Part II - FierceTelecom Leaders: Arunas Chesonis, Chairman and CEO of PAETEC

FierceTelecom: I have to ask with many tier 2 ILECs conducting deals, what's your take on the carrier merger/acquisition landscape? Do you have plans to conduct any deals of your own in 2010?
Chesonis: It's very good to be a buyer right now. Someone with good cash flow like ourselves, we have a good set of discussion with all three categories of companies all of the time: small VARs, the regional facilities-owned players and regional CLECs. A lot of people are interested in how they can scale faster and be part of a bigger organization. A lot of people feel that having the resources of a much larger company will help them accelerate their business plan. Most of the conversations we're having with people are being well received, but just like anything in sales you have to talk to 100 people to get 50 appointments to get 10 proposals to get one deal.

Usually if there's a rumor about us it's typically true, but it doesn't mean something is going to happen. The point is we have a nice platform to grow the company organically and be opportunistic about what you do can do M&A, but don't let it drive your mission.

FierceTelecom: We have seen some recent M&A activity with the tier 2 ILECs buying not only one another, but then Windstream buying up NuVox. What's your take on those deals?
Chesonis:
Yeah, I thought that was a great deal for Windstream and Nuvox because it highlights the fact that regional CLECs are good investments because they have nice customers and they can help the growth characteristics of companies. It was a nice validation for the industry.

FierceTelecom: One of the obvious issues that all CLECs face is how to get access to last mile fiber and copper facilities. Does the ILEC's ongoing retirement of copper have a major impact on PAETEC, and how do you see the last mile network evolving?
Chesonis: That's a long-term issue for all of us. There are more effective bandwidth options like fiber, but at the end of the day you're not going to get rid of the copper out there entirely because we spent 80 years putting it in there. You're not going to rewire the rest of the world that does not have fiber. That's a nice benefit of having an FCC that's more fact-based than maybe the previous FCC looking at these issues--it will be good for all of us. They are asking a lot of questions on what the infrastructure looks like and give me the data points on what buildings are on fiber or copper and where wireless spectrum is going to go. It might not mean that everyone gets what they want, but it's going to be more of an engineering approach. In the past, the FCC was like--what's my answer I want to come up with and make the entire facts look like it supports my answer. That was a backwards way of doing it.

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Click here for Part 3 of the interview

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