2014 Annual Report

Competitive Evolution

Broadband Cloud Business & Enterprise Fiber International Tower & Backhaul CEO Letter

Competition is the foundation on which COMPTEL was built more than three decades ago. Fostering robust, competitive markets will continue to be our core mission long into the future.

Competitive markets breed innovation. From the upstarts that challenged Ma Bell dominance to the bold new companies leveraging rapid technological change, we have seen the fruits of competition. But, no longer is competition about just local and long distance telephony. The entire communications ecosystem has flourished as a result of competition, bringing with it innovations in , wireless, content and video services that benefit businesses and consumers.

As the market has evolved, so has COMPTEL. Throughout 2014, our membership continued to diversify. Among our new members are companies that create and deliver content, lead in the and Internet space, provide a breadth of broadband services and compete internationally.

To address the needs of our growing and changing membership base, we expanded our policy advocacy efforts, joined forces with like-minded coalitions, enhanced the experience for attendees of our twice-annual conventions, and set the stage for new opportunities to network, learn and positively impact the future of competition.

We are pleased to present this annual report, which showcases our successes in 2014. And we look forward to working closely with our members, their customers and our coalition partners to protect and advance vibrant competitive markets, and the innovation that results from them. Membership

For 33 years, COMPTEL has been social media leaders, content competition, foster innovation and the voice of the competitive providers, wireless companies, encourage economic development. communications industry – starting Internet giants, international first as an advocate for opening the powerhouses, start-ups and venture COMPTEL and its coalition partners long distance markets, then leading capitalists among our members achieved great success in their the fight to open local telephony (see list of new members below). advocacy efforts in 2014 on issues markets. This year marked a new such as the Open Internet, chapter in our evolution, as we’ve Joining Forces to Promote technology transitions, special expanded our mission to serve the access, and rural call completion, to Competition advocacy and businesses needs for name a few, and build on this all entrepreneurial companies that are By organizing and unifying the momentum into the coming year as driving technological innovation and leading competitive companies the FCC and Congress continue to creating economic growth through across a wide spectrum of platforms, consider these issues and more. competitive networks and services. we are a stronger voice for network builders, service providers and new Delivering an Expansive, The composition of our membership entrants. We also are building New Network has transformed. In addition to our coalitions with like-minded groups – broadband wholesale and retail including consumer advocates, other The growth of our membership has service providers, and the vendors associations and business not only enabled COMPTEL to be a that cater to them, we now count organizations – to advocate for laws powerful advocate for all those who and policies that promote value competition, it has also given New Members in 2014

Business and Enterprise Service Internet, Cloud and Fiber Companies Suppliers and Professional Services Providers Accedian Networks ACN Cogent Communications Inc. Ciena Goodin, MacBride, Squeri, Day & Broadband Voice ICON Cloud Solutions Lamprey, LLC CoastCom, Inc. Inteliquent iconectiv Comspan Communications Inc. INDATEL Services LLC Level 3 Communications Spread Networks Juvo Technologies Neutral Path Communications LLC Twitter NetSapiens, Inc. TNCI Operating Company Telecom Professionals, Inc. United Fiber & Data International Transition Networks XO Communications British Telecom InfoVista Carrier/Incumbents Wireless Carriers SoftBank Corp. AT&T Cavalier Wireless, LLC Vodafone T-Mobile Cellular Corp.

1 Membership

our members the opportunity to Keeping You Informed Members also have the opportunity explore relationships that we expect In addition to the educational to participate in regular calls of the will result in new, innovative services sessions at COMPTEL PLUS, we legislative/regulatory committee to being delivered to consumers and host a variety of webinars on topics stay current on the communications- businesses of all sizes. of interest to our members. These related activities on Capitol Hill, latest webinars, in 2014, explored topics policy changes being considered at Through our twice-annual COMPTEL such as architecting the FCC, and learn more about PLUS conventions, we provide networks, changes to FCC Form 477 COMPTEL’s advocacy efforts. valuable opportunities for members filing requirements, and a new to do business, network and meet approach to manage human new potential partners. Our resources. members can see first hand in the exhibit hall cutting-edge products and services that will benefit their COMPTEL Members by Business Type customers, and take advantage of our educational sessions to learn more about the technology and Carrier business trends that could impact Professional their bottom line. International The networking opportunities we provide are not limited to just Spring Service Provider and Fall at our conventions. We announced last year the formation of Supplier an advisory committee that is exploring ways to facilitate strategic partnerships between wireline backhaul providers and wireless carriers. And, all year round, we provide the COMPTEL Members Only COMPTEL Members by Revenue Portal, where members can search company and representative profiles for prospective business leads and new products and services. $500 mil+

