Expanding Market Share Gen Tel Co Sample Gen

Expanding Market Share Gen. Tel. Co Sample Gen. Telco. Summary Report | SUMA Partners 1

Table of Contents Executive Summary. . 3 Voice of the Customer. . . . 22 Situation Analysis. . . . 5 Conditions at the Time. . . 6 Objectives. . . . . 7 General Attitudes. . . . Dependability, Reliability. . . Branding Gen. Tel. Co. . . . . The Sales Experience. . . Churn. . . Billing. . . Price. . . Customer Service. . . . Methodology. . . . Internal Teams. . . . 8 Initial Questions. . . . 9 Market Research. . . . 9 Focus Group Parameters. . 10 11 Recommendations / Results. . Required Elements. . . . Action Plan. . . . . 12 Initiative Results. . . . 13 Going Forward. . . . 13 14 Brand Promise. . . . 14 Initiative Rollout. . . 15 Lessons Learned. . . . 17 18 Gen. Telco. Summary Report | SUMA Partners Myths. . . 23 24 25 26 27 28 29 30 31 35 Hunches. . . . . 36 General Attitudes Re: Industry. . . . Attitudes and Perceptions. . Dependability, Reliability. . . The Sales Experience. . . Churn. . . Up Market / Down Market. . Customer Service. . . . 38 39 40 41 42 44 45 Market Data. . . . . 46 Who is the Competition? . . . 47 Green Zone Penetration. . . 49 Yellow Zone Penetration. . . 2

Executive Summary

Executive Summary SUMA Partners collaborated with Gen. Tel. Co’s Houston office to find untapped segments of Houston’s telecommunications market, and to produce a strategy for Gen. Tel. Co to capture these key market segments. Gen. Tel. Co management was particularly interested in reduc-ing churn and identifying the “Sweet Spot” in terms of market segment and Gen. Tel. Co products and services. The ultimate goal of successfully implementing this strategy is realization of double-digit growth in Gen. Tel. Co monthly revenue. Gen. Telco. Summary Report | SUMA Partners 4

Executive Summary Situation Analysis • Ambitious revenue goals (double-digit growth) for the coming months. • Recent corporate moves offer potential multiplier effect for increasing sales • New products and services offer untapped revenue potential. • Shift in regional competition. Some local companies have gone out of business. SBC may be making aggressive moves (bundling, reduced pricing, win-back). • New products and services may not have maximized their revenue potential (e. g. , audio conferencing). Other products and services are in development. • Investments are being made into “last mile” for selected locations, to enhance long-term margins. • Recent local initiatives: 3 rd Team, external telemarketing group to qualify leads, reinstating external group to assist in New Hire Training, co-marketing with property managers. • Outdated market perceptions of Gen. Tel. Co Gen. Telco. Summary Report | SUMA Partners 5

Executive Summary Conditions at the Time • inadequate understanding of local competitive landscape • unclear on beliefs / motivations of prospects, including: - reasons behind purchase decisions - perceptions about the telecom industry • more than 130 products / services led to: - overwhelmed new hires - veterans selling in comfort zone • no strategic sales approach • inefficient approach: - replacement selling / relegated to price only - no compelling reason to buy • poor account representative participation Gen. Telco. Summary Report | SUMA Partners 6

Executive Summary Objectives SUMA Partners designed a multi-faceted market research approach to: • identify key decision factors / behaviors of current customers, former customers, and prospects. • portray the competitive landscape for Houston telecommunications. • understand current market perceptions of / feelings about telecommunications. • determine market perceptions/knowledge of Gen. Tel. Co (products, services, market conditions, positioning, competitive landscape). • identify attributes/products/services most valued by targeted customer groups; test value propositions. • create effective, efficient, integrated approach that brings more Houston customers/revenue to Gen. Tel. Co. Gen. Telco. Summary Report | SUMA Partners 7

