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March 21, 2006

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Executives Roundtable Shares Stories on Companies' Extreme Makeovers

It may sound like a cable TV show, but Monday’s “Extreme Makeover” session showed COMPTEL PLUS attendees that competitors are nimble and can evolve their business models in the face of technological and regulatory changes.

Joseph Sandri Jr., senior vice president, First Avenue Networks; Bill LaPerch, president and CEO, AboveNet; Bill Capraro, CEO, CIMCO Communications Inc.; and Hank Carabelli, president and CEO, Pac-West Telecomm, shared their experiences transforming their respective businesses. The panel was moderated by Jason Oxman, COMPTEL’s senior vice president of legal and international affairs.

CIMCO, for example, started as a payphone provider, then an SDN reseller, then became a data services provider in the ’90s and a local reseller in the late ’90s. “Eighteen of 21 years were spent as a reseller,” said Capraro. “It was going really great. Then, overnight, UNE-P was taken away.” This caused CIMCO’s makeover, which included a move to facilities over 18 months, ending at the close of 2005. “We had to rebuild. It took longer and was more expensive than I thought it would be. It’s a much better place to be once you get there. We had to change just about everything we did. It was a tough job, but I would recommend it.”

Carabelli said Pac-West caught many waves of change and that the company is in a continual transformation process. Eighteen months ago, the company divested its SMB customer base and decided to become an enabler for other branded phone companies; it is expanding nationwide and is midstream in its transformation. “There were a lot of obstacles — one was brand, pure market power,” he said. “It can be a competitive market, but Pac-West isn’t going to be slugging it out with the Bells.”

Sandri said First Avenue is trying to avoid remaking the mistakes of early entrants in the fixed wireless business. “There’s only so much to be learned from the second kick of a mule,” he said, quoting his grandfather. “A lot of us rushed into fixed wireless as a ‘build it and they will come’ model. We are using a success-based model.”

La Perch noted AboveNet’s extreme makeover was bankruptcy-induced. “It wasn’t about profit and margin; it was about market share,” he said, recalling the errant direction of the early ’90s. The company spent 15 months in Chapter 11 and pared down its three business focus areas to just one — providing metro access solutions. “We are taking a focused, disciplined approach,” he said, noting that AboveNet takes care to understand the metrics of every deal on day one.

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