Alsbridge e sem-2011-0314-nsg-v2

Audio: +1 (323) 417-4600 Access code 280-431-831

© 2011 Alsbridge. All rights reserved.

Contains proprietary and confidential information.

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INNOVATION IN OUTSOURCING2011 eSEMINAR SERIES

March 24, 2011Audio: +1 (323) 417-4600, Access code 280-431-831




Page 2

Applications

Infrastructur

e

Network

Hardware /

Software

ADM

Business Process

IT Infrastructure

Network

Hardware / Software

Strategy

Selection

Negotiation

Governance

Cost

Price

Performance

Terms & Conditions




Page 3

Speaker Introduction

Dieter Thompson, President of Alsbridge Network Services Group

Dieter Thompson is the founder and President of NSG, a service line

of Alsbridge, Inc.

Dieter has been a major force in the telecommunications industry

since 1988. During his 22 year career, he has held numerous

leadership positions and launched multiple businesses that have

helped shape the industry, create jobs and improve processes.

In 2002, Dieter launched Thompson Advisory Group (TAG) which

helped corporations achieve greater IT and telecom value i.e. SAVE

MONEY.

TAG, now Alsbridge Network Services Group, was acquired by

Alsbridge in 2009. Today the company operates as a service line of

Alsbridge, a global leader in outsourcing, shared services and

optimization.




Page 4

eSeminar Agenda

What is the Wire Line Market?

Current Macro Industry Overview - Wire Line

Future Macro Industry Trends

Pricing Examples

Pricing Trends

International Markets

Leverage and Negotiating Strategies




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What is the Wire Line Market?

What is the wire line market?

• Tier 1 = AT&T and VZB

• Do not accept Tier 2 label…EMERGING PROVIDERS

XO, PAETEC, Global Crossing, Level 3, TWT

• Qwest = Tier 1.5?

• Sprint = Wireless?




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Current Macro Industry Overview – Wire line

Consolidation of providers is continuing

Financial stability has returned to the industry

Bandwidth consumption is growing exponentially (Ethernet)

2011 Enterprise IT investment expected to grow

Integration issues are plaguing the consolidated companies

Tier 1 providers fighting on many fronts

Tier 1 retention of QFTE’s and delivery issues getting worse

Tier 1 billing, service support, stewardship getting worse




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Current Macro Industry Overview (cont’d)

Huge gap in the “emerging provider” space trying to be filled.

• Enterprise market should be embrace change and accept entrants in the space

• We like: XO, Global Crossing, Qwest, Granite, Level 3, Paetec, TWT

Look for niche data services providers like Virtella, US Signal, Cogent, New

Edge, etc…

IT organizations struggling internally with fully meshed IP global strategies

VoIP, SIP and next generation convergence is aggressively being studied

and slowly being adopted

Integrators are becoming more relevant to the Network Tower

Marketplace is still very volatile with no clear winner




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Future Macro Industry Trends

More of the same for 2011

Tier 1 providers will continue to be difficult on T&C’s

Unit price points will continue to fall

Delta between price point and averages will continue to

increase

Tier 1 providers will continue to make market based

concessions harder to obtain

More layoffs and restructuring in the Tier 1 space

Providers looking towards outsourcing core functions

Look for a leader to appear in the emerging provider space




Page 9

Audience Poll #1

On average, what is the annual decrease in cost we achieve the first

time we renegotiate a contract?

• 0-10 %

• 10-20%

• 20-30%

• 30-40%




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Telecom Pricing Trends

The Providers have seen dramatic Price Point reductions over the

past five years:

NSG forecasts these type of “Price Point” declines to continue in

2011

Continued growth between Price Point and Averages

Legacy Local has been the only service offering the ILEC’s stability,

however displacement, SIP and wireless are beginning to pressure

pricing

2005 APP 2007 APP % Decline 2009 APP % Decline

Domestic TDM Voice $0.0231 $0.0166 28.4% $0.0115 30.5%

Inter TDM Voice $0.0885 $0.0261 49.7% $0.0216 51.6%

Domestic Data $554.96 $348.90 37.1% $177.81 48.9%




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$0.0075

$0.0125

$0.0175

$0.0225

$0.0275

$0.0325

Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

Interstate Direct Dial/Toll Free Dedicated Voice

Contract Rate --- Average Price Trend --- Price Point Trend

MPLS Port Price Trending




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$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000


Domestic Dedicated Internet DS3


Voice Pricing Sample by Commitment Level




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Historical and Future Pricing Trends

$0

$100

$200

$300

$400

$500

$600


Domestic DS1 Access 6-10 Miles





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Audience Poll #2

Is it likely that your current contract has an annual rate review

provision?

• Yes

• No




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International Markets

Rapidly growing area of focus for enterprise clients

Corporate IT groups growing need for fully meshed IP

networks and control

Foreign to foreign voice still hard to get

Not typically a good logical break point, Domestic /

International for dual vendor strategy

International based carriers, BT, C&W, Colt, etc. not

aggressively pushing in US market

Lots of price compression opportunities




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Leverage and Negotiating Strategies

Leverage is everything: term, commitment, relationship

Multiple vendor RFP process

Start early, use an advisor

Pursue an “active” secondary strategy

Think outside the “usual provider” box

Be very cautious of “The Channel”

Contract terms and structure are critical

Disconnect something…




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Dieter Thompson

President of Alsbridge Network Services Group

Email: [email protected]

Americas

Europe

www.Alsbridge.com

Alsbridge Americas

3535 Travis St., Suite 105

Dallas, TX 75204

United States of America

Tel: +1 214-696-6410

Fax: +1 214-239-0698

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Alsbridge e sem-2011-0314-nsg-v2