PART TWO OF A FOUR-PART SERIES

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1 Driving BROADBAND INNOVATORS SMALL BUSINESS Forward PART TWO OF A FOUR-PART SERIES

2 BROADBAND INNOVATORS PART 2 OF 4» DRIVING SMALL BUSINESS FORWARD Presented by Businesses, particularly small and medium-sized businesses (SMBs), are the growth engines of national economies. Small companies are undisputedly the lifeblood of economic prosperity. In the US, there are an estimated 27.9 million small businesses. Competitive carriers continually provide innovative, cost-effective telecommunication services that might otherwise be unattainable for organizations with fewer than 500 employees. Most competitive carriers are also small or mid-sized businesses themselves, so they know first hand the importance of product reliability, excellent customer service and how to deploy cutting-edge technologies that have a significant positive impact on the national economy. THE ECONOMIC IMPACT Broadband spurs faster business growth: WEB INTENSITY LOW WEB INDEX <20% MEDIUM WEB INDEX 20 40% HIGH WEB INDEX >40% Source: McKinsey SME Survey. Web Intensity based on McKinsey Web Index. SMBs are the biggest IT spenders: $177b $116b $33b Source: EarthLink. ANNUAL GROWTH (PAST 3 YRS) 6.2% 7.4% $326b SMALL BUSINESS MID-MARKET / ENTERPRISE FORTUNE % TOTAL NATIONWIDE IT SPEND MARKET Historically, small firms account for over 60% of net new jobs created in the US every year -- or about 11.8 million out of 18.5 million net new jobs from 1993 to Recently, these small businesses have been critical to boosting the economy by creating 67% of net new jobs from mid-2009 to Technologically-savvy companies are nimble and grow fast, and perhaps not surprisingly, small firms that adopt broadband and internet services are the fastest growing segment of the SMB market. Out of approximately $326 billion spent nationally on IT budgets, small and mid-sized companies spend $293 billion. However, in a nationwide survey of small businesses, participants wanted more competition among broadband service providers and ranked the ability to choose from more providers as one of the most important options for improving their communication and Internet services.

3 TAILOR-MADE SERVICE COMPETITIVE CARRIERS DELIVER WHAT SMBs NEED SMALL BUSINESS MID MARKET / ENTERPRISE FORTUNE 1000 SMBs increasingly want virtual systems IT resources not tied down to specific hardware hosted by service providers Competitive carriers provide SMBs the tools necessary to meet their own complex regulatory requirements (PCI, HIPAA, etc.) SMBs can focus on their core business strengths while service providers deliver productivity-enhancing communications services Competitive carriers offer small businesses highly tailored services that scale economically. Generally, small firms favor product reliability and responsive customer service and are less concerned about the name of the provider. To meet the needs of enterprise and small business customers, competitive carriers have consistently delivered customized solutions with excellent technical support. For flexible and reliable services, the SMB market is turning to cloud computing which gives them access to virtual systems. Unlike conventional IT resources that are limited to local hardware that can t easily be upgraded or expanded, virtualization gives SMBs a connection to shared datacenter resources where companies can better allocate their time and IT budgets. Competitive carriers provide industry leading cloud services that can simplify the process of achieving regulatory compliance, and SMBs appreciate the specialized customer service that only competitive carriers provide. SOLUTION SNAPSHOT: TW TELECOM Organization: Presbyterian Healthcare Services Operational Challenge: Deploy cost-effective bandwidth to meet the current and future needs of next-generation, high-performance capability for telemedicine for the newly-built Rust Medical Center in New Mexico Solution: Business Ethernet from tw telecom with a 2 Gbps network circuit Benefits: 100% uptime to date, robust communications network with video conferencing rooms The cost of healthcare is a huge challenge nationwide, and our organization is determined to keep the cost of healthcare as low as possible for our patients and members. That s why finding the lowest cost solution for the most amount of bandwidth was an important aspect of the new hospital. - Marcia Birmingham, Manager of Network Communications, Presbyterian Healthcare Services

