Cincinnati Bell 2009 Annual Report Download - page 77

Sales of handsets and accessories generated the remaining 7% of 2009 segment revenue. CBW sells
handsets and accessories, often below its purchase cost, to promote the acquisition and retention of subscribers.
Sales take place at Company owned retail stores, on the Company’s website, via business sales representatives,
and in independent distributors’ retail stores pursuant to agency agreements. CBW purchases handsets and
accessories from a variety of manufacturers and maintains an inventory to support sales.
The Wireless segment contributed $307.0 million, $316.1 million, and $294.5 million, or 23% of revenue in
2009 and 2008, and 22% of consolidated revenue in 2007. The Wireless segment produced operating income of
$33.0 million in 2009, $46.8 million in 2008, and $34.3 million in 2007.
Technology Solutions
The Technology Solutions segment provides a full range of managed information technology solutions,
including outsourced data center collocation in world class, state-of-the-art data center facilities, related data
center managed services, IT and telephony equipment sales, and professional IT infrastructure staff augmentation
services. These services and products are provided in multiple states through the Company’s subsidiaries,
Cincinnati Bell Technology Solutions Inc. (“CBTS”), CBTS Canada Inc., CBTS Software LLC, and GramTel
Inc. (“GramTel”). By offering a full range of equipment and outsourced managed services in conjunction with
the Company’s wireline network services, Technology Solutions provides end-to-end IT telecommunications
infrastructure management designed to reduce cost and mitigate risk while optimizing performance for its
customers.
The Company’s data center and managed services product line includes the operations of eleven data centers
totaling 271,000 square feet of billable data center capacity, a network operations center that provides off-site
infrastructure monitoring, and a wide array of IT infrastructure management products, which includes network
management, electronic data storage, disaster recovery, and data security management. At December 31, 2009,
214,000 square feet were under contract with customers, resulting in a 79% utilization rate of the 271,000 square
feet of available data center space. Data center services include 24-hour monitoring of the customer’s computer
equipment in the data center, redundant power, and environmental controls. CBTS’ data centers are connected
with one another and to its customers’ data networks through the fully redundant facilities of CBT’s
telecommunications network and/or CBTS’ dedicated dense wave division multiplexing optical network. This
connectivity and the geographical dispersion of the data centers provide enhanced data reliability and disaster
recovery. Data center and managed services revenue was $111.2 million for 2009, $97.7 million in 2008, and
$67.6 million in 2007.
The Company’s telecom and IT equipment distribution product line is the value-added reseller operation of
Technology Solutions. The Company maintains relationships with over ten branded technology vendors, which
allow it to sell, install, and maintain a wide array of telecommunications and computer equipment and operating
systems to meet the needs of small to large businesses. This unit also manages the implementation and
maintenance of traditional voice systems as well as converged VoIP systems. Revenue from telecom and IT
equipment distribution was $161.1 million in 2009, $201.2 million in 2008, and $180.8 million in 2007.
The professional services product line provides IT infrastructure staff augmentation and professional IT
infrastructure consulting by highly technical, certified employees. These engagements can be short-term IT
implementation and project-based work as well as longer term staffing and permanent placement assignments.
Technology Solutions utilizes a team of experienced recruiting and hiring personnel to provide its customers a
wide range of skilled IT professionals at competitive hourly rates. Professional services revenue was $20.8
million in 2009, $16.3 million in 2008, and $9.9 million in 2007.
Technology Solutions combines data center collocation services with value-added IT managed services into
a fully managed and outsourced infrastructure service. Data center customer contracts typically range from three
to fifteen years in length and produce attractive returns on invested capital. The Company intends to continue to
pursue additional customers and growth specific to its data center business and is prepared to commit additional
resources, including resources for capital expenditures, acquisitions and working capital both within and outside
its traditional operating territory, to support this growth.
In 2009, Technology Solutions purchased both Toronto, Canada-based Virtual Blocks Inc., a leading
software developer in the area of data center virtualization, and Cincinnati, Ohio-based Cintech LLC, a hosted
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Form 10-K