COMPARATIVE STOCK PRICES

Comparison

Level 3 common stock and Broadwing common stock are each listed and traded on the Nasdaq Global Select Market under the symbols “LVLT” and “BWNG,” respectively. The following table sets forth, for the respective fiscal periods of Level 3 and Broadwing indicated, the high and low sales prices per share of Level 3 common stock and Broadwing common stock as reported in Bloomberg Financial Markets.

On October 16, 2006 the last trading day prior to the announcement of the execution of the merger agreement, the last sales price of Broadwing common stock was $13.28 per share and the last sales price of Level 3 common stock was $5.32 per share, each as reported in Bloomberg Financial Markets. On                     , 2006, the most recent practicable trading day prior to the printing of this proxy statement/prospectus, the last sales price of Broadwing common stock was $             per share and the last sales price of Level 3 common stock was $             per share. The market prices of shares of Broadwing common stock and Level 3 common stock are subject to fluctuation. As a result, Broadwing and Level 3 stockholders are urged to obtain current market quotations. On                     , 2006 there were approximately              shares of Broadwing common stock outstanding and approximately              shares of Level 3 common stock outstanding.

Level 3 Dividend Policy

Level 3’s current dividend policy, in effect since April 1998, is to retain future earnings for use in Level 3’s business. As a result, Level 3’s management does not anticipate paying any cash dividends on shares of common stock for the foreseeable future. In addition, Level 3 is effectively restricted under certain covenants in its debt agreements from paying cash dividends on shares of its common stock.

RISK FACTORS

As a result of the merger, Broadwing’s business will be subject to the following risks. Thenew or increased risks related to Level 3’s other businesses and/or the structure of the merger. In addition to the risks described below, the combined operations will continue to be subject to the risks described in the documents that Level 3 has filed with the SEC that are incorporated by reference into this proxy statement/prospectus. If any of the risks described below or in the documents incorporated by reference into this proxy statement/prospectus actually occur, the business, financial condition, results of operations or cash flows of the combined operations could be materially adversely affected. The risks below should be considered along with the other information included or incorporated by reference into this proxy statement/prospectus.

Risks Related to the Merger

The exchange ratio will not be adjusted in the event the value of Level 3 common stock declines before the merger is completed. As a result, the value of the shares of Level 3 common stock at the time that Broadwing stockholders receive them could be less than the value of those shares today.

In the merger, Broadwing stockholders will be entitled to receive a combination of 1.3411 shares of Level 3 common stock and $8.18 in cash for each share of Broadwing common stock owned. The merger agreement does not provide for any adjustment of the exchange ratio for the portion of the merger consideration to be paid in Level 3 common stock as a result of any change in the market price of shares of Level 3 common stock between the date of this proxy statement/prospectus and the date that you receive shares of Level 3 common stock in exchange for your shares of Broadwing common stock. The market price of Level 3 common stock will likely be different, and may be lower, on the date you receive your shares of Level 3 common stock than the market price of shares of Level 3 common stock as of the date of this proxy statement/prospectus. During the 12-month period ended on                     , 2006, the most recent practical date prior to the mailing of this proxy statement/prospectus, Level 3 common stock traded in a range from a low of $             to a high of $             and ended that period at $            . See “Comparative Stock Prices” on page 16 for more detailed share price information. Differences in Level 3’s stock price may be the result of changes in the business, operations or prospects of Level 3, market reactions to the proposed merger, general market and economic conditions or other factors. If the market price of Level 3 common stock declines after you vote, you may receive less value than you expected when you voted. Neither Level 3 nor Broadwing is permitted under the merger agreement to terminate the merger agreement or resolicit the vote of Broadwing stockholders because of changes in the market prices of their respective common stock.

The market price for Level 3 common stock may be affected by factors different from those affecting the shares of Broadwing.

Upon completion of the merger, holders of Broadwing common stock will become holders of Level 3 common stock. Level 3’s businesses differ from those of Broadwing, and accordingly the results of operations of the combined operations will be affected by factors different from those currently affecting the results of operations of Broadwing. For a discussion of the businesses of Broadwing and Level 3 and of certain factors to consider in connection with those businesses, see the documents incorporated by reference in this proxy statement/prospectus and referred to under “Where You Can Find More Information.”

The market price of Level 3 common stock may decline as a result of the merger.

The market price of Level 3 common stock may decline as a result of the merger if the integration of Level 3 and Broadwing is unsuccessful or takes longer than expected, the perceived benefits of the merger are not achieved as rapidly or to the only ones facingextent anticipated by financial analysts or investors, or the effect of the merger on Level 3’s financial results is not consistent with the expectations of financial analysts or investors.

Level 3’s growth may depend upon its successful integration of acquired businesses

Level 3 and Broadwing entered into the merger agreement with the expectation that the merger will result in benefits to each company, as described in “The Merger” beginning on page 39. Achieving the anticipated benefits of the merger will depend in part upon whether Level 3 and Broadwing can integrate their businesses in an efficient and effective manner. In addition, since December 2005, Level 3 has acquired WilTel Communications Group, LLC, or WilTel, Progress Telecom, ICG Communications, TelCove and Looking Glass. Level 3 may acquire additional businesses from time to time in accordance with its business strategy. The integration of these businesses, Broadwing and any future businesses that Level 3 may acquire involves a number of risks, including, but not limited to:

If Level 3 cannot successfully integrate acquired businesses or operations, Level 3 may experience material negative consequences to its business, financial condition or results of operations. Successful integration of these acquired businesses or operations will depend on Level 3’s ability to manage these operations, realize opportunities for revenue growth presented by strengthened service offerings and expanded geographic market coverage and, to some degree, to eliminate redundant and excess costs. Because of difficulties in combining geographically distant operations, Level 3 may not be able to achieve the benefits that Level 3 hopes to achieve as a result of the acquisition.

Level 3 may not be able to realize the benefits from recently acquired operations

The completion of Level 3’s acquisitions of WilTel, Progress Telecom, ICG Communications, TelCove, Looking Glass, the proposed acquisition of Broadwing and any future acquisitions, create risks associated with Level 3’s ability to realize benefits of recently acquired operations. Some of these risks include:

Level 3 cannot be certain that it will realize the benefits from the recent acquisitions that it anticipates, or that Level 3 will be able to integrate the recently acquired operations successfully. If Level 3 fails to integrate the

recently acquired operations efficiently, it could have a material adverse effect on Level 3’s business, financial condition, results of operation and future prospects.

Level 3 may be unable to hire and retain sufficient qualified personnel; the loss of any of its key executive officers could adversely affect Level 3

Level 3 believes that its future success will depend in large part on its ability to attract and retain highly skilled, knowledgeable, sophisticated and qualified managerial, professional and technical personnel. In addition, the success of the combined operations after the merger will depend in part upon Level 3’s and Broadwing’s ability to retain key Broadwing employees. Key employees may depart because of issues relating to the difficulty of integration or accelerated retirement as a result of change in control severance provisions in their employment agreements with Broadwing. Accordingly, no assurance can be given that Broadwing will be able to retain key employees to the extent that it has been able to do so in the past.

In the past Level 3 has experienced significant competition in attracting and retaining personnel who possess the skills that it is seeking, and as a result of this, Level 3 may experience a shortage of qualified personnel. Level 3’s businesses are managed by a small number of key executive officers, particularly James Q. Crowe, Chief Executive Officer, Kevin J. O’Hara, President and Chief Operating Officer and Charles C. Miller, III, Vice Chairman and Executive Vice President. The loss of any of these key executive officers could have a material adverse effect on Level 3.

        The new notes, likeBroadwing stockholders will have different rights with respect to their stockholdings following the original notes, entailmerger.

Upon consummation of the following risks:merger, the Broadwing stockholders will become stockholders of Level 3. There are material differences between the rights of stockholders of Broadwing and the rights of stockholders of Level 3. See “Comparison of Stockholder Rights” beginning on page 82.

The merger agreement limits Broadwing’s ability to pursue alternatives to the merger.

The merger agreement contains “no shop” provisions that, subject to limited exceptions, limit Broadwing’s ability to discuss, facilitate or commit to competing third-party proposals to acquire all or a significant part of the company. The merger agreement also provides that Broadwing will be required to pay a termination fee of $35 million to Level 3 under certain circumstances and reimburse Level 3 for its expenses. These provisions might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Broadwing from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the merger, or might result in a potential competing acquiror proposing to pay a lower per share price to acquire Broadwing than it might otherwise have proposed to pay.

Broadwing executive officers and directors have financial interests in the merger that are different from, or in addition to, the interests of Broadwing stockholders.

