Windstream 2010 Annual Report Download - page 66

Windstream Corporation
Form 10-K, Part I
Item 1. Business
In connection with the consummation of the transactions, the parties and their affiliates entered into a publishing
agreement whereby Windstream granted Local Insight Yellow Pages, Inc. (“Local Insight Yellow Pages”), the
successor to the Windstream subsidiary that operated the publishing business, an exclusive license to publish
Windstream directories in each of its markets other than the acquired CTC markets. Local Insight Yellow Pages will, at
no charge to Windstream or its affiliates or subscribers, publish directories with respect to each Windstream service
area covered under the agreement in which Windstream or its affiliates are required to publish such directories by
applicable law, tariff or contract. Subject to the termination provisions in the agreement, the publishing agreement will
remain in effect for a term of fifty years. As part of this agreement, Windstream agreed to forego future royalty
payments from Local Insight Yellow Pages on advertising revenues generated from covered directories for the duration
of the publishing agreement.
MARKETING
Windstream primarily markets its service and product offerings to business and residential customers.
The Company provides its business customers with customized data, voice, networking, and phone systems. Business
services are offered through multiple channels, including the company’s direct sales force, business call center, and
third parties authorized to sell Windstream’s services and products on its behalf. Windstream invests in its network to
offer the latest advanced data services and integrated solutions to its customer base.
Windstream’s consumer marketing approach seeks to retain existing customers and gain new customers through
bundled service offerings. These bundles offer high-speed Internet, voice, and television services at a combined price
on one bill. The Company is also committed to offering high-speed Internet service to more households and at higher
speeds. Consumer services are offered primarily through the company’s call centers, retail stores, and door-to-door
sales channels.
As of December 31, 2010, Windstream operated 62 local retail stores and eight call centers, allowing the company to
sell new services and provide customer service in person or over the phone. Retail stores focus primarily on residential
customers. Two call centers are dedicated to business customers, one is dedicated to residential customers, and the
remaining support both business and residential customers.
TECHNOLOGY
Our network consists of host and remote central office digital switches and loop carriers interconnected with copper,
fiber and microwaved facilities. The outside plant infrastructure connecting the customer with the core network
consists of a mix of fiber optic and copper facilities. At the end of 2010, we maintained approximately 311,000 route
miles of copper plant and approximately 60,000 route miles of local and long-haul fiber optic plant. In addition, our
fully integrated communications network consists of an IP/MPLS backbone capable of supporting advanced Ethernet,
voice-over-Internet protocol (“VoIP”) and high-speed data services.
COMPETITION
Windstream experiences competition in many of its local service areas. Sources of competition to Windstream’s local
exchange business include, but are not limited to, wireless communications providers, cable television companies,
resellers of local exchange services, interexchange carriers, incumbent local exchange carriers in markets where we
provide competitive local exchange services, satellite transmission service providers, electric utilities, competitive
access service providers, including, without limitation, those utilizing an Unbundled Network Elements-Platform or
UNE-P, VoIP providers, and providers using other emerging technologies. In addition, we are subject to increased
competition from new and existing competitors receiving financial incentives through the federal broadband stimulus
program (See “Federal Regulation”).
During 2010, this competition adversely affected Windstream’s access line losses and revenue growth rates. Excluding
the lines acquired from NuVox, Iowa Telecom and Q-Comm, Windstream lost approximately 122,000 voice lines in its
wireline business during 2010, primarily as a result of the effects of fixed line competition and wireless substitution for
Windstream’s wireline services. Windstream expects the number of access lines served by its wireline operations to
continue to be adversely affected by fixed line competition and wireless substitution in 2011.
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