XO Communications 2010 Annual Report Download - page 9

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regional level and delivers it to Carrier Services’ customers over a larger speed connection. This allows
customers without a Point-of-Presence (‘‘POP’’) in a particular city or region where they have end users, to
use the XOH backbone to aggregate and backhaul their end user traffic to their POP. Traffic is transported
securely via MPLS and allows customers to manage their own IP address space. Wholesale long distance
termination services provide solutions to terminate inter- and intra-state long distance calls with only one
interconnection. VoIP Origination and VoIP Termination services allow incoming calls through XOH’s IP
network. VoIP Termination provides long distance connectivity to terminate IP-originated calls to the Public
Switched Telephone Network (‘‘PSTN’’). These services are used by some of the nation’s leading retail
VoIP service providers. Carrier Services also offers customers high-capacity, inter-city private line and inter-
city Ethernet services. Taking advantage of consolidation within the industry and increased customer demands
for bandwidth, Carrier Services also targets international carriers and cable companies.
Carrier Services continues to expand infrastructure to high-traffic aggregation points across the
United States in two specific areas: 1) submarine cable landing stations; and 2) public and private Data
Centers. The expansion of infrastructure in these two areas, in addition to continued investment in long-haul
Dense Wave Division Multi-plexing (‘‘DWDM’’), will enable more opportunity for high capacity bandwidth
and IP services among US domestic as well as global carriers. This will also position Carrier Services to serve
content distributed via the internet as well as serve cloud-based services or applications and information
served to end users via the internet or private IP networks. Further, in order to capture a greater share of the
metro IP and wavelength services market, Carrier Services continues to offer mid-band Ethernet services to
customers and has deployed next-generation Ethernet services enabling expanded IP-VPN and other IP-based
services. The combined investments in high speed wavelength in metro IP and Ethernet technologies and
customer service and support, differentiates Carrier Services from competitors for future wholesale IP business
growth.
Small Business Services (‘‘SBS’’)
The SBS customer segment, formerly called Concentric, provides communications services to small
businesses. These customers are typically defined as single location businesses, with less than 20 employees,
having non-complex telecommunications requirements.
The small business segment that SBS serves is a highly competitive market, with cable television
companies aggressively moving up-market with competitive product bundles tailored to the needs of small
businesses. In addition, ILECs such as AT&T and Verizon, and other CLECs offer aggressive pricing,
innovative products and services, and an ever increasing toolkit of self-directed capabilities. To improve
retention and growth of our customer base, XOH proactively contacts customers to promote bundled product
packages and to educate and inform customers on new services and capabilities. Our active churn
management programs help predict propensity to churn, enabling SBS to take swift action to minimize
attrition.
XOH offers SBS customers cost-effective, scalable and secure telecommunications solutions for their
voice, data, internet and web hosting needs. The product of choice is XOH’s award-winning IP Flex product,
which is a flexible integrated package of services sold at competitive rates. In 2010, we continued to promote
our on-line customer portal and portfolio of services. We will continue to enhance our hosted IT solutions,
such as managed back-up, managed server, hosted email exchange and hosted PBX, to enable small
businesses to rely on our carrier-strength network and service and allow them to focus on their core
competencies.
In 2011, SBS will continue to focus on providing superior customer service to this valuable customer
segment, seek opportunities to increase productivity and efficiency and continue to develop capabilities for
customers to self-manage their communications infrastructure.
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