Editor’s note: Charlotte Beat is a regular feature on Wednesdays. Today’s feature is Part Two of a Q&A with Aaron Cowell Jr., chief executive officer of US LEC.US LEC announced its fourth quarter and year-end earnings on Tuesday, and although the telecommunications company continued to lose money its revenues were up and net losses were cut.
In an interview with Local Tech Wire before the earnings announcement, chief executive officer Aaron Cowell Jr. was very upbeat about US LEC’s continuing trend of growth. In the second part of a Q&A, Cowell talks about his company’s target market, investment in infrastructure, and “not being all things to all people.”
While capital spending is being watched closely, he pointed out: “We are constantly investing in our network. We’re not trying to skimp along on the capital side. We are constantly looking at how many gateways we need to the Internet, how many locations, and more.”
Please talk a bit about capital spending. Most telecoms are reducing expenditures on new equipment and upgrades.
We are being cautious in cap expenditures, but they can’t be done away with or you sacrifice service. It’s one thing to be diligent. It’s another to know what equipment you need to support customers.
The depressed state of equipment buying puts you in a better position, doesn’t it?
You can drive down costs by being a much better buyer.
Everybody in this industry in this economy — generally, any industry — is looking for ways to cut costs. — We provide a great combination for customer — reliable service and great care along with cost savings that don’t involve customer sacrifice.
One of the advantages we have is that we are getting bigger all the time, and being a bigger buyer gives us leverage we didn’t have before.
Earlier this year you restructured your debt and obtained $5 million in new investment. Please explain your thinking.
We put our financing debt in place at a time when the market belief was that industry growth was at its height. A lot of companies were not able to deal with their debt and struggled to some degree. In our industry, a lot of people had to turn the lights out because of it.
Our growth rate was not high enough to support our debt load, so we moved the repayment load out a year or more to allow us to grow into it.
We did this before it became a crisis situation, and we’re very comfortable that we’ll be able to do it.
In an industry where people compete with CLECS (competitive local exchange carriers), they use a “fear, uncertainty and doubt” strategy. Will we be here tomorrow?
We can pound the table and say we’re here to stay!
You said you were not an advertising company. Please explain.
We have to decide what is the right advertising for our customer base. Bell South and Verizon are our competitors. We’ll never be able to compete with them on the radio or as a charitable event sponsor or in the newspaper.
We also have competitors who have multi-million dollar ad budgets with names on stadiums. That’s not what we are, either.
We have a growing dominance in many markets. Now, we’re trying to figure out how to build upon the leverage we already have.
Our target market is businesses with 10 to 15 business lines and a data need. We haven’t found a good way through mass media to meet that customer base.
How do you plan to continue your growth?
To some extent, the economic times help us. The class of customers out there we are pursuing would not have given a CLEC the time of day three years ago. They’ve always had Verizon or a Bell, so why change?
But when companies started looking at their cost structure and saw they could save 10, 20, 30 percent by moving to an alternative carrier, we started seeing more customers. Instead of us calling them, they are coming to see us.
Are you positive about future growth?
The third quarter was our best ever, and we think that’s going to continue. We think we see momentum — good momentum.
Our goal is to be No. 1 in market share among CLECS in our footprint.
We do offer some bells and whistles. People can take a variety of services from us beyond voice — data, e-mail, web hosting, the ability to dial in from remote locations. We offer a full suite of voice and data services.
But we don’t try to serve markets we can’t get to, and we don’t try to be all things to all people.
Do you have any plans to offer Voice over Internet Protocol services?
We are always evaluating. Our customers are generally agnostic about whatever technology we want to bring them. Most customers are looking for very reliable voice services. They are used to no distortion.
They are used to turning on the lights and knowing the phone works.
Part One: They Don’t Have a ‘Swoosh,’ But US LEC Team Does Have a Strong Reputation for Service, Says CEO – www.localtechwire.com/article.cfm?u=3404
Editor’s note: US LEC operates 26 switches. The number was reported incorrectly on Tuesday.