Executive officers of Broadwing negotiated the terms of the merger agreement with their counterparts at Level 3, and Broadwing’s board of directors approved the merger agreement and unanimously recommended that Broadwing stockholders vote to approve the merger. In considering these facts and the other information contained in this proxy statement/prospectus, you should be aware that Broadwing’s executive officers and directors have financial interests in the merger that are different from, or in addition to, the interests of Broadwing stockholders. For example, each of Broadwing’s executive officers has an employment agreement with Broadwing that provides, among other things, for payment of severance and other benefits upon a termination of the officer’s employment under certain circumstances within two years following the merger. These and some other additional interests of Broadwing directors and executive officers may create potential conflicts of interest and cause some of these persons to view the proposed transaction differently than you may view it, as a stockholder. Please see “The Merger—Interests of Certain Persons in the Merger” for information about these financial interests.

Risks Related to Level 3's3’s Business

Communications Group

Level 3 needs to continue to increase the volume of traffic on its network or its network will not generate profitsprofits.

Level 3 must continue to increase the volume of Internet, data, voice and video transmission on its network, or the Level 3's network3 Network, in order to realize the anticipated cash flow, operating efficiencies and cost benefits of the Level 3 Network. If Level 3 does not maintain its relationship with current customers and develop new large-volume customers, Level 3 may not be able to substantially increase traffic on the Level 3 Network, which would adversely affect Level 3'sits ability to become profitable.

Level 3's3’s VoIP services have only been sold for a limited period and there is no guarantee that these services will gain broad market acceptanceacceptance.

Although Level 3 has sold Softswitch based services since the late 1990's,1990’s, Level 3 has been selling its Voice-over-IP (or VoIP) services for a limited period of time. As a result, there are many difficulties that Level 3 may encounter, including regulatory hurdles and other problems that Level 3 may not anticipate. To date, Level 3 has not generated significant revenue from the sale of its VoIP services, and there is no guarantee that Level 3 will be successful in generating significant VoIP revenues.

The success of Level 3's3’s subscriber based VoIP services is dependent on the growth and public acceptance of VoIP telephonytelephony.

The success of Level 3's3’s subscriber based VoIP services is dependent upon future demand for VoIP telephony services. In order for the IP telephony market to continue to grow, several things need to occur. Telephone and cable service providers must continue to invest in the deployment of high speed broadband networks to residential and commercial customers. VoIP networks must continue to improve quality of service for real-time communications, managing effects such as packet jitter, packet loss, and unreliable bandwidth, so that toll-quality service can be provided. VoIP telephony equipment and services must achieve a similar level of reliability that users of the public switched telephone network have come to expect from their telephone service, including emergency calling features and capabilities. VoIP telephony service providers must offer cost and feature benefits to their customers that are sufficient to cause the customers to switch away from traditional telephony service providers. If any or all of these factors fail to occur, Level 3's3’s VoIP services business may not grow.

The prices that Level 3 charges for certain of its communications services have been decreasing, and Level 3 expects that they will continue to decrease over time and Level 3 may be unable to compensate for this lost revenuerevenue.

Level 3 expects to continue to experience decreasing prices for certain of its communications services:

•

as Level 3 and its competitors increase transmission capacity on existing and new networks;



•

as a result of itsLevel 3’s current agreements with customers which often contain volume based pricing or other contractually agreed upon decreases in prices during the term of the agreement;



•

through technological advances or otherwise; and

•

as volume based pricing becomes more prevalent.

Accordingly, Level 3's3’s historical revenue is not indicative of future revenue based on comparable traffic volumes. As the prices for itsLevel 3 communications services decrease for whatever reason, if Level 3 is unable to offer additional services from which it can derive additional revenue or otherwise reduce its operating expenses,

Level 3's3’s operating results will decline and its business and financial results will suffer. Level 3 also continues to expect, excluding the effects of acquisitions, managed modem related revenue to continue to decline in the future primarily due to an increase in the number of subscribers migrating to broadband services and continued pricing pressures and declining customer obligations under contractual arrangements. Level 3 experienced a significant decline in its digital subscriber line or DSL aggregation revenue during 2005, as a significant customerthe remaining customers of this service terminated itstheir customer contractcontracts during 2005.

Revenue under Level 3's3’s agreement with SBC Services is expected to decline materiallymaterially.

As part of Level 3's3’s acquisition of WilTel'sthe communications business Level 3of WilTel, it acquired a multi-year contract with SBC Services, Inc. Level 3 refers to this contract as the SBC Master Services Agreement. Recently, SBC Services Inc. became a subsidiary of AT&T, Inc. and announced its intention to migrate the services provided by WilTel to the merged SBC Services, Inc. and AT&T network. WilTel and SBC amended the SBC Master Services Agreement to run through 2009 and it provides a gross margin purchase commitment of $259$165 million from MarchJune 30, 2006 through the end of 2007, and $75 million from January 2008 through the end of 2009. OnlyCurrently, only purchases by SBC of on-net services on WilTel’s network count toward satisfaction of this purchase commitment. Originating and terminating access charges paid to local phone companies are passed through to SBC in accordance with a formula that approximates cost. Additionally, the SBC Master Services Agreement provides for the payment of $50$25 million in 2006 and $25 million in 2007 from SBC if certain performance criteria are met by Level 3. As a result, Level 3 expects the revenue generated by the SBC Master Services Agreement to decline materially in 2007.

Failure to complete development, testing and introduction of new services, including VoIP services, could affect Level 3's3’s ability to compete in the industryindustry.

Level 3 continuously develops, tests and introduces new communications services that are delivered over the Level 3 Network. These new services are intended to allow Level 3 to address new segments of the communications marketplace and to compete for additional customers. In certain instances, the introduction of new services requires the successful development of new technology. To the extent that upgrades of existing technology are required for the introduction of new services, the success of these upgrades may be dependent on the conclusion of contract negotiations with vendors and vendors meeting their obligations in a timely manner. In addition, new service offerings, including new VoIP services, may not be widely accepted by Level 3's3’s customers. If Level 3's3’s new service offerings are not widely accepted by Level 3'sits customers, Level 3 may terminate those service offerings and be required to impair any assets or information technology used to develop or offer those services. If Level 3 is not able to successfully complete the development and introduction of new services, including new VoIP services, in a timely manner, Level 3'sits business could be materially adversely affected.

Level 3's3’s communications revenue is concentrated in a limited number of customerscustomers.

A significant portion of Level 3's3’s communications revenue is concentrated among a limited number of customers. If Level 3 lost one or more of these major customers, or if one or more major customers significantly decreased orders for Level 3's3’s services, Level 3's3’s communications business would be materially and adversely affected. Revenue from Level 3's3’s two largest communications customers, Time Warner, Inc. and its subsidiaries and Verizon Communications, Inc. and its affiliates, represented approximately 18% and 14% of Level 3's3’s communications revenue for 2005, respectively. America Online, Level 3's3’s largest managed modem customer and an affiliate of Time Warner, Inc., reduced the

number of managed modem ports it purchases from Level 3 by approximately 30% during 2005. Level 3's3’s future communications operating results will depend on the success of these customers and otherLevel 3’s customers and its success in selling services to them. If Level 3 were to lose a significant portion of its communications revenue from either America Online, or Verizon, Level 3 wouldmay not be able to replace this revenue in the short term and its operating losses would increase, which increase may be significant.

In connection with the acquisition of WilTel in December 2005, Level 3 acquired a large customer contract between WilTel and SBC Communications, a subsidiary of AT&T. It is anticipated that the revenue generated by

this contract during 2006 will cause SBC Communications to become Level 3's3’s largest customer based on revenue. Level 3 also expects that the revenue generated under this contract will decline materially over time as SBC Communications migrates its traffic from the Level 3 Network to the network that was acquired by SBC Communications acquired from the former AT&T.

During itsLevel 3’s communications business operating history, Level 3 has generated substantial losses, which Level 3it expects to continuecontinue.

The development of Level 3's3’s communications business required, and may continue to require, significant expenditures. These expenditures could result in substantial negative cash flow from operating activities and substantial net losses for the near future. For the threesix months ended March 31,June 30, 2006 and the fiscal year ended December 31, 2005, Level 3 incurred losses from continuing operations of approximately $168$369 million and $687 million, respectively. Level 3 expects to continue to experience losses, and may not be able to achieve or sustain operating profitability in the future. Continued operating losses could limit Level 3's3’s ability to obtain the cash needed to expand its network, make interest and principal payments on its debt or fund other business needs. Level 3 will need to continue to expand and adapt its network in order to remain competitive, which may require significant additional funding. During 2005, Level 3 deployed a new generation of optical transmission equipment. Additional expansion and adaptations of the Level 3 Network'sNetwork’s electronic and software components will be necessary in order to respond to:

•

growing number of customers;



•

the development and launching of new services;



•

increased demands by customers to transmit larger amounts of data;



•

changes in customers'customers’ service requirements;



•

technological advances by competitors; and



•

governmental regulations.