Methodology

Methodology Internal Teams The Gen. Tel. Co Core Team provided a national perspective on key market drivers, market traction, and churn issues. The team included representatives from Gen. Tel. Co national / regional sales divisions, as well as the Gen. Tel. Co General Manager. The Gen. Tel. Co Acceleration Team provided leader-ship and input on strategic sales initiatives, market data, and implementation priorities. The Gen. Tel. Co Implementation Team provided a local perspective on Gen. Tel. Co’s sales, marketing, and operations. The team included individuals from Gen. Tel. Co’s direct and indirect sales, customer service, and operations. Gen. Telco. Summary Report | SUMA Partners Initial Questions Meetings with the internal teams provided information about Gen. Tel. Co’s strength, weaknesses, opportunities, and challenges vis a vis the market. • Which factors are the leading indicators for where Gen. Tel. Co wants to be? • How can Gen. Tel. Co capitalize on new opportunities to achieve market growth in Houston? • What is the “value proposition” for each of the targeted customer groups? • What are the priorities for taking action toward achieving the Gen. Tel. Co Communications Team’s objectives? 9

Methodology Market Research SUMA Partners’ research focused on customer attitudes and behaviors in the Houston telecommunications market. • Survey of current Gen. Tel. Co customers - overall customer satisfaction - ranking of 38 distinct telecommunications products / services - perceptions of telecommunications firms’ performance in the Houston market - ranking of Gen. Tel. Co versus competing firms in seven general product / service categories • Facilitation of focus groups with former and potential Gen. Tel. Co customers Gen. Telco. Summary Report | SUMA Partners 10

Methodology Focus Group Parameters Group III Group IV Current Gen. Tel. Co Customers Mix of $1, 000+ MRC Decision-maker No carriers Mix of IT & Telecom XYZ market Mix of data & voice customers Mix of new & more established Potential Customers Former Gen. Tel. Co Customers Potential Customers Mix of $500 -$2, 500 MR Decision-maker No carriers Mix of IT & Telecom people Incumbent & CLEC XYZ market Mix of data & voice Gen. Telco. Summary Report | SUMA Partners Mix of $500+ MRC Left Gen. Tel. Co Decision-maker No carriers Reasons for churn “actionable” Mix of data & voice Mix of IT & Telecom people Mix of new providers Mix of $3, 000+ MRC Decision-maker No carriers Mix of IT & Telecom Incumbent & CLEC XYZ market Mix of data & voice 11

Recommendations / Results

Recommendations Required Elements The concept of quality is defined by a combination of the following factors and attributes, none of which is mutually exclusive: • no down time • clarity • reliability / dependability • efficient, effective, timely customer / technical service Action Plan Gen. Tel. Co’s must “customerize” and fully integrate sales, cus- tomer service, technical support, and billing. The clear differentiators for Gen. Tel. Co must be woven into an aggressive, well-managed strategy for increasing awareness in the following markets: 1) Vendors and agents) 2) Business purchase decision-makers (targeted, not broadcast) 3) Referrals from current customers 4) general business community. Specific suggestions include: • targeted sales pitches that maximize yield • coverage • customer service/sales/operations workshops • reputation • defined roles and processes • price / value • re-designed incentives / compensation / measurements for sales and customer service personnel • educational materials for prospects and customers • bankruptcy information blitz • defined sweet spot • branding and win-back initiatives Gen. Telco. Summary Report | SUMA Partners 13

Initiative Results Outcomes Realized • clear understanding of market “Sweet Spot” Going Forward: Goals • 1. 5% market penetration • strategic sales approach • revenues ≥ 5% increase (over normal run rate) • direction for new hires • sales participation ≥ 70% • reduced sales cycle / improved efficiency • sales productivity ≥ $4, 000 • increasing revenues - increase close ratios • churn reduced to < 1% - more up-market sales • number one market in U. S - more “bang” for marketing dollars • improving account representative participation • consistently in Top 5 • “Hybrid Tier 1”: considered Tier 1 (awaiting changes) Gen. Telco. Summary Report | SUMA Partners 14

