XO Launches National Hub Wholesale Solution

On June 27th XO launched XO National Hub, a wholesale network solution that enables XO’s customers to expand their networks through a single network connection. XO customers can also reserve network capacity and deploy it when needed but only pay for circuits when they are used. The service is available today, and is targeted to international carriers extending service to the U.S., mobile wireless operators that need to rapidly expand capacity to meet increasing wireless voice and data needs, carriers that need primary or redundant network solutions, and ISPs that need to aggregate traffic nationwide through a single network handoff.

Recommended Competitive Responses

► Large wholesale competitors such as AT&T, Level 3 and Verizon can consider the addition of similar managed services for wholesale customers either on an individual case basis or as a standard product offering. XO is not doing anything that is technologically revolutionary; it is simply packaging previously disparate services that customers frequently ordered together. These competing carriers can point to a more extensive metro presence than XO offers.

► Competitors such as AT&T and Verizon Partner Solutions can emphasize the depth and breadth of wholesale solutions and more extensive U.S. and international coverage.

Recommended End User/Customer Responses

► Carriers that are considering entry or expansion into the U.S. market should evaluate XO’s offer to see if it meets their requirements. XO’s network covers 75 major metropolitan areas in the U.S., and the carrier has established partnerships with other carriers for off-net services.

► Carriers that are concerned about maintaining some level of control over the network should find out more about tools that XO offers to enable them to monitor and manage the service in order to optimize traffic.

| Client Access - Wholesale Telecom Services |

NXTcomm 2007: Verizon Business Officially Enters the FMC Fray with PBX Extension and Conferencing Services

On June 20th Verizon Business launched three FMC services: Wireless Office, a network-based solution for SMBs which extends common PBX calling to wireless devices; PBX Mobile Extension, targeted to a large corporate campus or large number of mobile workers, which works with a company’s existing PBX and provides extension to cellular devices; and Mobile Conference Connection which provides road warriors with the ability to initiate or join a conference call with a BlackBerry or Microsoft Windows Mobile smart phone/PDA..

Analytical Summary

► Current Perspective: Slightly positive on Verizon Business’ new PBX extension services as they represent the first “FMC” services to be launched by the carrier that combine its wireline and wireless assets and services. While several cellular handset vendors and PBX vendors are already offering premises-based solutions to extend PBX functionality to cellular devices, carrier-managed services offer another option, especially relevant to smaller companies without a PBX or without extensive internal support resources. The choice of whether to use a managed vs. unmanaged solution depends on the customer’s existing resources and infrastructure investments. The new mobile conferencing service doesn’t quite fit in with the other two offerings as an “FMC” solution, but offers some useful functionality for remote workers.

► Vendor Importance: Moderate to Verizon Business as not only are PBX extension services necessary to have in its arsenal to be competitive, but the messaging regarding the carrier’s integration of Verizon Wireless services into its overall services portfolio is important. Mobility via cellular access is rapidly becoming one of the most important growth segments in the business telecommunications segment; remote workers can benefit significantly from a cost and ease-of-use perspective if their cellphone can be treated as an extension of their corporate PBX with one-number/single-mailbox access. Additionally, it is very important for Verizon Business to leverage its ownership of Verizon Wireless in terms of not only business bundles and discounts, but via actual service integration.

► Market Impact: Moderate on the enterprise mobility segment as the market for PBX extension has been heating up this year. However, non-carrier enterprise-managed solutions from wireless device vendors (RIM and Nokia), as well as IP telephony vendors (Cisco, Avaya, Alcatel-Lucent, Siemens, etc.) are already seeding the market with do-it-yourself options. While Embarq, AT&T, and Sprint already offer managed carrier services for PBX extension to cellular devices, other U.S. carriers have been noticeably silent. To complicate things further, 2007/2008 seems to be the time period in which dual-mode devices will be available more widely and carriers have to decide whether it is in their best interest to support them. While in-building signal boosters and zoned pricing options will help, VoWLAN/cellular combos may ultimately prove more compelling.

| Client Access - Business Network Services - U.S. | Client Access - Enterprise Mobility - U.S. |

Web.com Finds the Yin to Its Yang in Merger with Website Pros

On June 26th Website Pros, Inc. and Web.com, Inc. jointly announced that the two companies have signed a definitive merger agreement, creating a company focused on providing managed Web services to small and medium-sized business (SMB) customers. The combined entity will have annualized revenue of over $117 million and over 234,000 paid subscribers.

Recommended Competitive Responses

► Competitors such as Navisite, Rackspace, and Verio that offer broader portfolios of managed hosted services can dismiss the merged company as having a limited set of offerings compared to the breadth of their own services, and can emphasize the cost and performance benefits associated with relying on a provider with a more expansive portfolio.

► Much larger hosting providers such as AT&T can describe the pending union as the marriage of two niche providers that offer an interesting solution set but don’t have the infrastructure, services portfolio, or expertise to compete in their league.

► Competitors can point to Web.com’s financial issues and legal costs as evidence that there is trouble ahead for the post-acquisition company.

Recommended End User/Customer Responses

► Existing Web.com and Website Pros customers should ask what the impact of the acquisition will be on their service, and how they can benefit from having access to a larger menu of Web hosting and online marketing services.

► Once the acquisition closes, prospective small and medium-sized business customers looking to improve their online presence should consider the Web.com/Website Pros entity as a provider that can help them develop, manage, and market their Web sites to their best advantage.

| Client Access - Internet/Managed Services - U.S. |