Member companies also benefit from increased visibility as we promote their $100 - $500 mil news via COMPTEL’s social media Under $10 mil channels, website, weekly e- newsletter and other targeted $25 - $100 mil marketing and public relations efforts. $10 - $25 mil

2 Meetings

COMPTEL PLUS is the signature Las Vegas and a performance by president and CEO of Windstream, event produced by the association. Jackopierce in , and created a joined COMPTEL CEO Chip This twice-annual convention and schedule that ensured exclusive Pickering for a Q&A session during trade show has a strong reputation exhibit hours and included a full which he talked about the as the place where deals are done. lunch in the Expo Hall each day. importance of always putting Because the majority of attendees customers first and policy issues that are key purchasing decision makers COMPTEL PLUS also fosters have a bearing on the competitive for their companies, COMPTEL PLUS stronger relationships among top marketplace – such as wholesale has created an environment where industry executives. From CEO regulation, technology transitions and our members and their business Breakfasts featuring high-level building out broadband networks in partners and vendors can maximize networking opportunities and open rural areas. During the keynote their time and minimize their travel discussions on topics impacting speech at the fall event, FCC budgets by meeting in a central the sector, to exclusive events, such Chairman Tom Wheeler laid out his location. Unlike other industry as dinner at the Bush Library, we agenda for competition, noting that events, COMPTEL PLUS provides make sure COMPTEL PLUS is a where competition exists, the attendees with a unique opportunity can’t miss event for C-level Commission will protect it, and where to discover potential new customers executives. it can be made more vibrant, it in advance of the show using our should be incented. innovative online Business PLANner Our 2014 shows took us to Las to explore who is attending and set Vegas and Dallas, drawing 3,300 The educational agenda at up meetings in the Expo Hall, at attendees. In addition to the COMPTEL PLUS included general meeting rooms or in the Deal Center. networking and business sessions featuring a roundtable opportunities there, we offered discussion among top service To give attendees more networking attendees the chance to hear from provider executives, as well as ones time, this year we added evening industry and government leaders. At on telecom convergence and parties featuring a Casino Night in the spring event, Jeff Gardner, megamergers, interconnection, over-

COMPTEL PLUS Events Who Attends COMPTEL PLUS April 12-15, 2015 Gaylord Palms Orlando Other C-Level/President October 18-21, 2015 Marriott Marquis Director San Francisco SVP/EVP/VP April 10-13, 2016 Gaylord National Washington, D.C. Account Executive Manager October 23-26, 2016 Gaylord Texan Dallas

3 Meetings

the-top video, wireless backhaul and the future of the copper network. Our tracks were designed to explore hot business and technology trends in the cloud, broadband and networking markets, as well as strategies for improving revenue streams and policy issues, such as E-rate and technology transitions. We also offered half-day workshops that helped attendees better understand the potential Communications Act rewrite and how to capitalize on emerging trends at the intersection of public policy and business.

The COMPTEL PLUS Expos showcased more than 153 exhibitors, including 39 companies that exhibited for the first time. And, adding excitement to the show floor was the debut in Fall 2014 of the COMPTEL PLUS Hub, which featured live interviews with newsmakers and presentations of awards.

Webinar Program Throughout the year, COMPTEL offered members the chance to reach targeted audiences with webinars on a variety of issues. During 2014, the COMPTEL Webinar Program featured informational presentations by UNITEL on its new human resources solution, Technologies Management Inc. on FCC Form 477 requirements and Fujitsu Network Communications Inc. on architecting Ethernet networks.