Future expansion or adaptation of Level 3's3’s network will require substantial additional financial, operational and managerial resources, which may not be available at the time. If Level 3 is unable to expand or adapt its network to respond to these developments on a timely basis and at a commercially reasonable cost, its business will be materially adversely affected.

Level 3's3’s need to obtain additional capacity for its network from other providers increases its costscosts.

Level 3 continues in some part to lease telecommunications capacity and obtainsobtain rights to use dark fiber from both long distance and local telecommunications carriers in order to extend the scope of Level 3'sits network both in the United States and Europe. Any failure by companies leasing capacity to Level 3 to provide timely service to Level 3 would adversely affect Level 3's3’s ability to serve its customers or increase the costs of doing so. Some of Level 3's3’s agreements with other providers require the payment of amounts for services whether or not those services are used. Level 3 enters into

interconnection agreements with many domestic and foreign local telephone companies, but Level 3 is not always able to do so on favorable terms.

Costs of obtaining local service from other carriers comprise a significant proportion of the operating expenses of long distance carriers. Similarly, a large proportion of the costs of providing international service consists of payments to other carriers. Changes in regulation, particularly the regulation of local and international telecommunication carriers, could indirectly, but significantly, affect Level 3's3’s competitive position. These changes could increase or decrease the costs of providing Level 3's3’s services.

Level 3's3’s business requires the continued development of effective business support systems to implement customer orders and to provide and bill for servicesservices.

Level 3's3’s business depends on its ability to continue to develop effective business support systems and in particular the development of these systems for use by customers who intend to use Level 3's3’s services in their own service offering. This is a complicated undertaking requiring significant resources and expertise and support from third-party vendors. Business support systems are needed for:

•

implementing customer orders for services;



•

provisioning, installing and delivering these services; and



•

monthly billing for these services.

Because Level 3's3’s business provides for continued rapid growth in the number and volume of services offered, there is a need to continue to develop these business support systems on a schedule sufficient to meet proposed service rollout dates. The failure to continue to develop effective business support systems could materially adversely affect Level 3's3’s ability to implement its business plans.

Level 3's growth may depend upon its successful integration of acquired businesses

        The integration of acquired businesses, including WilTel Communications, involves a number of risks, including, but not limited to:

•

demands on management related to the significant increase in size after the acquisition;



•

the diversion of management's attention from the management of daily operations to the integration of operations;



•

higher integration costs than anticipated;



•

failure to achieve expected synergies and costs savings;



•

difficulties in the assimilation and retention of employees;



•

difficulties in the assimilation of different cultures and practices, as well as in the assimilation of broad and geographically dispersed personnel and operations; and



•

difficulties in the integration of departments, systems, including accounting systems, technologies, books and records and procedures, as well as in maintaining uniform standards, controls, including internal control over financial reporting required by the Sarbanes Oxley Act of 2002, procedures and policies.

        If Level 3 cannot successfully integrate acquired businesses or operations, Level 3 may experience material negative consequences to its business, financial condition or results of operations. Successful integration of these acquired businesses or operations will depend on Level 3's ability to manage these operations, realize opportunities for revenue growth presented by strengthened service offerings and expanded geographic market coverage and, to some degree, to eliminate redundant and excess costs.

Because of difficulties in combining geographically distant operations, Level 3 may not be able to achieve the benefits that Level 3 hopes to achieve as a result of the acquisition.

Level 3 may not be able to integrate WilTel operations with its business efficiently

        The completion of Level 3's acquisition of WilTel creates risks associated with the integration of WilTel's operations with Level 3's. Some integration risks include:

•

difficulties assimilating the personnel and operations of WilTel;



•

loss of key personnel of WilTel;



•

loss of customers post-integration;



•

disruption of ongoing business and additional burdens on Level 3's management team;



•

higher integration costs than anticipated;



•

failure to achieve expected synergies and costs savings;



•

difficulties in maintaining uniform standards, controls, procedures and policies; and



•

difficulties in ensuring accurate and timely reporting of financial information.

        Level 3 cannot be certain that it will realize the benefits from the WilTel acquisition that it anticipates, or that Level 3 will be able to integrate WilTel's operations successfully. If Level 3 fails to integrate the operations of WilTel efficiently, it could have a material adverse effect on Level 3's business, financial condition, results of operation and future prospects.

Level 3 may be unable to hire and retain sufficient qualified personnel; the loss of any of its key executive officers could adversely affect Level 3

        Level 3 believes that its future success will depend in large part on its ability to attract and retain highly skilled, knowledgeable, sophisticated and qualified managerial, professional and technical personnel. Level 3 has experienced significant competition in attracting and retaining personnel who possess the skills that it is seeking.

        As a result of this significant competition, Level 3 may experience a shortage of qualified personnel. Level 3's businesses are managed by a small number of key executive officers, particularly James Q. Crowe, Chief Executive Officer, Kevin J. O'Hara, President and Chief Operating Officer and Charles C. Miller, III, Vice Chairman and Executive Vice President. The loss of any of these key executive officers could have a material adverse effect on Level 3.

Level 3 must obtain and maintain permits and rights-of-way to operate Level 3's networkits network.

If Level 3 is unable, on acceptable terms and on a timely basis, to obtain and maintain the franchises, permits and rightsrights-of-way needed to expand and operate Level 3'sits network, its business could be materially adversely affected. In addition, the cancellation or nonrenewal of the franchises, permits or rightsrights-of-way that are obtained could materially adversely affect Level 3. Level 3's3’s communications operating subsidiaries are defendants in several lawsuits that the plaintiffs have sought to have certified as class actions that, among other things, challenge the subsidiaries'subsidiaries’ use of rights of way. It is likely that additional suits challenging use of itsLevel 3’s rights of way will occur and that those plaintiffs also will seek class certification. The outcome of this litigation may increase Level 3's3’s costs and adversely affect its operating results.

Termination of relationships with key suppliers could cause delay and costscosts.

Level 3 is dependent on third-party suppliers for fiber, computers, software, optronics, transmission electronics and related components that are integrated into Level 3'sits network. If any of these relationships is terminated or a supplier fails to provide reliable services or equipment and Level 3 is unable to reach suitable alternative arrangements quickly, Level 3 may experience significant additional costs. If that happens, Level 3 could be materially adversely affected.

Rapid technological changes can lead to further competitioncompetition.

The communications industry is subject to rapid and significant changes in technology. In addition, the introduction of new services or technologies, as well as the further development of existing services and technologies may reduce the cost or increase the supply of certain services similar to those that Level 3 provides. As a result, Level 3's3’s most significant competitors in the future may be new entrants to the communications and information services industries.industry. These new entrants may not be burdened by an installed base of outdated equipment. Future success depends, in part, on the ability to anticipate and adapt in a timely manner to technological changes. Technological changes and the resulting competition could have a material adverse effect on Level 3.

Increased industry capacity and other factors could lead to lower prices for Level 3's services3’s services.

Additional network capacity available from Level 3's3’s competitors may cause significant decreases in the prices for the services that Level 3it offers. Prices may also decline due to capacity increases resulting from technological advances and strategic acquisitions. Increased competition has already led to a decline in rates charged for various telecommunications services.

Level 3 is subject to significant regulation that could change in an adverse mannermanner.

Communications services are subject to significant regulation at the federal, state, local and international levels. These regulations affect Level 3 and its existing and potential competitors. Delays in receiving required regulatory approvals (including approvals relating to acquisitions or financing activities), completing interconnection agreements with incumbent local exchange carriers or the enactment of new and adverse regulations or regulatory requirements may have a material adverse effect on Level 3. In addition, future legislative, judicial and regulatory agency actions could have a material adverse effect on Level 3.

Federal legislation provides for a significant deregulation of the U.S. telecommunications industry, including the local exchange, long distance and cable television industries. This legislation remains subject to judicial review and additional Federal Communications Commission ("FCC")FCC rulemaking. As a result, Level 3 cannot predict the legislation'slegislation’s effect on its future operations. Many regulatory actions are under way or are being contemplated by federal and state authorities regarding important items. These actions could have a material adverse effect on Level 3's3’s business.

