Cincinnati Bell 2012 Annual Report Download - page 85

Form 10-K Part I Cincinnati Bell Inc.
particular customer. CyrusOne believes that this approach significantly reduces the risk associated with
expansion into new markets because it provides strong visibility into its anticipated cash flow and helps to ensure
targeted returns on new developments. Its strategy for entering a new market will vary based on in-place real
estate and data center infrastructure and could include greenfield construction projects as well as acquisitions.
Sales and Distribution Channels
The Company’s Wireline and Wireless segments utilize a number of distribution channels to acquire
customers. As of December 31, 2012, the Company operated ten retail stores in its operating territory.
The Company works to locate retail stores in high traffic but affordable areas, with a distance between each
store that considers optimal returns per store and customer convenience. As stores are added or closed from time
to time, certain stores may be transitioned to local agents for marketing of the Company’s products and services.
Wireline and Wireless also utilize a business-to-business sales force and a call center organization to reach
business customers in its operating territory. Larger business customers are often supported by sales account
representatives, who may go to the customer premises to understand the business needs and recommend solutions
that the Company offers. Smaller business customers are supported through a telemarketing sales force and store
locations. The Company also offers fully-automated, end-to-end web-based sales of wireless phones, accessories
and various other Company services. In addition, the Company utilizes a door-to-door sales force that targets the
sale of the Fioptics products to residents.
Aside from Company resources, there are approximately 140 third-party agent locations that sell Wireline
and Wireless products and services at their retail locations. The Company supports these agents with discounted
prices for wireless handsets and other equipment and commission structures. The Company also sells wireline
and wireless capacity on a wholesale basis to independent companies, including competitors that resell these
services to end-users.
IT Services and Hardware primarily sells to customers through its business-to-business sales force. Sales
representatives develop customer leads through existing relationships with IT leaders of businesses, referrals
from existing customers, and IT hardware vendors.
Our former Data Center Colocation segment also sold to customers primarily through its internal sales force.
To a lesser extent, leads were also developed from third-party brokers and marketing sources, including web-
based efforts.
Suppliers and Product Supply Chain
Wireline’s primary purchases are for network equipment, software, and fiber cable to maintain and support
the growth of Fioptics services, as well as copper-based electronics and cable. Wireless primarily purchases
handsets and accessories, wireless cell site and network equipment, and software. Wireless often partners with
other regional carriers and wholesale distributors to build requisite volume for handset manufacturers. The
Company generally subjects these purchases to competitive bids and selects its vendors based on price, service
level, delivery, quality of product and terms and conditions.
The Company maintains facilities and operations for storing cable, handsets and other equipment, product
distribution and customer fulfillment. Wireless also has long-term lease commitments on towers used in its
wireless network operations.
In addition, Wireline has long-term commitments to outsource various services, such as certain information
technology functions, cash remittance and accounts payable functions, call center operations, and maintenance
services. Similar to the purchase of materials, competitive bids are obtained for such vendors and are subject to a
rigorous evaluation and approval process.
IT Services and Hardware primarily purchases IT and telephony equipment that is either sold to a customer
or used to provide service to the customer. The Company is a certified distributor of Cisco, EMC, Avaya, and
Oracle equipment. Most of this equipment is shipped directly to the customer from the vendor manufacturing
location, but the Company does maintain warehouse facilities for replacement parts and equipment testing and
staging.
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Form 10-K