4 Policy

COMPTEL is the leading voice for degrade access to content that their advocating for strong, enforceable competition policy before Congress, subscribers want or extract unfair rules to protect the open Internet. the Federal Communications tolls from edge providers to reach Commission, the Department of their subscribers. Technology Transitions and Justice and other government Last Mile Access agencies. Based on the record already established at the Commission, It was a productive year for tech We have built a strong reputation as COMPTEL, its members and several transitions, as COMPTEL advocates for competition across all other consumer and trade successfully refocused the debate platforms – from wireline and wireless organizations recommended that to around core principles that promote networks to over-the-top streaming achieve these goals, the Commission competition, public safety and platforms and advanced broadband should reclassify retail broadband access. infrastructure, including fiber Internet access service as a networks. Policy makers know service, but In January, COMPTEL joined with COMPTEL is the authoritative source grant forbearance from certain leading consumer groups to for information on competition’s provisions of Title II of the formulate this list of principles. Then impact on existing markets and how Communications Act. With this in February, the FCC adopted those best to foster greater competition in reclassification, the Commission same core values as it opened the future. could take a light-touch policy proceedings on tech transition trials. approach that has worked in In the past year, the new and rapidly promoting investment and growth in We proposed a managerial expanding COMPTEL has built an the wireless industry for the past two framework in April, which outlined impressive record of success with decades. We believe that this type of the steps that should be taken to respect to a number of key policy light-touch framework would not guarantee success of ongoing issues: unduly burden broadband providers, technology transitions, and ensure and would encourage investment in that businesses could continue to receive voice and broadband Open Internet broadband networks, interconnection and promote competition for services services from their preferred The fight to preserve an Open providers. The framework was Internet, of blocking, throttling and applications running across those networks. We also urged the designed to complement the various and manipulation of content by large technology transition trials that were Internet service providers has been Commission to directly address the congestion caused by certain large proposed, and drew from key one of the most significant battles in recommendations in the the . ISPs for Internet traffic exchange in order to extract unreasonable tolls Commission’s 2010 National Broadband Plan. In response to the successful legal from other networks and edge providers. challenge of the FCC’s 2010 Open Because AT&T largely failed to Internet rules, the FCC spent a good identify sufficient replacement portion of the year examining the In addition to our direct advocacy, COMPTEL was a founding member products for wholesale customers in best legal approach to ensure that its proposed trial documents – even broadband Internet access service of, and helped to launch, the Internet Freedom Business Alliance, a listing some as “TBD” – we joined providers cannot exert their with our members in urging the gatekeeper control to block or coalition of startups, small businesses and tech companies Commission not to approve AT&T’s

5 Policy

proposed technology transitions FCC Chairman Tom Wheeler spoke carriers receive sufficient notice when experiments in Carbon Hill, Ala., and at the COMPTEL PLUS show in copper networks are being shut off, Kings Point, Palm Beach County, October, and during his keynote so that they can continue to serve Fla., without significant address underscored his position on their customers effectively. modifications. We believed that this issue, when he said: “Let me be because of the specific wire centers clear: transitions to IP are not a Special Access targeted, the experiments would not license to limit competition.” After more than a decade of delay, generate the type of data necessary special access reform and data to fully understand the impact of the In November, the Commission collection began moving in 2014 TDM-to-IP transition on residential, released a Notice of Proposed following COMPTEL’s vigilant business and wholesale customers. Rulemaking (NPRM) to address pressure. Additionally, we expressed concern policy issues related to the transition. over the lack of detail about the The Commission sought comment on After extended debate on the data replacement services AT&T will be ways to increase transparency, needed, the FCC proceeded with its making available to wholesale improve consumer protection and special access mandatory data customers during the experiments, provide opportunities for consumer request, following the August the timeline for enhancements to the input when carriers plan to retire approval by the Office of replacement voice services that will existing copper networks. The Management and Budget (OMB) as be made available to residential and rulemaking also tentatively part of the Paperwork Reduction Act. business customers, as well as the concluded that carriers seeking to rates, terms and conditions on which discontinue a service used as a Along with our members, we replacement services will be offered wholesale input should be required to continue to work with the to wholesale customers during the provide competitive carriers Commission as it analyzes special experiments as required by the equivalent wholesale access going access data, in hopes that this Commission’s January Order. forward, and proposed to update the process will lead to rapid, fact-based FCC’s rules so that competitive evaluation and correction of long- standing special access market failures, including for packet-based services such as Ethernet. By doing so, we believe that small, mid-sized and enterprise consumers – including government, schools, libraries and healthcare facilities – will be able to benefit from a robust, competitive communications marketplace. During his COMPTEL PLUS keynote in Dallas, Chairman Wheeler addressed special access and spoke out against lock-up provisions, and terms and conditions, which manipulate and hamper competition in the marketplace.