States also often require prior approvals or notifications for certain transfers of assets, customers or ownership of certificated carriers and for issuances by certified carriers of equity or debt.

Level 3 may lose customers if itLevel 3 experiences system failures that significantly disrupt the availability and quality of the services that it providesprovides.

Level 3's3’s operations depend on its ability to avoid and mitigate any interruptions in service or reduced capacity for customers. Interruptions in service or performance problems, for whatever reason, could undermine confidence in Level 3'sits services and cause Level 3 to lose customers or make it more difficult to attract new ones. In addition, because many of Level 3's3’s services are critical to the businesses of many of its customers, any significant interruption in service could result in lost profits or

other loss to customers. Although Level 3 attempts to disclaim liability in its service agreements, a court might not enforce a limitation on liability, which could expose Level 3 to financial loss. In addition, Level 3 often provides its customers with guaranteed service level commitments. If Level 3 is unable to meet these guaranteed service level commitments as a result of service interruptions, Level 3 may be obligated to provide credits, generally in the form of free service for a short period of time, to its customers, which could negatively affect its operating results.

The failure of any equipment or facility on Level 3's3’s network, including the network operations control center and network data storage locations, could result in the interruption of customer service until necessary repairs are effected or replacement equipment is installed. Network failures, delays and errors could also result from natural disasters, terrorist acts, power losses, security breaches and computer viruses. These failures, faults or errors could cause delays, service interruptions, expose Level 3 to customer liability or require expensive modifications that could significantly hurt Level 3'sits business.

Intellectual property and proprietary rights of others could prevent Level 3 from using necessary technology to provide Internet protocol voice servicesits services.

If technology that is necessary for Level 3 to provide its services were held under patent by another person, Level 3 would have to negotiate a license for the use of that technology. Level 3 may not be able to negotiate such a license at a price that is acceptable. The existence of such patents, or Level 3's3’s inability to negotiate a license for any such technology on acceptable terms, could force Level 3 to cease using the technology and offering products and services incorporating the technology.

To the extent that Level 3 is subject to litigation regarding the ownership of its intellectual property, this litigation could:

•

be time-consuming and expensive;



•

divert attention and resources away from Level 3's3’s daily business;



•

impede or prevent delivery of Level 3's products and3’s services; and



•

require Level 3 to pay significant royalties, licensing fees and damages.

Parties making claims of infringement may be able to obtain injunctive or other equitable relief that could effectively block Level 3's3’s ability to provide its services and could cause Level 3 to pay substantial damages. In the event of a successful claim of infringement, Level 3 may need to obtain one or more licenses from third parties, which may not be available at a reasonable cost, if at all. The defense of any lawsuit could result in time-consuming and expensive litigation, regardless of the merits of such claims, and could also result in damages, license fees, royalty payments and restrictions on Level 3's3’s ability to provide its services, any of which could harm Level 3'sits business.

Canadian law currently does not permit Level 3 to offer services directly in CanadaCanada.

Ownership of facilities that originate or terminate traffic in Canada is currently limited to Canadian carriers. This restriction hinders Level 3's3’s entry into the Canadian market unless appropriate arrangements can be made to address it.

Potential regulation of Internet service providers in the United States could adversely affect Level 3's operations3’s operations.

The FCC has to date treated Internet service providers as enhanced service providers. In addition, Congress has to date not sought to heavily regulate the provision of IP-based services. Both Congress and the FCC are considering proposals that involve greater regulation of IP-based service providers.

Depending on the content and scope of any regulations, the imposition of such regulations could have a material adverse effect on Level 3's3’s business and the profitability of its services.

The communications and information services industries areindustry is highly competitive with participants that have greater resources and a greater number of existing customerscustomers.

The communications and information services industries areindustry is highly competitive. Many of Level 3's3’s existing and potential competitors have financial, personnel, marketing and other resources significantly greater than Level 3. Many of these competitors have the added competitive advantage of a larger existing customer base. In addition, significant new competitorscompetition could arise as a result of:

•

the recent increased consolidation in the industry, led by AT&T and Verizon;



•

allowing foreign carriers to compete in the U.S. market;



•

further technological advances; and



•

further deregulation and other regulatory initiatives.

If Level 3 is unable to compete successfully, itsLevel 3’s business could be significantly hurt.

Level 3 may be unable to successfully identify, manage and assimilate future acquisitions, investments and strategic alliances, which could adversely affect Level 3'sits results of operationsoperations.

Level 3 continually evaluates potential investments and strategic opportunities to expand Level 3'sits network, enhance connectivity and add traffic to the network. In the future, Level 3 may seek additional investments, strategic alliances or similar arrangements, which may expose itLevel 3 to risks such as:

•

the difficulty of identifying appropriate investments, strategic allies or opportunities;



•

the possibility that senior management may be required to spend considerable time negotiating agreements and monitoring these arrangements;



•

the possibility that definitive agreements will not be finalized;



•

potential regulatory issues applicable to the telecommunications business;



•

the loss or reduction in value of the capital investment;



•

the inability of management to capitalize on the opportunities presented by these arrangements; and



•

the possibility of insolvency of a strategic ally.

There can be no assurance that Level 3 would successfully overcome these risks or any other problems encountered with these investments, strategic alliances or similar arrangements.

Information Services

Software Spectrum relies on financial incentives, credit terms, such as rebates, volume purchase discounts, marketing development funds and prompt-payment discounts from software publishers

        As part of Software Spectrum's supply agreements with certain publishers and distributors, Software Spectrum receives substantial financial incentives and credit terms such as rebates, volume purchase discounts, marketing development funds and prompt-payment discounts. Software Spectrum has little or no input into either the form of financial incentives or the targets required to achieve them. Some financial incentives are based on specific market segments and products. Other financial incentives are based on Software Spectrum's volume or growth rate of revenue or purchases and Software Spectrum's participation in marketing programs. A decrease in the volume or growth rate of

Software Spectrum's revenue or purchases could have a material adverse effect on the amount of incentives offered to Software Spectrum by its publishers. Additionally, in the future, if the Software Spectrum business model fails to align with the objectives established for these incentives or if software publishers further change, reduce or discontinue these incentives, Software Spectrum's business and Level 3's consolidated financial results could be materially adversely affected.

As publishers change their distribution model, Software Spectrum increasingly relies on sales agency fees

        Since 2001, Microsoft and other publishers increasingly have used a sales agency model for distribution of their products, under which Software Spectrum recognizes as revenue an agency fee that it receives from the publisher, as opposed to the final sales price of the software. Software Spectrum recorded approximately $74 million, $54 million and $35 million of revenue attributable to contracts under the sales agency model in 2005, 2004 and 2003, respectively. Based on Software Spectrum's review of relevant software publisher sales data, Software Spectrum estimates that the final sales price of the software sold under these arrangements was $1.235 billion, $975 million and $661 million in 2005, 2004 and 2003, respectively. Typically, Software Spectrum does not earn rebates from publishers under the sales agency model. To date, Software Spectrum has not been materially adversely affected by the impact of the sales agency model on its revenues, because Software Spectrum has experienced a corresponding decline in its cost of revenue. As a result, Software Spectrum does not expect the lack of financial incentives under the sales agency model to have a meaningful effect on its business in the near future. However, if the economics concerning the sales agency model change, this could have a material adverse effect on Software Spectrum's business, results of operations and financial condition and on Level 3's consolidated financial results.

        In 2005, Microsoft notified Software Spectrum of proposed changes to Microsoft's sales agency program which, once finalized by Microsoft, will take effect for customer contracts entered into after July 1, 2006. All contracts completed prior to July 1, 2006, will be grandfathered under the existing sales agency program. Under the proposed revised program for agency type sales as currently drafted, the number of performance metrics against which Software Spectrum is measured and the standard of performance on those metrics are expected to increase. Based on a preliminary evaluation of Microsoft's proposed program changes, Software Spectrum expects that the amount of agency fees it earns from Microsoft will be reduced over the three-year period in which it is implemented. Due to the grandfathering of existing sales agency program sales, however, Software Spectrum anticipates that the program changes will not have a significant effect on Software Spectrum's results of operation or financial position in 2006. Microsoft has yet to finalize the proposed changes, and thus Software Spectrum is not able to definitively determine the effects of Microsoft's proposed changes on its results of operations and financial position after July 1, 2006.