Brand Promise The translation of refined analysis of market data into a branding statement for Gen. Tel. Co, addressing the highestpriority customer issues that emerged from SUMA’s research

Brand Promise Gen. Tel. Co Communications is… A data-savvy national company with a big Houston heart. We promise to provide service that is “always up. ” Because we have our own switch, we can reduce the risk of downtime. RELIABILITY We specialize in reliability, security, and just as much redundancy as you need to keep your systems up and running. All the time. Because we understand that telecommunications is the lifeblood of your company. MASTER DIAGNOSTICIANS We pride ourselves in our diagnostic skills. We listen carefully so we can understand your needs and anticipate ways your business might change and grow over time—so we can grow with you. PRODUCTS AND SERVICES Our products and services have been judged to be the best in market in terms of flexibility and the ability to meet your business needs. CUSTOMER INTIMATE Our promise goes beyond our technical expertise and killer applications. . . we focus on our relationships with our customers and our community, on the our long-term commitment to being the Houston market leader, and on promise to help our customers achieve market leadership, too. Gen. Tel. Co Communications… always up. Gen. Telco. Summary Report | SUMA Partners 16

Initiative Rollout

Initiative Rollout “Seizing Untapped Market Opportunities” was introduced at a one-day, hands-on workshop on January 16, 2004. The four main areas of focus included: • Double-Digit Growth: accelerating sales productivity, gaining market share, reducing churn. • Gen. Tel. Co’s Sweet Spot in the Market: Gen. Tel. Co’s “killer differentiation” message, signals to give that communicate “Gen. Tel. Co is the one, ” creating a multiplier effect. Gen. Telco. Summary Report | SUMA Partners • Customer-izing Gen. Tel. Co’s Shop: practical, implementable ways to improve the customer’s experience throughout the lifetime of the relationship. • Ramp-up of new hires: What sales team leaders can do differently to increase productivity and awareness of strategic positioning among new account executives. 18

Initiative Rollout: Lessons Learned What Gen. Tel. Co team members told us they learned during the rollout session: Customer perspectives on telecommunications Gen. Tel. Co participants were shown what lies just beyond the customer’s perception of telecommunications as a “necessary evil. ” Breaking through the customers’ dislikes about telecom creates opportunities for a skilled sales force to sell solutions: “Telecommunications changes every day, and customers need to be educated. ” “Perception of telecom IS reality - so find out what the perception is and take advantage of it. ” “The majority of providers can deliver – it’s a matter of who really listens to the customer. ” “Customers trust the advice of their vendors more than I expected. ” Gen. Telco. Summary Report | SUMA Partners Competitive landscape for telecom- munications Gen. Tel. Co participants gained new insights into how cus- tomers view the firms who are competing for their business, and how Gen. Tel. Co is viewed among this group: “Don’t automatically assume that price is the key differentiator. ” “Customers aren’t concerned with Tier Levels – the leading firms are those who deliver on their service. ” “We have fewer true competitors than I assumed, but they are also more aggressive than I expected. ” “Gen. Tel. Co has huge market opportunities in data and on-net buildings. ” “We have a strategic advantage in offering switch tours. ” 19

Initiative Rollout: Lessons Learned Gen. Tel. Co’s sales strategy Gen. Tel. Co participants became more attuned to customers’ needs regarding overall solutions and reliable service: “We must thoroughly understand our prospects needs and focus on providing a total solution. ” Information that will help in their jobs. The majority of participants noted the Green Zone penetration figures and the benefits of positioning Gen. Tel. Co as a data-savvy firm. Other helpful information included: “We can get good client testimonials from satisfied customers. ” “Probe - close the gap between face value and added benefit. ” “There is emerging demand for data; the switch sells!” “Make it simple, keep it simple. ” “The video and analysis from customer focus groups will help me drill down on my current engagements more effectively. ” “Leverage Gen. Tel. Co assets and reinforce the Gen. Tel. Co brand. ” “Use a consultative approach; be more aggressive in targeting the Green Zone. ” Gen. Telco. Summary Report | SUMA Partners “Utilize the switch; work with peers to boost product knowledge. ” 20