6 Policy

USTelecom Petition for -Time Warner Communications Act, spectrum policy, network interconnection, and Forbearance Cable Merger the role of the FCC in competition USTelecom returned to the Comcast announced its intentions to policy and universal service. Commission for the second time in acquire in as many years seeking relief on February 2014, touching off serious COMPTEL engaged on FCC process behalf of the Regional Bell Operating concerns about how the reform issues with the House Companies, price cap incumbent consolidation of the top two cable Committee on Energy and local exchange carriers and/or all companies in the nation could harm Commerce and the Senate ILECs from what it characterizes as competition. We opposed the merger, Commerce Committee. We “obsolete” statutory and regulatory before both the FCC and the expressed our support for bipartisan requirements. COMPTEL opposed Department of Justice, noting that it reform that would create greater USTelecom’s petition seeking would give Comcast the ability to certainty and efficiency at the forbearance from the requirement stifle competition and restrict choice agency, while also protecting the that ILECs provide unbundled 64 in the services residential consumers FCC’s enforcement and rulemaking kpbs voice channels where they increasingly use to consume content. role in protecting competitive replaced a copper loop with fiber, In a petition urging denial of the markets. and rules prohibiting the use of merger, we noted that approval of the contract tariffs to offer special access transaction would have many We also continued our educational and high capacity services in the adverse consequences, including efforts to ensure members of absence of pricing flexibility. less access to online content, limited Congress understand the history of choice and functionality in streaming competitive markets and the need to In its opposition to USTelecom’s devices, harm to competition in the maintain pro-competitive polices at petition , COMPTEL noted that the set-top box marketplace and the federal level. statutory and regulatory provisions constriction of the wholesale market, from which USTelecom seeks all of which would negatively impact forbearance remain necessary to consumers and competition. protect consumers, ensure that innovative services continue to be On Capitol Hill developed and offered in the retail COMPTEL continued its advocacy market and that end users continue work on Capitol Hill as well, offering to have a choice in providers. We our expertise on a number of issues believed that USTelecom fell short of before the House and Senate. meeting its burden of proving that forbearance was warranted because, As part of the House Committee on among other things, it failed to Energy and Commerce’s ongoing provide evidence on the market efforts to explore a potential rewrite share or market power held by any of of the Communications Act, the the ILECs in any of the discrete committee drafted a series of white geographic or product markets in papers on core communications which they operate. issues. We responded to questions posed by these white papers, on topics including modernizing the

7 Policy

Customers, Competition and the 1996 Telecom Act In June, we gathered a bipartisan Copps, who is now with Common collection of current and former Cause. Members of Congress, consumer advocates, CEOs from the nation’s At this event, COMPTEL also joined leading competitive broadband with the Broadband Coalition to providers and their customers for a launch a new effort to highlight large and small, including local day-long showcase of the enduring businesses that have chosen a governments, schools and nonprofit benefits of competition forged in the competitive provider. This effort groups that have chosen a landmark 1996 Telecommunications and new website – competitive provider based on Act. Customers4Competition.com – customer service, affordable pricing showcase a number of customers and innovation. The “Customers, Competition and the 1996 Telecom Act” event took place in the historic Jefferson Building of the Library of Congress, the site where the President signed the 1996 Telecommunications Act into law.