Software Spectrum is very dependent on a small number of vendors

        A large percentage of Software Spectrum's sales is represented by business software products from a small number of publishers. For 2005, approximately 87% of Software Spectrum's revenue represented products purchased from its 10 largest publishers. For 2005, the top 10 software titles Software Spectrum sold represented approximately 54% of its sales. For 2005, products from Microsoft and IBM accounted for approximately 59% and 10% of revenue, respectively. For 2004, products from Microsoft and IBM accounted for approximately 58% and 10% of revenue, respectively. Most of Software Spectrum's contracts with publishers are non-exclusive and terminable by either party, without cause, upon 30 to 60 days notice. Additionally, Software Spectrum's contracts with its major publishers are generally for one- or two-year terms, and the majority of these contracts contain no provision for automatic renewal. A loss of or significant change in Software Spectrum's relationship with these publishers could have a material adverse effect on Software Spectrum's business and its consolidated

financial results. Although Software Spectrum believes that it could obtain these software products from distribution partners, Software Spectrum may not be able to obtain such products or may only be able to obtain such products on terms that could materially adversely affect its financial results. In addition, Software Spectrum can not be sure that any financial or other difficulties of such publishers will not have a material adverse effect on its business.

Software Spectrum's business is dependent on certain key distributors

        Although Software Spectrum obtains the majority of its revenue from publishers, it also relies on distributors for sales of products, such as products from IBM. A loss of or significant change in Software Spectrum's relationships with these distributors could have a material adverse effect on its business. For example, Software Spectrum cannot be sure that these distributors will continue to provide it with credit terms and financial incentives, such as rebates, volume purchase discounts and prompt-payment discounts. Although Software Spectrum believes that the software products it obtains through these distributors would be available from other parties, Software Spectrum may not be able to obtain such products or may only be able to obtain such products on terms that could materially adversely affect its financial results. In addition, Software Spectrum cannot be sure that any financial or other difficulties of these distributors will not have a material adverse effect on its business.

Software Spectrum's business is subject to seasonal changes in demand and resulting sales activities

        Software Spectrum's business is subject to seasonal change. In particular, revenue and profits in the United States, Canada and Europe are typically lower in the first and third quarters due to lower levels of IT purchases during those times. As a result, Software Spectrum's quarterly results may be materially affected during those periods. In addition, periods of higher sales activities during certain quarters may require a greater use of working capital to fund Software Spectrum's business. During these periods, the increased working capital requirements could temporarily increase Software Spectrum's leverage and liquidity needs and expose it to greater financial risk during these periods. Due to these seasonal changes, the operating results for any three-month period are not necessarily indicative of the results that may be achieved for any subsequent fiscal quarter or for a full fiscal year.

Software Spectrum's business is sensitive to general economic conditions and conditions in the software and IT industries

        Software Spectrum's business is sensitive to the spending patterns of its customers, which in turn are subject to prevailing economic and business conditions, the condition of the IT industry, shifts in demand for or availability of software and the introduction of new software products or upgrades. In particular, Software Spectrum's business is sensitive to the North American and Western European economic environments. In the past, the software industry in general has felt the effects of an economic slowdown in the United States and Europe and the resulting decrease in IT spending. For example, according to IDC, from 2001 to 2003, software end user spending in North America declined at a CAGR of 0.7%. Further, sales to large corporations have been important to Software Spectrum's results, and its future results are dependent on its continued success with such customers. Any change in demand for products by these large corporations could have a material adverse effect on Software Spectrum's revenue.

Software Spectrum's international operations are sensitive to currency risks

        In 2005, approximately 43% of Software Spectrum's total revenue was generated by sales outside the United States. Software Spectrum's international revenue, cost of revenue and operating expenses are denominated in foreign currencies, principally the Euro and the Pound Sterling. Software Spectrum's international operations are sensitive to currency exchange risks. Software Spectrum presently has currency exposure arising from both sales and purchases denominated in foreign

currencies. Changes in exchange rates between foreign currencies and the U.S. dollar may adversely affect Software Spectrum's operating margins. For example, if these foreign currencies appreciate against the U.S. dollar, it will become more expensive in terms of U.S. dollars to pay expenses with foreign currencies. In addition, currency devaluation against the U.S. dollar can result in a loss to Software Spectrum if it holds deposits of that currency. Software Spectrum currently does not conduct any hedging activities. In addition, some currencies are subject to limitations on conversion in to other currencies, which can limit Software Spectrum's ability to otherwise react to rapid foreign currency devaluations. Software Spectrum cannot predict the impact of future exchange-rate fluctuations on its business and operating results.

Software Spectrum is exposed to the risks of a global market

        Software Spectrum has U.S., European and Asian-Pacific operation centers as well as sales offices in Australia, Belgium, Canada, France, Germany, Hong Kong, Italy, the Netherlands, Singapore, Spain, Sweden, the United Kingdom and the United States. In those regions in which it does not have a physical presence, such as Japan, China, India and Latin America, Software Spectrum serves its customers through strategic relationships. Software Spectrum also will continue to evaluate opportunities to open new international sales offices or enter into strategic relationships to serve international customers. Software Spectrum's future growth and success depend on its continued growth and success in international markets.

        In addition, until a payment history is established over time with customers in a new region, the likelihood of collecting receivables generated by such operations, on a timely basis or at all, could be less than Software Spectrum's expectations. As a result, there is a greater risk that reserves set with respect to the collection of such receivables may be inadequate. Furthermore, changes in policies and/or laws of the United States or foreign governments resulting in, among other things, higher taxation, currency conversion limitations or the expropriation of private enterprises could reduce the anticipated benefits of Software Spectrum's international operations. Any actions by countries in which Software Spectrum conducts business to reverse policies that encourage foreign trade could adversely affect its business.

Software Spectrum operates in a highly-competitive business environment and is subject to significant price competition

        The desktop technology marketplace is competitive. Competition is based primarily on price, product availability, speed of delivery, quality and breadth of offerings, ability to tailor specific solutions to meet customer needs and credit availability. Software Spectrum faces competition from a wide variety of sources, including software publishers, software and hardware direct marketers, OEMs and large system integrators. Many competitors have substantially greater financial resources than Software Spectrum does. Some of Software Spectrum's competitors may provide a broader range of services, such as extending long-term capital financing or offering bundled hardware and software solutions. Companies that compete in this market, including Software Spectrum, are characterized by low gross and operating margins. Consequently, Software Spectrum's profitability is highly dependent upon maintaining scale and effective cost and management controls.

Software Spectrum's new Media Plane™ platform

        Software Spectrum has made significant investments in research, development and marketing for its new Media Plane™ software. Significant revenue from this new product investment may not be achieved for a number of years, if at all.

Software Spectrum may not succeed in protecting its intellectual property

        To protect its intellectual property, Software Spectrum relies upon copyright and trademark laws, unpatented proprietary know-how and trade secrets as well as confidentiality, invention assignment, non-competition and non-solicitation agreements. There can be no assurance that these measures will afford sufficient protection of Software Spectrum's intellectual property. Despite its efforts, it is possible that third parties may copy or otherwise obtain and use Software Spectrum's proprietary information without authorization or otherwise infringe on its intellectual property rights. The disclosure of Software Spectrum's trade secrets could impair Software Spectrum's competitive position and could have a material adverse effect on its business, results of operations, financial condition and future growth prospects.

        Additionally, Software Spectrum's patent application for its Media Plane™ software is currently pending. There can be no assurance that Software Spectrum will obtain a patent for this technology or that any patent that it receives will provide protection of commercial significance. There can also be no assurance that competitors will not challenge, invalidate or avoid the application of this or any other future patents that Software Spectrum may receive or license. Software Spectrum's competitors may have applied for or obtained, or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with its ability to make and sell its Media Plane™ software both in the United States and abroad. There can be no assurance that any patent rights will prevent Software Spectrum's competitors from developing, using or selling products that are similar or functionality equivalent to its Media Plane™ software.

Software Spectrum may incur substantial costs defending or protecting against third-party claims

        In connection with the enforcement of Software Spectrum's own intellectual property rights or in connection with disputes relating to the validity or alleged infringement of third-party rights, including but not limited to patent rights, Software Spectrum may in the future be subject to claims, negotiations or complex, protracted litigation. Other than in connection with the Media Plane™ software, Software Spectrum generally does not hold title to the software it sells or licenses and therefore believes that any such claims made in connection with any defects or errors in the software would be the responsibility of the publisher. However, any such claims could result in negative publicity or harm to Software Spectrum's reputation. In addition, Software Spectrum may face warranty and/or infringement claims related to its Media Plane™ software. Intellectual property disputes and litigation are typically very costly and can be disruptive to business operations by diverting the attention and energies of management and key technical personnel. Furthermore, Software Spectrum may not prevail in any future litigation and/or disputes. Adverse decisions in any litigation or disputes could have negative results, including subjecting Level 3 to significant liabilities, requiring Software Spectrum to seek licenses from others, preventing it from licensing certain of its products or causing severe disruptions to its operations or the markets in which it competes, any one of which could seriously harm Software Spectrum's business.

