Starbucks’ Wi-Fi to get jolt of speed from Omaha-founded Level 3 and Google

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Posted: Wednesday, July 31, 2013 12:00 am

An Omaha-founded company will supply the Wi-Fi network to upgrade the “coffee and connectivity” formula at 7,000 Starbucks shops in a new deal that includes Internet giant Google.

Level 3 Communications’ global fiber-optic “backbone” and Google’s cutting-edge technology will combine to enhance the online experience for customers at Starbucks, which is known for integrating its drinks-and-snacks products with Internet service, the companies said Wednesday.

“We’re proud that they selected Level 3 to help take it to the next level,” said Jeff Storey, president and CEO of Level 3. He promised to provide “the best Internet experience to Starbucks customers.”

The stores’ Wi-Fi connections will become up to 10 times faster over the coming 18 months.

A customer might walk into a Starbucks, check in on a smartphone and, through Google, get a discount on a seasonal drink, for example, Storey said.

Google and Starbucks “will do what they do best,” he said. “We will do the network stuff.”

He did not disclose financial details of the agreement.

Level 3, based in Broomfield, Colo., began as Kiewit Diversified Group in Omaha and drew heavy investments from Omahans before splitting off from its Kiewit Corp. connection, moving to Colorado and focusing on its telecommunications network.

Also Wednesday, Level 3 reported its second-quarter financial results, a loss of $24 million, or 11 cents per share, compared with a loss of $62 million, or 29 cents a share, a year earlier. Revenue was flat at $1.6 billion.

The company also reports an adjusted earnings figure each quarter, which it says reflects its performance excluding a variety of costs. For the quarter, that was $387 million, compared with $353 million a year earlier.

Costs in the latest quarter included $17 million from ending the employment agreement of Jim Crowe, former CEO. Storey said the company is flattening its management structure, eliminating the job of chief operating officer and other executive positions to push decision-making down to lower levels. Those job cuts will result in about $3 million in severance pay every three months but bring more efficiency, he said.

Sunit Patel, chief financial officer, said he expects stronger revenue for the rest of 2013. “Overall, demand for our services is high,” he said. That includes demand for Level 3’s data centers, such as one in Omaha. “We feel good about our outlook for the second half of 2013.”

Storey said the company’s data security services are an area of potential growth, along with helping companies “manage the growing complexity in the telecommunications environments” locally, nationally and internationally.

Level 3 is adding to its sales force to reach more customers, he said. “I’m confident in our ability to execute. I believe we’re on the right track.”

Storey said economic swings affect Level 3 less than some other businesses because demand for its basic services remains fairly steady. Although a booming economy would help, he said, “our ability to win isn’t based on the economy.”

He said that Level 3 has no businesses that it should sell and that acquiring other companies is “not a primary focus of the company right now.” Instead, Level 3 is focusing on becoming more efficient, increasing sales and generating profit.

He said the company can grow by taking business away from competitors. “We have a great network, a very compelling set of assets.”

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