Initiative Rollout: Lessons Learned What they will do differently based on this new knowledge Gen. Tel. Co participants want to listen better, apply a sharper analysis of their customers’ benefit signals, and capi- talize on opportunities to up-sell. “Work the Green Zone more, find the ‘Sweet Zone. ’” “I will improve my product knowledge, focus my prospecting, and make a knockout introduction as to who Gen. Tel. Co is!” “I plan to simplify my approach, use less industry jargon. ” “Think carefully, analyze data, re-position in either vertical or horizontal marketing, drive up-market sales. ” Gen. Telco. Summary Report | SUMA Partners What participants need from Gen. Tel. Co to help them meet their 2004 goals Gen. Tel. Co focus on increasing visibility, better installation and service team follow-through, and more product training topped the list: “A brown bag lunch once a week, with a product training session. ” “Keep the product promos fresh and allow the reps some flexibility. ” “Shorter provisioning time; Gen. Tel. Co needs to get a good handle of the order process and management of orders so I don’t have to. ” “We have the tools to sell—we need flexibility in packaging the products. ” “Keep moving in the current direction—we have a great leader. ” 21

The Voice of the Customer The framework for findings and conclusions.

The Voice of the Customer: General Attitudes The term “Tier 1” does not resonate with the customer. • Participants’ groupings don’t match actual Tiers. • Tier 1 is associated with name recognition, size of company, and advertising dollars spent • Residential experience affects buying groups in lower end. • Customers don’t really know what services are offered by their providers. • There is a lot of confusion with customers re: wireless vs. traditional providers. • Customers (lower MRC) are not educated in telecom. “Telecommunications is a necessary evil. . . A nightmare scenario. ” “Telecom is an expensive black box we don’t understand. ” “It’s too complicated. ” “They’re not Tier I in our eyes, even if they are in the industry. ” “If they have to say they’re Tier 1, they’re probably not. ” • “Word of mouth” is powerful: One bad experience can influence an entire group even if they have never heard of your company. Gen. Telco. Summary Report | SUMA Partners 23

Voice of the Customer: Dependability, Reliability • Dependability and reliability are the overall top dealmakers and deal-breakers. [telecommunications is the] “Lifeline of the business. ” • Definitions include (perception of) size of vendor, reputation, coverage, technical response, up time, customer service “Without our communication system, we don’t work. ” • There is a perceived link between declaration of bankruptcy and decreased dependability. “Reliability means constant up time. ” • Potential risk of company going under isn’t worth it to most customers. “Telecommunications is the backbone of company. ” “I worried about Gen. Tel. Co; I was afraid they were going under. ” Gen. Telco. Summary Report | SUMA Partners 24

Voice of the Customer: Branding Gen. Tel. Co • Participants either have never heard of Gen. Tel. Co or do not know what value it offers. • Customers believe Gen. Tel. Co needs to advertise. • Problems raised seem to be universal across all carriers —the industry as a whole contributes to the negative perceptions about Gen. Tel. Co. • “We can’t buy you if we don’t know you. ” “Distinguish yourself from the pack. ” “Didn’t Gen. Tel. Co go under? ” The market is “ripe” for marketing initiatives. Gen. Telco. Summary Report | SUMA Partners 25

Voice of the Customer: The Sales Experience • Customers want sales reps to be technologically knowledgeable. “Deliver what you promise. ” • People buy because they think the rep / vendor is honest. “Explain product without using terminology that most people wouldn’t understand. ” • Especially lower end customers are confused about broadband vs. data. • SLA’s are especially important to data people. • Timing is everything. “Sell me what I need, not what you can sell me. ” “Throw sales promotions in the trash; I don’t want to become a customer based on that. ” “I don’t’ like it when they use all those acronyms and technical terms--I feel like they’re talking down to me. ” “ Gen. Telco. Summary Report | SUMA Partners 26