Other Operations

Environmental liabilities from Level 3's3’s historical operations could be materialmaterial.

Environmental liabilities from Level 3's3’s historical operations could be material. Level 3’s operations and properties are subject to a wide variety of laws and regulations relating to environmental protection, human health and safety. These laws and regulations include those concerning the use and management of hazardous and non-hazardous substances and wastes. Level 3 has made and will continue to make significant expenditures relating to its environmental compliance obligations. Level 3 may not at all times be in compliance with all of these requirements.

In connection with certain historical operations, Level 3 has responded to or been notified of potential environmental liability at approximately 149 properties.148 properties as of December 31, 2005. Level 3 is engaged in addressing or

has liquidated 7470 of those properties. Of the remaining 58 sites,these: (a) Level 3 has formal commitments or other potential future costs at 35 sites. There13 sites; (b) there are an additional 11 sites with minimal future costs andcosts; (c) there are 12 sites with unknown future costs; and (d) there are 34 sites with no likely future costs. The remaining 78 properties have been dormant for several years.

Level 3 could be held liable, jointly or severally, and without regard to fault, for such investigation and remediation. The discovery of additional environmental liabilities related to historical operations or changes in existing environmental requirements could have a material adverse effect on Level 3.

Potential liabilities and claims arising from coal operations could be significantsignificant.

Level 3's3’s coal operations are subject to extensive laws and regulations that impose stringent operational, maintenance, financial assurance, environmental compliance, reclamation, restoration and closure requirements.

These requirements include those governing air and water emissions, waste disposal, worker health and safety, benefits for current and retired coal miners, and other general permitting and licensing requirements. Level 3 may not at all times be in compliance with all of these requirements. Liabilities or claims associated with this non-compliance could require Level 3us to incur material costs or suspend production. Mine reclamation costs that exceed reserves for these matters also could require Level 3 to incur material costs.

General

If Level 3 is unable to comply with the restrictions and covenants in its debt agreements, there would be a default under the terms of these agreements, and this could result in an acceleration of payment of funds that have been borrowedborrowed.

If Level 3 were unable to comply with the restrictions and covenants in any of its debt agreements, there would be a default under the terms of those agreements. As a result, borrowings under other debt instruments that contain cross-acceleration or cross-default provisions may also be accelerated and become due and payable. If any of these events occur, there can be no assurance that Level 3 would be able to make necessary payments to the lenders or that itLevel 3 would be able to find alternative financing. Even if Level 3 werewas able to obtain alternative financing, there can be no assurance that it would be on terms that are acceptable.

Level 3 has substantial debt, which may hinder its growth and put itLevel 3 at a competitive disadvantagedisadvantage.

Level 3's3’s substantial debt may have important consequences, including the following:

•

the ability to obtain additional financing for acquisitions, working capital, investments and capital or other expenditure could be impaired or financing may not be available on acceptable terms;



•

a substantial portion of Level 3's3’s cash flow will be used to make principal and interest payments on outstanding debt, reducing the funds that would otherwise be available for operations and future business opportunities;



•

a substantial decrease in cash flows from operating activities or an increase in expenses could make it difficult to meet debt service requirements and force modifications to operations;



•

Level 3 has more debt than certain of its competitors, which may place Level 3 at a competitive disadvantage; and



•

substantial debt may make Level 3 more vulnerable to a downturn in business or the economy generally.

Level 3 had substantial deficiencies of earnings to cover fixed charges of approximately $151 million and $60$332 million for the threesix months ended March 31, 2006 and 2005, respectively. The

CompanyJune 30, 2006. Level 3 had deficiencies of earnings to cover fixed charges of $611 million for the fiscal year ended December 31, 2005, $384 million for the fiscal year ended December 31, 2004, $689 million for the fiscal year 2003, $918 million for the fiscal year 2002 and $4,356 million for the fiscal year 2001.

Level 3 may not be able to repay its existing debt; failure to do so or refinance the debt could prevent Level 3 from implementing its strategy and realizing anticipated profitsprofits.

If Level 3 were unable to refinance its debt or to raise additional capital on acceptable terms, itsLevel 3’s ability to operate its business would be impaired. As of March 31, 2006 and April 6,June 30, 2006, Level 3 had an aggregate of approximately $6.441 billion and $6.741$7.092 billion of long-term debt on a consolidated basis, respectively,excluding discount and fair value adjustments and including current maturities, and approximately $546$33 million of stockholders'stockholders’ deficit. Level 3's3’s ability to make interest and principal payments on its debt and borrow additional funds on favorable terms depends on the future performance of the business. If Level 3 does not have enough cash flow in the future to make interest or principal payments on its debt, itLevel 3 may be required to refinance all or a part of its debt or to raise additional capital. Level 3 cannot assure you that it will be able to refinance its debt or raise additional capital on acceptable terms.

Restrictions and covenants in Level 3's3’s debt agreements limit its ability to conduct its business and could prevent itLevel 3 from obtaining needed funds in the futurefuture.

Level 3's3’s debt and financing arrangements contain a number of significant limitations that restrict its ability to, among other things:

•

borrow additional money or issue guarantees;



•

pay dividends or other distributions to stockholders;



•

make investments;



•

create liens on assets;



•

sell assets;



•

enter into sale-leaseback transactions;



•

enter into transactions with affiliates; and



•

engage in mergers or consolidations.

If certain transactions occur with respect to Level 3's3’s capital stock, itLevel 3 may be unable to fully utilize its net operating loss carryforwards to reduce its income taxestaxes.

As of December 31, 2005, Level 3 had net operating loss carryforwards of approximately $5.9 billion for federal income tax purposes. If certain transactions occur with respect to Level 3's3’s capital stock that result in a cumulative ownership change of more than 50 percentage points by 5-percent shareholdersstockholders over a three-year period as determined under rules prescribed by the U.S. Internal Revenue Code and applicable regulations, annual limitations would be imposed with respect to the Company'sLevel 3’s ability to utilize its net operating loss carryforwards and certain current deductions against any taxable income Level 3it achieves in future periods. Level 3 has entered into transactions over the last three years resulting in significant cumulative changes in the ownership of its capital stock. Additional transactions could cause the CompanyLevel 3 to incur a 50 percentage point ownership change by 5-percent shareholders5% stockholders and, if the CompanyLevel 3 triggers the above-noted Internal Revenue Code imposed limitations, prevent it from fully utilizing net operating loss carryforwards and certain current deductions to reduce income taxes. The CompanyLevel 3 does not believe its net operating loss carryforwards will be limited in 2006 or thereafter, based on information available atas of the timedate of this filing.proxy statement/prospectus.

Increased scrutiny of financial disclosure, particularly in the telecommunications industry in which Level 3 operates, could adversely affect investor confidence, and any restatement of earnings could increase litigation risks and limit itsLevel 3’s ability to access the capital marketsmarkets.

Congress, the SEC, other regulatory authorities and the media are intensely scrutinizing a number of financial reporting issues and practices. Although all businesses face uncertainty with respect to how the U.S. financial disclosure regime may be impacted by this process, particular attention has been focused recently on the telecommunications industry and companies'companies’ interpretations of generally accepted accounting principles.

If Level 3 were required to restate its financial statements as a result of a determination that itLevel 3 had incorrectly applied generally accepted accounting principles, that restatement could adversely affect its ability to access the capital markets or the trading price of its securities. The recent scrutiny regarding financial reporting has also resulted in an increase in litigation in the telecommunications industry. There can be no assurance that any such litigation against Level 3 would not materially adversely affect its business or the trading price of Level 3's3’s securities.

Terrorist attacks and other acts of violence or war may adversely affect the financial markets and Level 3's business3’s business.

Since the September 11, 2001 terrorist attacks and subsequent events, there has been considerable uncertainty in world financial markets. The full effect on the financial markets of these events, as well as concerns about future terrorist attacks, is not yet known. They could, however, adversely affect Level 3's3’s ability to obtain financing on terms acceptable to it,Level 3, or at all.

There can be no assurance that there will not be further terrorist attacks against the United States or U.S. businesses. These attacks or armed conflicts may directly affect Level 3's3’s physical facilities or those of itsLevel 3’s customers. These events could cause consumer confidence and spending to decrease or result in increased volatility in the U.S. and world financial markets and economy. Any of these occurrences could materially adversely affect Level 3's3’s business.

