavelength services utilizing such fiber.”