The Conneaut Telephone Company

Big Enough to Succeed – orBig Enough to Survive?

Profile

Founded in 1897 Reorganized and incorporated in

1926 – same stock still circulating today

I am only 6th Chief Executive of the Company

~ $8 million in annual revenue

Work Force—Keep it Lean39 EmployeesAbout half Union Two administrators Five Primary departments Two professional managers

(HR/Billing) Six (6) I.T. field techs In-house construction and tech

support Everyone multi-functional and

interdisciplinary Few contracted services

Services We Provide

Regulated Telephone/calling features/LD/Key Sys. Cable TV and related products Communications construction/structured cabling Outsourced I.T. Consulting/business/residential Broadband Internet access:

In territory-service available today to every customer Out of territory by wholesale agreement (WS & CL) Service types: ADSL, Cable Modem, FTTH, and WI-FI Speeds: FTTH-Up to 30/30, Cable Modem-Up to 18/1,

ADSL-Up to 24/1

Market Share:

Telephone ~ 4,200 lines (75% ms) Internet ~ 3,200 accounts (ADSL,

Cable Modem, Fiber, T-1) Cable TV ~ 2,200 subs (48% ms) Over 40 I.T. customers with over 30

on monthly retainer CLEC coming online later in ‘12 and

FTTH to expand territory started

Keys to our Execution:Don’t rest on Monopoly

Since early 90’s company believed local competition was coming and that ICC would erode

Worked to diversify with investments in Cellular, Internet, and CATV services

Realize that we must diversify geographical market in addition to diversifying services

Lean work force and small administrative layer All employees working to create revenue Offer all related services customers want Make smallest investments possible to get into

a product line, then expand with demand Use Gray market where prudent

Recent Investments:

$2M in fiber trunk outside area to increase bandwidth and lower costs

Doubled Cable Modem speeds by adding DS

Rebuilt all ADSL footprint 3 years ago Launched first FTTH system to over build

ADSL footprint in coming years (1st regional provider to launch FTTH)

Keep pushing upper limits of bandwidth to customers while watching capacity

Strive to be the best Cost/Mb provider

Are Small Telcos Surviving?

Why? Wages are calibrated to area cost of living

CEO pay ~ $125K for SLEC Windstream (Morning Star) $9.7M (77x) Verizon (Bloomberg) $23.1M (1,848x) Time Warner Cable (Fox Bus.) $16.4M (131x) Extrapolate that for CFO, COO, HR, etc.

New products added to meet demand not as speculative

Multi-functional workforce Not slaves to Wall St.

Challenges Ahead

USF and ICC Changes – Can we replace revenue as fast as change takes it away?

Political ideologies against small telcos

Anticompetitive practices of competitors(Feel like the eldest child)

Big Enough to Succeed?

Another five years will tell the tale

Thank you