Among the members of Congress who participated were Rep. Gregg Harper (R-MS), Sen. Ed Markey (D- MA), Sen. Mark Pryor (D-AR) and Rep. Peter Welch (D-VT), as well as former lawmakers Rep. Thomas J. Bliley, Jr. (R-VA), former Rep. Chip Pickering (R-MS, now CEO of COMPTEL) and Rep. John Shadegg (R-AZ). We also were joined by executives of Rural Health Telecom, TDS, TSI, tw telecom inc. and XO Communications, and their customers Pantheon Software and WestStar Mortgage. Other special guests included Gene Kimmelman, president of Public Knowledge, and former FCC Commissioner Michael

8 Board

Chairwoman Board of Directors Level 3 Communications TSI Joseph Cavender, Vice President Deb Ward, CEO Alpheus Communications, LLC & Assistant General Counsel, Scott Widham, CEO Federal Affairs Vice Chairman EarthLink ANPI LS Networks Chris Murray, Senior Vice President, Gene Chohon, Vice President, Sales Jerry Cady, Director, Sales & Public Policy and Market Development Marketing Randy Lemmo, Executive Vice Treasurer President, Strategic Business TelePacific Communications TDS Russell Shipley, Senior Vice Jim Butman, Group President Birch Communications, Inc. President, Wholesale and Network Christopher Bunce, Senior Vice Services President, Legal and General Executive Committee Counsel TeleQuality Communications, Inc. At-Large Tim Koxlien, CEO ComSpan Mark Scully, President TNCI & Blue Casa Telephone Cbeyond Inc. Jeff Compton, CEO/President Julia Strow, Co-Founder Fatbeam, LLC Greg Green, President Voce Telecom Impact Telecom Peter Stazzone, CFO Bob Beaty, CEO FirstLight Fiber Kurt Van Wagenen, CEO Windstream Sprint Eric Einhorn, Senior Vice President, Ben Vos, Vice President, Wholesale Government Affairs Business Operations Global Convergence Solutions Chris Birdsall, Executive Vice President, Worldwide Sales XO Communications YourTel America Inc. Lisa Youngers, Vice President and Dale Schmick, Chief Strategy Officer Granite Telecommunications LLC Assistant General Counsel, Samuel Kline, Senior Vice President, Federal Affairs Corporate Strategy

HyperCube LLC Ron Beaumont, Founder and CEO

Kansas Fiber Network Steven Dorf, President & General Manager

9 Staff

Chip Pickering Meetings and Membership Finance and Administration CEO Amy Smith Stephen D. Trotman Amanda Catanoso Vice President, Conference Services COO/CFO Executive Assistant/Scheduler Kevin Morris Anna Bayer Policy Director, Membership & Exhibitor Website & Database Manager Relations Angie Kronenberg Debra Butler Chief Advocate and General Counsel Tracy MacDonald Staff Accountant Member Programs, Support Manager Mary Albert Geraldine "Gerri" Culpepper Assistant General Counsel Communications Administrative Assistant/Receptionist

Alan Hill Gail Norris Senior Vice President, Government Public Relations Relations David Zinn Karen Reidy Marketing Manager Vice President, Regulatory Affairs

Jenny Gilbert Government Relations Assistant

10 Member Companies

1st Point Communications CoastCom, Inc. FastTrack Communications, Inc. 910 telecom dba Gas and CoBank Fatbeam, LLC Electric Building Cogent Communications, Inc. Federation of Internet Service Accedian Networks Inc. COMLINK Providers of the Americas (FISPA) Access Point Inc. Communications Data Group FiberLight LLC ACN Compliance Solutions, Inc. Fiberlink, LLC Allied Telecom Group, LLC CompSouth (Competitive Carriers of Fibertech Networks, LLC Alluvion Communications the South, Inc.) FiberTower Alpheus Communications, LLC Comspan Communications, Inc. FirstLight Fiber Amazon Consolidated Communications FPL FiberNet LLC Americatel Corporation Contingent Network Services LLC Fujitsu Network Communications, Inc. ANPI CoStreet Communications Genesis10 Appcore Creative Support Solutions, LLC GeoResults, Inc. Arent Fox LLP CSF Corporation Global Capacity AT&T Cyan Global Convergence Solutions ATL Communications Data Tech, Inc. Goodin, MacBride, Squeri, Day & Atlantic Fiber Networks Davis Wright Tremaine LLP Lamprey, LLC Atlantic-ACM dishNet Wireline, LLC Google Fiber Axiom Fiber Networks DoubleHorn Communications, LLC Granite Telecommunications LLC BalsamWest FiberNET, LLC DrayTek Corp. GSAssociates, LLC Bill Perfect, Inc. DSET Corporation GWI - Great Works Internet Birch Communications, Inc. DukeNet Communications Hayneville Fiber Transport Birch Horton Bittner and Cherot PC EarthLink Carrier Services Hilliary Communications, LLC Blue Casa Telephone Easton Telecom Services, LLC HyperCube LLC Bluetone Communications, LLC Eckert Seamans Cherin & Mellott ICON Cloud Solutions Broadband Voice Eden Acquisitions Group, LLC iconectiv Broadview Networks Edge Communications Impact Telecom BT Edison Carrier Solutions INDATEL Services LLC BTI Systems Enghouse Networks - Pulse, NetOne Independent Optical Network CABS Agent Suite, Data Services iNetworks Group, Inc. CALTEL Enoch Kever, PLLC InfoVista Cavalier Wireless, LLC Enventis Telecom, Inc. IntegraOptics Charter Business Equinox Information Systems IntelePeer CHR Solutions, Inc. ETC Group, LLC Inteliquent Ciena Excel Telecommunications Iowa Network Services Cisco Systems EZtax Juvo Technologies, LLC CIT Group, Inc. FairPoint Communications Fiber Network

