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

FierceTelecom: Despite the sagging economy, there are some vertical segments that are expanding facilities and need to upgrade their network infrastructure. Are there any segments that are showing signs of greater activity?
Chesonis: We started the company focusing on 2-3 government segments 11 years ago. Two of them were government and healthcare and the other two were higher education and hospitality. If you look at the two markets that are on fire this year, its government and healthcare. It makes sense because that's where people are putting stimulus dollars and investments. And the vertical markets that are struggling are those that you would expect such as real estate. Some parts of the country had been hit a bit worse than others such as Arizona, Florida, California and Michigan while others like Texas are doing very well. The reason most people like vertical markets is because you can create a product set that matches up to the needs of that type of customer and mass produce it. It's almost like a template to market to similarly situated customers not just in the U.S., but elsewhere in the world. While this is an efficient way of doing things, the risk is if you don't have a strong service model, usually bad news travels quicker than good news. It takes a long time to build up a good vertical and not too long to destroy it.

FierceTelecom: What should we expect to see from PAETEC in 2010?
Chesonis: We always told people that we thought 2010 would still be a reasonably difficult economic year, but people are more optimistic and are looking to plan for the future. They are actually talking about how they are going to grow their companies. It's a much healthier conversation than what we had with people 12 months ago, but we don't think all of a sudden everyone's going to hire 5-10 percent more in their workforces. You have to be cautious. We'll work the platform we have and the sales funnel has never been larger because of the national opportunities. We're really looking forward to 2010. Our cash flows are up even though our revenues are kind of flat.

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