Broadsides from Both Sides as Level 3, Hypercube Battle on
Level 3 and HyperCube traded more salvos, as Level 3 slammed HyperCube for what Level 3 calls “a repetitive tirade” answering an administrative law judge’s request for financial data. In a Monday filing to the California Public Utilities Commission, Level 3 said HyperCube used the request “as an excuse to issue yet another press release, and to confuse the record with irrelevant and unsupported allegations.”
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HyperCube wants the commission to require Level 3 to escrow $5.3 million against debts that HyperCube estimates at $20 million. HyperCube provides Level 3, which sells toll- free 8YY services in California, with tandem access services under HyperCube’s interstate and intrastate tariffs. That relationship has continued under commission order since last year, when Level 3 began boycotting payments to HyperCube Level 3 alleged that HyperCube had been overcharging and that Level 3 was withholding payment to balance accounts. HyperCube, which says Level 3 owes it about $20 million, filed a complaint with the California commission and petitioned to force Level 3 to escrow about $5.3 million (CD Sept1 p8).
In repeating its demand for escrow, HyperCube is making “an entire new round of irrelevant and unsupported allegations against Level 3,” attorney Gregory Rogers of Level 3 wrote. “HyperCube compounds its abuse of the record by the manner in which it makes this latest filing. When HyperCube filed its original motion, as Level 3 noted, it failed to file any declaration at all in support, and instead included a newspaper article, allegations of a complaint in another case, and amateur stock analysis as its basis for the motion.”
HyperCube asks unfairly and illogically to tie up a chunk of Level 3’s working capital while the case plays out, Rogers wrote. “HyperCube did not demonstrate irreparable and immediate harm, probability of success on the merits, the lack of an adequate legal remedy, or a threat of loss of service by Level 3’s customers,” he said.
Level 3 is trying to get back at HyperCube, a HyperCube representative told us by e-mail. “Shortly after we won a key customer from them, Level 3 stopped paying for HyperCube’s services,” he said. “Given well-documented concern about Level 3’s finances, we are asking that the money Level 3 owes HyperCube be placed in escrow pending a ruling on our dispute. Level 3’s abrupt decision to stop paying HyperCube for services represents an ongoing violation of state tariffs and state law.”
Level 3 doesn’t dispute that it lost $262 million in the first half of 2009, the HyperCube representative said. “Level 3 also does not dispute that it began 2009 with $771 million in cash and ended the first six months of 2009 with $632 million in cash,” he said. “How a company that loses about $44 million dollars a month and had a reduction of its cash balance of $139 million in the first six months of this year can say it has ‘free cash flow’ is astounding.”