11 Member Companies

Kelley Drye & Warren LLP Profitec Billing Services, Inc. Transition Networks Klein Law Group PLLC RAD Transmode Level 3 RCN Telecom Services, LLC TransNexus Life Wireless Holdings, LLC Sales Tax Associates, Inc. Tristar License Group, LLC LightRiver Technologies, Inc. Sandy Beaches Software TSI LightSpeed Technologies segTEL, Inc. Twitter Local Backhaul Networks, LLC Shango Unite Private Networks Logix Communications SMS/800, Inc. United Fiber & Data Lone Star Corporate Services snom technology, Inc. United States Cellular Corp LS Networks SoftBank Corp. UNITEL Insurance Lumos Networks Sonic US Signal Company LLC Magic Telecom Spirit Communications Utilipath Fiber Networks Matrix Telecom, Inc. Spread Networks VarData, LLC MegaGate Broadband Sprint MegaPath Corporation SRP Telecom Vertek Corporation Michigan Internet and Sunesys, LLC VIXXI Solutions Telecommunications Alliance Taqua, LLC Vocale LTD (The SIP School/Web Mid- TDS RTC School) Midcontinent Business Solutions Technologies Management, Inc. Vocalocity Morgan, Lewis & Bockius LLP Telco Planning Voce Telecom Netflix Inc. Telecom One Vodafone NetSapiens, Inc. Telecom Professionals, Inc. VoIP Logic LLC Neustar, Inc. TelePacific Communications Walker and Associates Neutral Path Communications LLC TeleQuality Communications, Inc. WCI New Paradigm Resources Group TeleSphere Software (WOW!) Norcast TeliaSonera International Carrier Wide Voice, LLC Northfork Strategies, LLC Telispire WILCON NTT America TelNet Worldwide Willkie Farr & Gallagher LLP O1 Communications, Inc. TexalTel WiMacTel, Inc. OPT Teleservices Thermo Credit, LLC Windstream Optelian Thomasville Utilities Wolfe Overgroup Consulting, LLC Time Warner Cable Business Class Worldwide Supply Overture Networks T-Mobile XO Communications Patterson Advisory Group TNCI Operating Company YourTel America, Inc. Peerless Network, Inc. Tower Cloud Peninsula Fiber Network, LLC Transaction Network Services Positron Access Solutions, Inc. Transcom Holdings, Inc.

12 Financials

Assets 2014 2013

Cash and cash equivalents $ 647,536 $1,265,551 Accounts receivable 1,144 12,778 Prepaid expenses 130,610 144,651 Investments 4,397,979 5,774,958 Property and equipment, 584,117 603,368 Deferred compensation investment 54,190 53,976

Total Assets $5,815,576 $7,855,282

Liabilities and Net Assets 2014 2013

Accounts payable and accrued expenses $ 193,640 $ 552,020 Deferred revenue 922,949 991,021 Deferred lease liability 618,245 535,317 Deferred compensation liability 54,190 53,976

Total Liabilities 1,789,024 2,132,334

Net assets - unrestricted 4,026,552 5,722,948 Total Liabilities and Net Assets $5,815,576 $7,855,282

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