XO Communications (XOHO.OB) announced that the Court of Chancery in the State of Delaware has ruled in favor of XO Communications’ complaint for declaratory judgment. This court ruling, announced on Monday, has also prevented Level 3 Communications from interfering with XO’s business operations and requires that Level 3 will uphold their duties under a previous agreement signed with XO Communications.
In 1998, both XO and Level 3 entered into an exclusive agreement to mutually develop an extensive fiber optic network. Level 3 was to design this fiber network while XO Communications was to purchase rights to use this network. As business continued, XO Communications also agreed to purchase wavelength services from Level 3. In court, Level 3 argued that these more recent agreements stripped XO of their rights to the fiber optic network acquired in 1998. However, 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.”
“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.”
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