Voice of the Customer: Churn • Most customers who had switched to CLEC had done so more than once. • Some switched because they liked the sales rep. • Switched because it was the “right” time. • Most are open to retuning if they’ve switched before. Gen. Telco. Summary Report | SUMA Partners “I don’t want to get out, I just want good service. ” 27

Voice of The Customer: Billing • Bundled services and one provider are as important as ever to customer. • Billing was a general problem with all participants. • Customers want a clean bill. Gen. Telco. Summary Report | SUMA Partners “It took thirteen months to correct our billing problems. ” “I’m still getting bills, and we don’t even use their service anymore. ” 28

Voice of the Customer: Price • Customers are more interested in quality / customer service. • Price is tied to quality / expectations. • Customers will pay more for dependability. Gen. Telco. Summary Report | SUMA Partners “Give me simple, definitive pricing. ” “Price isn’t always the issue—it’s quality of service. ” 29

Voice of the Customer: Customer Service • Customers want one contact. • They are frustrated with the chain of companies for repairs. • The issue isn’t whethere are problems, but HOW the problems are handled. “Customer service is everything. ” “It’s OK to make mistakes--just take responsibility, be honest, and fix it. ” “Every time I called Gen. Tel. Co, I got mad. ” “It’s a nightmare where one maintenance agreements stops and the other picks up. ” “Customer service reps can’t solve problems. ” “I just want to talk to somebody. ” “No one accepts responsibility. ” “If you say you’re going to call me, CALL ME!” Gen. Telco. Summary Report | SUMA Partners 30

Myths Beliefs commonly held by Gen. Tel. Co personnel and customers

Myths Myth Fact The current level of sales activity is sufficient to achieve double digit growth. The levels and types of activity must be kicked up immediately. Gen. Tel. Co-Houston’s network has limitations that keep it from being competitive. The green zone alone has penetrated its potential by less than 2 percent. Plus, the perception is that Gen. Tel. Co’s network offers very competitive coverage. Gen. Tel. Co is doing everything it can to renew current customers at contract renewal time. SBC has a very aggressive system for contacting Gen. Tel. Co’s cus-tomers at the time of renewal. Gen. Tel. Co is not perceived to be doing as aggressive a job at that critical time. Gen. Tel. Co sales account executives never leave money on the table. According to customers, Gen. Tel. Co sales account executives leave money and entire product lines on the table for other vendors to grab. Gen. Telco. Summary Report | SUMA Partners 32

Myths Myth Fact Gen. Tel. Co’s products and services are not price-competitive. The market thinks Gen. Tel. Co’s products and services are extremely well-priced: Hands-down better than SBC and ATT, which are viewed as expensive and not necessarily worth it. Every Gen. Tel. Co sales account executive knows enough about the Gen. Tel. Co products and services to be considered to be a “Master Diagnostician”. Most need to practice analyzing customer needs and translating them into potential product and service “filters. ” Then, they need to go to the next step by using good probing skills. No one knows Gen. Tel. Co in Houston. We need advertising. Compared with a market that does advertising, Gen. Tel. Co has more sales per capita. However Gen. Tel. Co desperately needs visibility. Gen. Tel. Co should just sell however it can in the Houston market. A sale is a sale. Gen. Tel. Co’s sweet spot is clearly as the “data savvy provider”. Every sales account executive needs to understand customer “benefits signals” and what is behind them. If they get into a “Voice File Folder, ” they’ll be up a creek trying to either replacement sell or compete against the “incumbent” mentality. Gen. Telco. Summary Report | SUMA Partners 33

Myths Myth Fact Gen. Tel. Co has nothing unique to offer. It’s too hard to sum it all up. A picture is worth a thousand words. Salespeople should carry a photo of the switch in their wallets, incorporate it into their elevator speeches and sales pitches. It’s all about the switch Gen. Telco. Summary Report | SUMA Partners 34

Hunches SUMA and Gen. Tel. Co project team assumptions, generated throughout the early and middle stages of the project. The most significant hunches were catalogued and tested against research findings.