Level 3's3’s international operations and investments expose itLevel 3 to risks that could materially adversely affect the businessbusiness.

Level 3 has operations and investments outside of the United States, as well as rights to undersea cable capacity extending to other countries, that expose itLevel 3 to risks inherent in international operations. These include:

•

general economic, social and political conditions;



•

the difficulty of enforcing agreements and collecting receivables through certain foreign legal systems;



•

tax rates in some foreign countries may exceed those in the U.S.;



•

foreign currency exchange rates may fluctuate, which could adversely affect Level 3'sour results of operations and the value of itsLevel 3’s international assets and investments;



•

foreign earnings may be subject to withholding requirements or the imposition of tariffs, exchange controls or other restrictions;



•

difficulties and costs of compliance with foreign laws and regulations that impose restrictions on Level 3's3’s investments and operations, with penalties for noncompliance, including loss of licenses and monetary fines;



•

difficulties in obtaining licenses or interconnection arrangements on acceptable terms, if at all; and

•

changes in U.S. laws and regulations relating to foreign trade and investment.

Risks Related to an Investment in Level 3’s Common Stock

Additional issuances of equity securities by Level 3 would dilute the ownership of Level 3’s existing stockholders.

Level 3 may issue equity in the future in connection with acquisitions or strategic transactions, to adjust its ratio of debt to equity, including through repayment of outstanding debt, to fund expansion of operations or for other purposes. Level 3 may issue shares of common stock at prices or for consideration that is greater than or less than the consideration for which this common stock is being offered. To the extent Level 3 issues additional equity securities, your percentage ownership of Level 3’s common stock would be reduced.

If a large number of shares of Level 3’s common stock is sold in the public market, the sales could reduce the trading price of Level 3’s common stock and impede its ability to raise future capital.

Level 3 cannot predict what effect, if any, future issuances of Level 3’s common stock will have on the market price of its common stock. In addition, shares of Level 3 common stock that are issued in connection with an acquisition may not be subject to resale restrictions. The market price of Level 3 common stock could drop significantly if certain large holders of Level 3 common stock, or recipients of Level 3 common stock in connection with an acquisition, sell all or a significant portion of their shares of common stock or are perceived by the market as intending to sell these shares other than in an orderly manner. In addition, these sales could impair Level 3 ability to raise capital through the sale of additional common stock in the capital markets.

Anti-takeover provisions in Level 3's3’s charter and by-laws could limit the share price and delay a change of managementmanagement.

Level 3's3’s restated certificate of incorporation and by-laws contain provisions that could make it more difficult or even prevent a third party from acquiring Level 3 without the approval of itsthe incumbent board of directors. These provisions, among other things:

•

divide the board of directors into three classes, with members of each class to be elected in staggered three-year terms;



•

prohibit stockholder action by written consent in place of a meeting;



•

limit the right of stockholders to call special meetings of stockholders;

limit the right of stockholders to present proposals or nominate directors for election at annual meetings of stockholders; and



•

authorize the board of directors to issue preferred stock in one or more series without any action on the part of stockholders.

In addition, the terms of most of Level 3's3’s long term debt require that upon a "change“change of control"control,” as defined in the agreements that contain the terms and conditions of the long term debt, require that Level 3 makesmake an offer to purchase the outstanding long term debt at either 100% or 101% of the aggregate principal amount of that long term debt.

These provisions could limit the price that investors might be willing to pay in the future for shares of Level 3's3 common stock and significantly impede the ability of the holders of Level 3'sthe common stock to change management. Provisions and agreements that inhibit or discourage takeover attempts could reduce the market value of Level 3's common stock.

If a large number of shares of Level 3's common stock are sold in the public market, the sales could reduce the trading price of Level 3's common stock and impede Level 3's ability to raise future capital

        Level 3 cannot predict what effect, if any, future sales of its common stock will have on the market price of its common stock. The market price of Level 3's common stock could drop significantly if certain large holders of Level 3's common stock sell all or a significant portion of their shares of common stock or are perceived by the market as intending to sell them other than in an orderly manner. In addition, these sales could impair Level 3's ability to raise capital through the sale of additionalour common stock.

The market price of Level 3's3’s common stock has been subject to volatility and, in the future, the market price of Level 3's3’s common stock may fluctuate substantially due to a variety of factorsfactors.

The market price of Level 3's3 common stock has been subject to volatility and, in the future, the market price of Level 3's3’s common stock may fluctuate substantially due to a variety of factors, including:

•

the depth and liquidity of the trading market for Level 3's3 common stock;



•

quarterly variations in actual or anticipated operating results;



•

changes in estimated earnings by securities analysts;



•

market conditions in the communications and information services industries;



•

announcement and performance by competitors;



•

regulatory actions; and

•

general economic conditions.

In addition, in recent months the stock market generally has experienced significant price and volume fluctuations. Those market fluctuations could have a material adverse effect on the market price or liquidity of Level 3's3’s common stock.

Risks RelatingCertain Non-U.S. Holders may be subject to adverse U.S. federal income tax considerations.

Generally, if a non-U.S. holder, who owns more than 5% of Level 3’s outstanding common stock disposes of common stock, such holder may be subject to U.S. federal income or withholding tax on any gain recognized on the disposition as income effectively connected with a U.S. trade or business if Level 3 were a “U.S. real property holding corporation” at any time during the shorter of the five years before the disposition or the holding period of the holder. In addition, if Level 3’s common stock is not considered to be regularly traded on an established securities market at such time, a non-U.S. holder may be subject to such tax on any gain recognized on the disposition of common stock without regard to the Notesvalue of the common stock owned by such holder. Level 3 may be, or may become, a U.S. real property holding corporation.

INFORMATION ABOUT THE SPECIAL MEETING OF BROADWING STOCKHOLDERS

This section contains information for Broadwing stockholders about the special meeting of Broadwing stockholders being held to consider:

Together with this proxy statement/prospectus, Broadwing also is sending you a notice of the special meeting of Broadwing stockholders and a form of proxy that is being solicited by Broadwing’s board of directors for use at the special meeting of Broadwing stockholders.The information and instructions contained in this section are addressed to Broadwing stockholders and all references to “you” in this section should be understood to be addressed to Broadwing stockholders.

Date, Time and Place of the Special Meeting of Broadwing Stockholders

This proxy statement/prospectus is being furnished by Broadwing’s board of directors in connection with the solicitation of proxies from holders of Broadwing common stock for use at the special meeting of Broadwing stockholders to be held at                              on                     , 200    , beginning at             a.m.,          Time, and at any adjournment or postponement of the special meeting of Broadwing stockholders.

Purpose of the Special Meeting of Broadwing Stockholders

The special meeting of Broadwing stockholders will be held to consider and vote upon a proposal to adopt the merger agreement and approve the merger, and a proposal to approve an amendment and restatement of the Purchase Plan in order to increase the number of shares of Broadwing’s common stock authorized for issuance under the Purchase Plan.

Record Date and Outstanding Shares

Broadwing’s board of directors has fixed the close of business on                     , 200    , as the record date. Only stockholders of record of Broadwing common stock on the books of Broadwing as of the close of business on the record date will be entitled to notice of, and to vote at, the special meeting of Broadwing stockholders and any postponements or adjournments of the special meeting of Broadwing stockholders. On                     , 2006, there were              shares of Broadwing common stock issued and outstanding held by              stockholders of record. The number of record stockholders does not include persons whose stock is held in nominee or “street name” accounts through brokers.

Quorum Requirement

A majority of all shares of Broadwing common stock outstanding on the record date, represented in person or by proxy, constitutes a quorum for the transaction of business at the special meeting of Broadwing stockholders. You will be considered part of the quorum if you return a signed and dated proxy card, if you vote by telephone or the Internet, or if you vote in person at the special meeting of Broadwing stockholders. Abstentions and shares of Broadwing common stock voted by a bank or broker holding shares of Broadwing

common stock for a beneficial owner are counted as present and entitled to vote for purposes of determining a quorum. On the other hand, broker non-votes will not be treated as present for purposes of determining the number of votes required to approve or disapprove a proposal. A “broker non-vote” occurs on a proposal when a broker is not permitted to vote on that proposal without instruction from the beneficial owner of the shares and no instruction is given by the beneficial owner. If a quorum is not present at the special meeting of Broadwing stockholders, Broadwing intends to adjourn or postpone the meeting to solicit additional proxies.