4 INNOVATION SPOTLIGHT: ADVANCED VOICE SERVICES Voice communications have always played an important role in business non-labor expenses. As early as 2006, competitive carriers have done a much better job than incumbents at preparing small and mid-sized businesses for converged communications. According to a Yankee Group study, while only 9% of SMBs served by incumbent telecoms purchased advanced voice services such as VoIP, 23% of SMBs with service from competitive carriers adopted IP-based telecommunications for their phone systems. Competitive carriers are leading the transition to IP. They have continually promoted the benefits of IP-enabled services to SMBs to educate their customers about the advantages of next-generation voice solutions, while incumbent providers have provided relatively scant information about VoIP and hosted voice solutions to small businesses. ENABLING MULTI-SITE BUSINESS Multi-site SMBs tend to buy more broadband and IP services and are more likely to buy from non-incumbents, according to a Deloitte study. Hosted voice revenues are growing rapidly in the small business sector: $1400m $1050M $700M $350M $ Source: Insight Reports THE ADVANTAGES OF HOSTED VOICE Lower startup costs Flexibility & economic scalability No on-site maintenance expenses Advanced controls over costs for travelling or remote workers Multi-site coordination with productivity benefits

5 A CLOUD YOU CAN COUNT ON COMPETITIVE CARRIERS DELIVER RELIABLE SERVICES Competitive carriers have long-standing relationships with small and medium-sized enterprises and a track record of reliable service plus the proven ability to provide a comprehensive range of IT infrastructure and applications that SMBs want and need. As a rule of thumb, SMBs distinguish themselves in the market by effective execution with a focus on their operations and customers areas that large incumbents neglect. Competitive telcos often serve SMBs as full-service IT solution providers, allowing businesses to concentrate on growing. Competitive carriers are technological allies for small businesses, providing 24/7 service and making sure critical business data is secure, backed up, protected from malware and always accessible. RECOGNITION OF EXCELLENCE Cbeyond: The American Business Awards called Cbeyond a technology ally to small and mid-sized businesses, naming it a Finalist in the Best New Product or Service of the Year (Software category) in the 2013 American Business Awards. tw telecom: Atlantic-ACM awarded tw telecom best in class awards in five categories at its 2013 North American Business Connectivity Awards for Sales Reps, Billing, Customer Service, Voice Value, and Data Value. Forrester Research presented tw telecom with the 2010 voice of the customer award the only telco in the finalists list. XO Communications: 2013 Atlantic-ACM Customer Choice award serving Emerging Customers for metro data services excellence Rated by Gartner as one of the top nationwide service providers for meeting the voice and data networking needs of mid-sized and large enterprises. Teleworking is more common in small businesses: 33% 37% ALL BUSINESS SMALL BUSINESS ALLOWS TELEWORK Source: Connected Nation 1.5 mil SMBs.9 mil OTHER BREAKDOWN OF BUSINESSES THAT ALLOW TELEWORK Businesses report numerous benefits from cloud services: MORE FLEXIBLE 83% MORE PRODUCTIVE 78% MORE RESPONSIVE 74% MORE INNOVATIVE 73% SAVING MORE 71% Source: Cbeyond Survey

6 SOLUTION SNAPSHOT: EARTHLINK Organization: HoneyBaked Ham Operational Challenge: Operate an affordable, scalable & secure network to reliably connect disparate locations with an agile solution that can adapt to seasonal retail spikes Solution: Private MPLS network from EarthLink Business with a blend of wireline and wireless capabilities to handle permanent storefronts as well as seasonal pop up or kiosk locations Benefits: A uniquely reliable communications network with wireless EVDO that can expand and contract in a timely manner to accommodate holiday spikes SOLUTION SNAPSHOT: XO COMMUNICATIONS Organization: Central Alarm Control The Broadband Coalition represents America s innovative broadband providers. For innovations like the ones examined in this document to continue, the Federal Communications Commission s pro-competitive rules need to be updated and enforced regardless of the technology used. For more information on how to maintain an innovative broadband environment, visit thebroadbandcoalition.com Operational Challenge: Install a simplified, reliable and cost-effective phone system with exceptional customer service responsiveness Solution: Hosted PBX from XO Communications Benefits: Simplified billing, a single point of contact for customer service and scalability for the future Moving to XO was the best business decision we ever made. - Carlos Moya, VP, Operations at Central Alarms Control CASE STUDY: CBEYOND TotalCloud Phone System allows SMBs to manage remote workers with a wide range of phone capabilities TotalCloud Data Center offers computing power on demand to SMBs, including security and regulation compliance Whereas our average customer used to have 12 employees, our new customer has somewhere in the 20s. And these newer customers have been growing.. - Jim Geiger, Cbeyond CEO

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