Hunches General Attitudes re: Industry Hunch Generally, the CLECs have low name recognition. Commentary People believe all CLECs are resellers. As soon as Gen. Tel. Co is grouped with “all those CLECs”, it loses strength and credibility. Key areas of differentiation: Gen. Tel. Co has a network, they don’t; Gen. Tel. Co has outside-the-mainstream products that are application-specific (e. g. , Teleblock), they don’t. How does the customer view VOIP? Those who know about VOIP think it’s a signal of data expertise. The market is moving toward data and/or broadband. YES – Gen. Tel. Co needs to lead the charge. Customers believe all communication services will eventually end up going over a broadband connection / Internet. (Note: find out if they believe it will be primarily wireless or terrestrial. ) YES Customers don’t really understand, or their perceptions are incorrect, regarding local loop, last mile, etc. There is a wide range of “last mile” understandings, depending on level of IT background. Gen. Telco. Summary Report | SUMA Partners 36

Hunches General Attitudes re: Industry, continued Hunch Commentary Internet as a driver…who are the competitors? Everyone The average customer doesn’t know the difference between Tier 1 and Tier 2. Customers might care if they understood. They do under-stand risk and are willing to pay more to mitigate risk. Ads or billboards work. Everyone knew Birch because of its billboards. Gen. Tel. Co. XYZ’s success is about leadership and a targeted business-tobusiness visibility strategy—not simply top-of-mind awareness by consumers. At a T-1 speed or less, the method of Internet access does not really make a difference. (e. g. , T-1, DSL, or cable). Customers consider DSL/cable to be consumer grade. T-1 is for business and is more reliable. SBC has the best follow-on position (will that be true in data / broadband? ). Many prospects will still choose SBC for Internet because of the name. . . Although Gen. Tel. Co has a huge opportunity to enter as a data leader / expert. Gen. Telco. Summary Report | SUMA Partners 37

Hunches Attitudes and Perceptions re: Gen. Tel. Co Hunch Commentary Gen. Tel. Co is not well known in the XYZ market Very true and very important to change A. S. A. P. The perceptions about SBC’s customer service are not as bad as Gen. Tel. Co thinks they are. SBC = reliability; however, all were willing to churn. They expect hassles, even from SBC. Gen. Tel. Co does not stand alone in the bundled offering arena. Gen. Tel. Co can out-bundle anyone. Bundling matters. Everyone is doing it. Gen. Tel. Co isn’t known, period. Centralized operations at Gen. Tel. Co have reduced quality of support, especially pre-install. AMEN. Customers would love it if Gen. Tel. Co could give the appearance of a single point of contact for the install. Gen. Tel. Co is better known for voice than data. Gen. Tel. Co must compete with SBC and ATT in the voice arena. Good news is that the future is in positioning Gen. Tel. Co as the leader in data. “Almost all research and development being done by phonesystem developers is on VOIP. By the end of this year 20% of the new phones shipped to the U. S. will use VOIP; by 2007 that number will exceed 50%. ” (Wall Street Journal, 1/12/2004). Gen. Telco. Summary Report | SUMA Partners 38

