PAETEC Equipment For Services

1
PAETEC Equipment For Services
PAETECs Equipment for Services program is a
profit sharing mechanism that provides our
customers with a unique method for acquiring
equipment with minimal or NO capital outlay while
recognizing a reduction in current network cost
which creates unparalleled value and convenience.
2
PAETEC Equipment For Services
70 of the monthly lease payments are subsidized
Over 30 million in EFS equipment sales funded to
date.
The average contract term is 48 months
As of 9/05
3
PAETEC Equipment For Services Two Packaging
Options

• Bundled
• Preferred pricing- vendor relationships
• Competitive PAETEC rates
• Consultative Sales Strategy
• Turn-key solution
• Lease included on PAETEC invoice (complete bill
  and collect for CIT finance/ partner)

• Unbundled
• Preferred pricing- vendor finance relationships
• Competitive Sales Strategy
• Turnkey Solutions
• Credit on PAETEC network Invoice for Profit
  Sharing Amount

4
EFS Structure
Master Service Agreement PAETEC pays the Monthly
Lease Payment to Leasing Company on behalf of
the customer and Acts as a Billing and
Collecting Agent
TELNET
Customer
PAETEC
Leasing Company
Leasing Company Pays Vendor upon Receipt of
Delivery And Acceptance Form (DA)
Customer Signs Service Agreement With PAETEC
with Minimum Monthly Fee
Customer Signs Lease with Leasing Company
Customer Signs Vendor Purchase Agreement
5
PAETEC Equipment For Services Customer Benefits

• Better leverage telecom spend
• Cost savings
• PAETEC equipment contribution eliminates budget
  constraints
• Customer chooses equipment solution
• Customer option to own equipment at end of term
• Fixed, competitive rate for life of contract

6
PAETEC Equipment For Services TELNET Benefits

• Increased sales opportunities with a market
  differentiator
• Cost justification of equipment purchase
• Customer budget constraints not an issue
• Leverage PAETECs reliable network
• Long term contracts (MAC and maintenance)
• Enable customer to upgrade sooner

7
Equipment For Services Case Study
St. Peters Hospital Full Subsidy

• Equipment information
• Outdated PBX infrastructure which St Peters owns
• NEC is vendor
• Cash flow bind
• Cost to upgrade equipment- 250,000 (NEC
  requires progress payments)

8
St. Peters Hospital EFS Case Study

• Why did St Peters choose PAETEC?
• PAETEC reduces overall cost for network services
  by gt 24
• PAETEC provides total subsidy of 337,500
• PAETEC worked with existing vendor to bundle
  total solution

• Equipment Lease Solution
• Fair Market Value Lease - the customer owns the
  initial PBX switch. The upgrade equipment does
  not have a residual value without the main PBX
  switch.
• 60 month lease term will keep the payments lower
  and allow for PAETEC to subsidize the entire
  upgrade cost.
• Lease Payment 5625

• Network Solution
• (7) PRI T1
• 26,838 minutes/month Domestic Intralata
• 18,918 minutes/month Domestic Intrastate
• 28,358 minutes/month Domestic Interstate
• 3,750 O minutes per month
• Local LMS 1,038,643 by minutes

9
EFS Success Stories

• Management Consulting Firm
• Total EFS Subsidy 50,498
• Contract Term 36 months
• Monthly EFS 1,402.72
• Monthly Usage 3,873
• Travel Agency
• Total EFS Subsidy 14,153
• Contract Term 60 Months
• Monthly EFS 236
• Monthly Usage 971

• Hospital System
• Total EFS subsidy 88,995.28
• Contract Term 60 months
• Monthly EFS 1,483.25
• Monthly Usage 25,000
• Construction Company
• Total EFS Subsidy 5,392
• Contract Term 36 months
• Monthly EFS 150
• Monthly Usage 930