XO Communications 2009 Annual Report Download - page 8

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Hosting and Hosted Applications. XOH offers a range of web hosting, messaging, collaboration and
Software-As-A-Service (“SaaS”) applications to help customers manage their online business and
provide online business tools to our customers. These services include website hosting, business email,
managed server and professional website services related to these products. XOH provides its hosted
services on a patented Clustered Technology architecture, a platform that delivers greater reliability, speed
and performance than traditional shared platforms. XOH’s unique technology provides virtually inexhaust-
ible dynamic resources and multiple tiers of system and application security.
Business Units
XOH operates through three customer-centric business units: XO Business Services (“Business Services”), XO
Carrier Services (“Carrier Services”) and XO Concentric (“Concentric”). Business Services markets our
telecommunications solutions to government agencies and business customers, ranging in size from growing
businesses to Fortune 500 companies. Business Services provides managed IP, data and end-to-end communi-
cations solutions. Carrier Services markets wholesale solutions to carriers and other telecommunications
providers. Concentric is primarily marketed to small business customers. This business unit structure helps
XOH focus on specific customer groups, grow revenue within each customer group, and it highlights XOH’s
unique competitive advantages in serving business and carrier customers as the telecommunications industry
consolidates and data and telecommunications services converge.
Business Services
Business Services provides business customers and government agencies with managed IP, data and end-to-end
voice communications solutions. Business Services is focused on obtaining and retaining customers through an
outstanding customer experience and profitably growing revenue through an expanding IP-based service
portfolio. Business Services builds on our strong position within the small-to-medium sized business market as
a platform for greater emphasis on mid-market businesses. Business Services also leverages XOH’s nationwide
network to increase our penetration in the larger enterprise market.
The United States market for wireline business telecommunications services consists of over 14 million
businesses with average monthly telecommunications spending of approximately $6.0 billion. XOH’s network
footprint reaches approximately 40% of that available market.
To reach our markets, Business Services employs a direct sales and support organization. In addition, Business
Services has agreements with over 250 third-party national, regional and local agents and agency firms, who
represent a broad range of voice, data, consulting, and equipment services that they provide to end users.
These business partners extend the reach of the Business Services sales organization geographically as well as
addressing specific customer segments.
Business customers in the United States telecommunications market span a wide range of sizes and needs,
from small and medium sized businesses to large multi-location enterprises. Business Services is aligning its
service offerings, sales and channel strategies and customer support models to better meet the needs of these
broad customer groups:
Small-to-Medium Business (“SMB”). The SMB group consists of single-site or multiple-site custom-
ers. These customers may require multiple service packages or some level of customized solutions.
Mid-Market Business. Business Services is ideally positioned to serve the needs of mid-market
businesses. These growing companies are frequently underserved by large telecommunications providers.
XOH has a range of IP based services, from bundles that are suited to branch locations, to customized
solutions that meet the needs of company headquarters locations or multi-site networks. A majority of
Business Services’ resources are concentrated on serving the needs of customers within this market.
Enterprise. Enterprises are large commercial entities with complex communications needs. These
customers require high bandwidth, secure private networks, multi-location services and unique solutions.
Business Services is allocating additional resources in this segment focusing on key growth verticals that
can take advantage of our national footprint and scalable IP-based service portfolio.
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