Hunches Dependability, Reliability Hunches Gen. Tel. Co does not have a substantial “green zone” footprint, relative to other markets and competition. Commentary Gen. Tel. Co’S view: We’ve penetrated less than 2% of the green zone. Competitive perspective: Most competitors have an unlimited footprint, including ATT; but they re-sell. Because of their names, the customer assumes they own the facilities. Customers’ perspective” If they know Gen. Tel. Co, they are more inclined to put Gen. Tel. Co in the same category as SBC. Corporate fiscal considerations are an ongoing concern. Not necessarily top-of-mind, but noteworthy. Position Gen. Tel. Co as a vital, ongoing concern. Be armed with proof that Gen. Tel. Co is fiscally sound. The bankruptcy issue must be addressed If a “stamp of approval” could add to credibility, what unprompted stamp of approval would b effective? Managing expectations, vendorsements, guarantees, all help. What can Gen. Tel. Co promise for delivery? Customers’ perceptions about the stability of wireless vs. landline. (There are different flavors of wireless, i. e. fixed wireless, cellular, Wi-Fi/ Blue. Tooth, wireless data network, wireless cable). The definition of “competitive landscape” for smaller customers reflected a residential and consumer mindset in terms of products and brands. Gen. Telco. Summary Report | SUMA Partners 39

Hunches The Sales Experience Hunch Commentary Price is a bigger factor than “value proposition. ” NO – you must be able to prove quality and reliability. No one listed price as a reason for churn. The Gen. Tel. Co compensation plan should look at how it rewards per-formance so it can focus on hitting the sweet spot. Critical: increasing sales activity, expanding the approaches to filling the funnel, and getting referrals. SBC tracks Gen. Tel. Co’s contract deadlines better than Gen. Tel. Co can. What an embarrassment! Gen. Tel. Co must start at least a paper trail to follow up on its own contract renewals. Gen. Tel. Co’s credit process is burdensome. The subject never arose, so it can’t be too big an issue. It certainly shouldn’t hamper a salesperson’s level of confidence. However from an operational standpoint this process should be streamlined. 130 products. . . Gen. Tel. Co needs to find the sweet spot. It is difficult for customers to group these products. The benefits signals are a perfect way to filter the 130 products and prioritize them for a given customer’s needs. Wireless as a new direction. . . Who are the competitors? What are Gen. Tel. Co’s options? Gen. Tel. Co should consider an alliance with a wireless provider. That level of strategic alliance is a wave of the future based on what customers want. Gen. Telco. Summary Report | SUMA Partners 40

Hunches Churn Hunch Commentary Service, billing, response, SLAs, meantime to repair, all drive churn. . . how are these factors different from the sales factors? It’s about customer communication—customer intimacy—competitors’ timing. Offers like bundled services and single billing might not have the allure they once had as reasons for customers to switch providers. (NOTE: Look for the big next reason to switch. There could be some niche products that would drive customers to switch providers. ) Customers still want this; they just haven’t found it yet. Gen. Tel. Co needs to prove it is a dependable, integrated communications provider. Gen. Telco. Summary Report | SUMA Partners 41

Hunches Up Market / Down Market Hunch Commentary The larger the prospective customer, the more important the last mile. Research did not support this—actually, it’s tied to overall technical knowledge. Larger companies expect the provider to include last mile, but didn’t question who would “own” it. Gen. Tel. Co can’t compete in the up market. Is it due to lack of name recognition, or capabilities? (High risk for decision-maker if there are problems vs. if there are problems with SBC). Gen. Tel. Co customers rate Gen. Tel. Co with SBC and ATT. That must be dem-onstrated and delivered on. (Cover this differentiator with branding). Assurances and down time guarantees help. Up market proxies for competency/requirements for marketing to the up market: > Increased visibility > Marquee client testimonials > Great references, with other large customers > Vendor referrals (sophisticated) Educate sales people in technical knowledge; bring in technical experts for mission-critical aspects of the client’s business. Proactive trouble shooting; don’t point fingers. Dedicated account team and billing person. Know what MCI has done wrong and what SBC has done correctly. Gen. Telco. Summary Report | SUMA Partners 42

Hunches Up Market / Down Market, continued Hunch Commentary Smaller enterprises are becoming more sophisticated. Smaller enterprises expect convergence between wireless and data. They operate from a residential knowledge base. There is a halo effect (or negative halo effect) with long distance providers who call them at home; Time Warner, who offers residential, cable, etc. ). For non-Internet based companies, the order of importance is 1) price 2) up-time 3) speed 4) latency / packet loss. Price is part of the purchasing decision. Gen. Tel. Co current customers: price / knowledge / service. Churn group: price / customer service / product knowledge. Down market: price / reliability / service. Up market: service / price / quality. Gen. Telco. Summary Report | SUMA Partners 43

