Gary Breauninger, Level 3: Crossing the wholesale divide
22 May 2013 | Kavit Majithia
Level 3's appointment of Gary Breauninger as its new wholesale chief not only reflects the company's increased focus on the segment, but also on the continuing success of its integration with Global Crossing. Kavit Majithia reports.
Gary Breauninger, Level 3
As a self proclaimed sports fanatic, Breauninger’s competitive mentality shines through when he discusses the battle Global Crossing used to face with his new employers. And his initial hesitation towards the takeover could be due to the fact he spent 12 years at Global Crossing trying to compete with Level 3’s success.
Breauninger held numerous roles at Global Crossing, and was the company’s CFO for North America and wholesale carrier services at the time of the takeover.
He explains that when the deal was finalised in October 2011, his competitive streak somewhat got the better of him. Breauninger was still committed to what Global Crossing had set out to achieve all those years ago, and it was a big stepping stone for him to accept that he was now going to working for one his biggest competitors.
It was when he finally looked beyond his Global Crossing perspective, and realised what could be achieved with “two superstars coming together”, that his mindset shifted very rapidly.
“I left that mindset behind after discussing the deal on the finance side and the investor relations side and realised the opportunities that came with bringing these two companies together,” he says.
“When I was offered the job as head of wholesale, I knew I wanted to be a part of it. I respected the competition that existed between us and Level 3, and with the two companies coming together, it is now up to the new team to unlock the potential.”
The departing stalwart
Breauninger’s short lived pessimism at the takeover was a reflection of his long-standing commitment to Global Crossing and how hard he worked at the company.
And while the competition between the companies remained fierce, Breauninger tells Capacity that the majority of employees at Global Crossing held an element of respect and admiration for what Level 3 was doing in developing IP and content services, as well as serving as a profitable wholesale provider across North America, Latin America and Europe.
Level 3’s success is of course largely down to Jim Crowe, its recently departed CEO, and it was he that Breauninger looked to for inspiration in trying to pioneer wholesale services to the market while at Global Crossing. Breauninger describes Crowe as “an industry stalwart”, who “we respected a lot for his ability to stay on that march and continually build assets”.
He claims that Level 3 is now the only company that focuses solely on wireline. And while others are investing in it, Level 3 is wholly focused on the space, which is “a testimony to the strategy that Jim developed a long time ago”.
Breauninger’s new role arguably comes without a predecessor, as Level 3 has never technically operated with a head of wholesale, but he denies that the company’s management restructure came as a result of Crowe’s announcement to leave his role.
“We actually started this structure six months before Jim’s announcement and it has been tailored towards getting closer to the customer.”
It was Jeff Storey, the company’s former COO and newly appointed CEO, that approached Breauninger about taking an advanced role at Level 3 after the merger, and he was initially handed the job of head of enterprise, which he held for 16months. Former Global Crossing head Andrew Crouch was then appointed to run Level 3’s business in North America, and Breauninger was asked to the take the wholesale job.
He believes the management restructure and the creation of his role in wholesale largely underlines the success of the integration process so far. “The initial integration involved a lot of sessions, with a planning process of how Level 3/Global Crossing will look after each significant period of time and so far, I’d give us an A- for how well we have done it,” he says.
“In hindsight, Level 3 has made some previous acquisitions which have not gone as smoothly as they might have, and although there are things we need to work on, we are doing well so far.”
The power of Level 3
Appointing Breauninger into a role that is largely untried and untested could be viewed as a risk by some in the market. However, with 23 years experience in the industry, including a role spanning 10 years at AT&T, he believes his most prevalent attributes lie in the very thing that wholesale is fundamentally built on; networking.
“Folks that I used to work with seem to popup in a range of influential positions, whether it’s domestically in the US or internationally, and these relationships can always be leveraged. Success, to an extent, largely depends on the ease of doing business with your partners,” he says.
“A CEO at one of the biggest wireless carriers (in the US) used to be my boss, and it’s always important to keep such contacts when you are looking to do business in the wholesale space.”
As a former CFO, it was easy for Breauninger to assiduously assess Level 3’s financials and identify where the company had succeeded, in what he calls “an unwavering march towards a particular focussed strategy”.
Given the natural similarities between his past company and its acquirer, it was equally natural for him to identify where Global Crossing had failed. “While Global Crossing went through a bankruptcy process and a strenuous set of times, Level 3 continued to evolve and to develop a rock solid balance sheet, largely by expanding its reach to over 500 different markets, offering 165,000 route miles across five different continents.”
It has been just over 18 months since the announcement that Level 3 would be taking over one of its biggest rivals, and Breauninger is brimming with enthusiasm over the potential his new role holds.
“Wholesale is no longer the stagnant old business it used to be,” he says. “It is fun, and it’s largely due to the continuing end user demand for bandwidth and as it evolves, a company like Level 3 is positioned well to continue to deploy assets which have already been acquired.”
Taking the company’s wholesale segment and pushing it forward is a challenge that has largely been made easier for Breauninger, particularly because of the asset strategy the company has embarked on in the past decade. “We’ve always served to enable our carrier customers to gain access to a range of markets which is not in their portfolio and by developing this infrastructure, we can enable access to markets like Europe and Latin America.”
He notes that his biggest challenge will be in curbing the industry wide decline in wholesale, which can be largely attributed to maligning revenues in legacy services such as voice. However, Breauninger says this challenge can also bring opportunity, and he identifies a number of growth opportunities in other wholesale services: “You can pick up any industry report these days and see that while the voice and long line business is declining, something like Ethernet VPN, Metro Ethernet and long haul Ethernet is set to grow by 20%. VPN services too is something that has been addressed by Level 3 through organic and inorganic acquisitions, and it overlays perfectly with my wholesale strategy.”
Breauninger stands as one of the select few Global Crossing executives that have come to Level 3 and taken a top job, and his new colleagues are likely to have been pleasantly surprised at the new chief ’s secret passion in life. “I’m an out of work rhythm, blues and Hip Hop DJ," he confesses. “I used to do it for about 15 years as a profession for some extra side money, and I managed to dust off my
decks to perform at the company’s annual kick-off earlier this year. Mixing the beats is a nice escape for me.”
Turning up his beats helps Breauninger decompress from his job, and no doubt, the challenges he faces at Level 3 will be equally as strenuous as those he faced at Global Crossing. This will be coupled with the added pressure of ensuring the Global Crossing integration continues to bear fruits.
And despite his earlier reservations, the new head of wholesale looks ahead with equanimity regarding his role in pushing Level 3’s wholesale segment forward.
“It’s my job to ensure our customers continually make the seamless transition from legacy networks to advanced IP solutions, with better reach at a competitive rate,” he says. “With the assets now in place, it is my job as Level 3’s wholesale chief to optimise this scale.”