Vote Required

Each holder of Broadwing common stock will be entitled to one vote, in person or by proxy, for each share of Broadwing common stock registered in the holder’s name on the books of Broadwing as of the record date on any matter submitted for the vote of Broadwing’s stockholders. The proposal to approve and adopt the merger agreement and to approve the merger will be approved if a majority of the outstanding shares of Broadwing common stock entitled to vote at the special meeting of Broadwing stockholders are voted in favor of such proposal. The proposal to approve the amendment and restatement of the Purchase Plan will be approved if a majority of the outstanding shares of Broadwing common stock present in person or represented by proxy and entitled to vote at the special meeting are voted in favor of such proposal.

Failures to vote, abstentions and broker non-votes will have the same effect as a vote against each of the proposals. A broker is not permitted to vote on the proposals without instruction from the beneficial owner of the shares of Broadwing common stock held by the broker. Therefore, if your shares of Broadwing common stock are held in an account at a brokerage firm or bank, and you do not provide the broker or bank with instructions on how to vote the shares of Broadwing common stock which you beneficially own in accordance with the instructions received from the brokerage firm or bank, a broker non-vote will occur with respect to those shares of Broadwing common stock.

The respective obligations of Level 3 and Broadwing to complete the merger are subject to the condition that Broadwing’s stockholders approve the merger agreement. If Broadwing’s stockholders fail to approve the merger agreement at the Broadwing special meeting of stockholders, each of Level 3 and Broadwing will have the right to terminate the merger agreement. See “The Merger Agreement—Termination” beginning on page 79.

Shares Beneficially Owned as of the Record Date

As of                     , 2006, there were              shares of Broadwing common stock outstanding. As of that date, less than         % of the outstanding shares of Broadwing common stock were held by directors and executive officers of Broadwing and their respective affiliates. You are entitled to vote if you were a holder of record of shares of Broadwing common stock shares as of the record date. Your shares may be voted at the meeting only if you are present or represented by a valid proxy.

Voting at the Special Meeting of Broadwing Stockholders

If you are a Broadwing stockholder of record on the record date and you attend the special meeting of Broadwing stockholders, you may vote in person by completing a ballot at the special meeting of Broadwing stockholders even if you already have signed, dated and returned a proxy card. If your shares of Broadwing common stock are held in the name of a broker or nominee, you may not vote your shares of Broadwing common stock in person at the special meeting of Broadwing stockholders unless you obtain a signed proxy from the record holder giving you the right to vote the shares of Broadwing common stock.

Proxies

Broadwing stockholders may grant their proxies by mail by completing the enclosed proxy card, and signing, dating and returning it in the enclosed envelope. We recommend you do so promptly to help ensure timely delivery. We have arranged for Broadwing stockholders who are stockholders of record to have the option

to submit their proxies by using the telephone or the Internet. The laws of Delaware, under which Broadwing is incorporated, specifically permit electronically transmitted proxies, provided that each proxy contains or is submitted with information that enables the inspectors of election to determine that the proxy was authorized by the stockholder.

Instructions for voting by using the telephone or the Internet are printed on the proxy voting instructions attached to the proxy card. In order to vote via the Internet, please have your proxy card available so you can input the required information from the card. The proxy card shows the Internet website address. When you log on to the Internet website address, you will receive instructions on how to proceed with voting your shares. The telephone and Internet voting procedures are designed to authenticate votes cast by use of a personal identification number. These procedures allow Broadwing stockholders to appoint a proxy to vote their shares of Broadwing common stock, and to confirm that their instructions have been properly recorded.

Shares Held Through Brokerage Accounts. If your shares of Broadwing common stock are held in the name of a broker or nominee, you should follow the instructions provided by that broker or nominee on how to direct the voting of your shares of Broadwing common stock.

How Proxies will be Voted; Recommendations of the Broadwing Board of Directors.All shares of Broadwing common stock represented by proxies properly executed and received by Broadwing before or at the special meeting of Broadwing stockholders will be voted in accordance with the instructions indicated on the proxies. The board of directors of Broadwing recommends that you vote“FOR”the adoption of the merger agreement and approval of the merger and “FOR” the amendment and restatement of the Purchase Plan. If the proxy is properly completed, signed and returned but no instructions are indicated, the shares of Broadwing common stock will be votedFORthe adoption of the merger agreement and approval of the merger, andFORthe amendment and restatement of the Purchase Plan.

The grant of a proxy will confer discretionary authority on the persons named in the proxy as proxy appointees to vote in accordance with their best judgment on procedural matters incident to the conduct of the Broadwing special meeting, such as a motion to adjourn in the absence of a quorum or a motion to adjourn for other reasons, including to solicit additional votes in favor of approval of the merger agreement. Proxies which specify a vote against approval of the merger agreement will not be voted in favor of any adjournment of the Broadwing special meeting for the purpose of soliciting additional votes in favor of the approval of the merger agreement.

Revoking Your Proxy.If you grant a proxy in respect of your shares of Broadwing common stock and then attend the special meeting of Broadwing stockholders, your attendance at the special meeting of Broadwing stockholders, or at any adjournment or postponement of the special meeting of Broadwing stockholders, will not automatically revoke your proxy. You can, however, revoke a proxy at any time prior to its exercise by:

If your shares of Broadwing common stock are held in the name of a broker or nominee, you may change your vote by submitting new voting instructions to your broker or nominee in accordance with your broker’s or nominee’s instructions.

Solicitation of Proxies

Proxies may be solicited by mail, personal interview, telephone, facsimile and electronic mail by Broadwing’s directors, officers and employees on a part-time basis and for no additional compensation. Broadwing will bear the costs it incurs in the solicitation of proxies under this proxy statement and prospectus, including amounts paid in reimbursement to banks, brokerage firms, custodians, nominees and others for their expenses in forwarding soliciting material to the beneficial owners of Broadwing common stock. Level 3 and Broadwing have agreed to share equally all costs and expenses incurred in connection with the filing fee for the registration statement on Form S-4 of which this proxy statement and prospectus forms a part, as well as the costs of printing and mailing this proxy statement and prospectus.

Broadwing has retained D.F. King & Co., Inc. to assist it with the solicitation of proxies and to verify certain records related to the solicitations. Broadwing has agreed to pay D.F. King a fee in addition to its out-of-pocket expenses for services rendered and to indemnify D.F. King against certain liabilities arising out of it’s engagement (except for those resulting from D.F. King’s gross negligence or intentional misconduct).

Other Business

Broadwing’s board of directors currently is not aware of any business to be acted upon at the special meeting of Broadwing stockholders other than as described in this proxy statement and prospectus. A specific proposal has been included on the proxy card to authorize Broadwing’s board of directors to act in its discretion with respect to any procedural matters, adjournments or postponements to permit further solicitation of proxies for the merger.

Householding

Householding is a program, approved by the SEC, which allows the delivery of only one package of stockholder proxy materials if there are multiple Broadwing stockholders who live at the same address. This means that, if your household participates in the householding program, you will receive an envelope containing one set of proxy materials and a separate proxy card for each stockholder account in the household. Please vote all proxy cards enclosed in the package.

To Attend the Broadwing Special Meeting of Stockholders

Only stockholders, authorized proxy holders and Broadwing’s guests may attend the special meeting. An official admission ticket or proof of stock ownership, such as a recent brokerage account statement or letter from your broker, and a valid government-issued picture identification, such as a driver’s license are required for admission to the meeting. If your shares are held in the name of your broker, bank, or other nominee, you must bring to the meeting an account statement or letter from the nominee indicating that you beneficially owned the shares on                     , 200  , the record date for voting.

A detachable admission ticket is attached to your proxy solicitation/voting instruction card. Please detach and bring the detailed admission ticket with you to the special meeting. Internet voters will be guided to a Website where, by following the instructions on the Website, they will be able to sellprint an admission ticket.

Communications by Broadwing’s Stockholders with Broadwing

Any written revocation of a proxy or other communications in connection with this proxy statement/prospectus and requests for additional copies of this proxy statement and prospectus or the proxy card should be addressed to Broadwing Investor Relations, 1122 Capital of Texas Highway South, Austin, Texas 78746. If you have any questions or need further assistance in voting your original notes if you doshares of Broadwing common stock, please call Broadwing’s proxy solicitor, D.F. King & Co., Inc., toll free at 1-800-290-6424 or collect at 1-212-269-5550.

Your vote is important. Please sign, date and return your proxy card or submit your proxy and/or voting instructions by telephone or through the Internet promptly.

APPROVAL OF BROADWING’S AMENDED AND

RESTATED EMPLOYEE STOCK PURCHASE PLAN