Hunches Customer Service Hunch Commentary Customers prefer customer-managed solutions vs. outsourced solutions (hosting, applications, Microsoft exchange, firewall, etc. ) Customers seemed to want peace of mind, security, and redundancy. Whether that comes from outsourced or customer-managed solutions was of little concern. When it comes to Internet access, up-time is more important than speed. That should be Gen. Tel. Co’s local promise. As a perceived differentia-tor, up-time is a proxy for market leadership. Speed is not the driver of perception as a buying signal. Customers can name their customer service deal-makers and deal-breakers. One point of contact, delivering what you promise, and managing expectations are deal makers and churn creators. Gen. Telco. Summary Report | SUMA Partners 44

Market Data Key findings based on original research of the local telecommunications market and industry trends

Market Data “Who is the competition? ” Four Gen. Tel. Co internal teams plus the Gen. Tel. Co General Manager were asked to name and rank Gen. Tel. Co’s local competitors. The internal perceptions do NOT track with the customer perceptions. Direct Sales Indirect Sales Gen. Tel. Co-Core Team Up Market Focus Group Gen. Tel. Co—Senior Execs SBC SBC Qwest AT&T Time Warner Sprint MCI Global Crossing MCI Time Warner AT&T Time Warner Sprint MCI Birch Allegiance Logix Gen. Telco. Summary Report | SUMA Partners 46

Market Data Green Zone Penetration Number of Lines Houston-Area Gen. Tel. Co Penetration Prospects Customers 1 to 5 50, 566 268 0. 5% 6 to 10 9, 176 104 1. 1% 11 to 15 3, 682 66 1. 8% 16 to 20 1, 594 36 2. 2% 21 to 49 2, 111 55 2. 5% > 50 639 21 3. 2% Gen. Telco. Summary Report | SUMA Partners 47

Market Data Monetization of increased green zone penetration FOCUS ON THE GREEN ZONE. GENTELCO HAS SUCH A SMALL PERCENTAGE OF MARKET SHARE THERE THAT AGGRESSIVE MARKET PENETRATION WOULD YIELD SIGNIFICANT SUSTAINABLE REVENUES. Number of Lines Customer Prospect 5% of Potential 1 to 5 $134, 000 $13, 551, 688 $677, 584 6 to 10 $78, 000 $954, 304 $47, 715 11 to 15 $66, 000 $243, 012 $12, 151 16 to 20 $45, 000 $57, 384 $2, 869 21 to 49 $82, 500 $116, 105 $5, 805 > 50 $36, 750 $13, 419 $671 Totals $442, 250 $14, 935, 912 $746, 796 Gen. Telco. Summary Report | SUMA Partners 48

Market Data Yellow zone penetration XYZ-Area Gen. Tel. Co Number of Lines Prospects Customers Penetration 1 to 5 47, 176 44 0. 1% 6 to 10 6, 667 29 0. 4% 11 to 15 2, 672 13 0. 5% 16 to 20 1, 175 8 0. 7% 21 to 49 1, 506 16 1. 1% > 50 402 9 2. 2% Gen. Telco. Summary Report | SUMA Partners 49

Market Data Monetization of increased Yellow Zone penetration Number of Lines Customer Prospect 5% of Potential 1 to 5 $22, 000 $2, 075, 744 $103, 787 6 to 10 $21, 750 $193, 343 $9, 667 11 to 15 $13, 000 $34, 736 $1, 737 16 to 20 $10, 000 $9, 400 $470 21 to 49 $24, 000 $24, 096 $1, 205 > 50 $15, 750 $3, 618 $181 Totals $106, 500 $2, 340, 937 $117, 047 Gen. Telco. Summary Report | SUMA Partners 50