President Interview: Knology, Inc. - M. Todd Holt

• On 4:42 pm EST, Monday November 2, 2009

67 WALL STREET, New York - November 2, 2009 - The Wall Street Transcript has just published its Telecommunications Services & Equipment Report offering a timely review of the sector to serious investors and industry executives. This 20-page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Telecom Carriers VS. Telecom Equipment Vendors - Increased Competition Hurts Profitability Among Telecom Carriers - Net Neutrality Battle - New Telecom Players Apple & Google - High-Growth Opportunity In Latin American Market - Rural Local Exchange Carriers - Fierce Wireless Competition - Significant Deceleration In Wireless Subscriber Growth - Upgrade To 4G - Secular Decline In RLEC Sector - Regulatory Environment - Unlimited Pay-In-Advance Segment Is Fastest-Growing In Wireless

Companies include: Ciena Corporation (CIEN); ERF Wireless (ERFW.OB); AT&T (T); Alcatel (ALU); Apple (AAPL); CenturyLink (CTL); Clearwire (RLWR); Comcast (CMCSK); Consolidated Communications (CNSL); Frontier Communications (FTR); Google (GOOG); Intel (INTC); Iowa Telecom (IWA); Knology (KNOL); Leap Wireless (LEAP); Liberty Global (LBTYA); MetroPCS (PCS); Millicom (MICC); NII Holdings (NIHD); Nortel (NTL); Sprint (S); T-Mobile (DT); Telefonica (TEF); Tellabs (TLAB); Time Warner Cable (TWC); Time Warner Cable (TWX); TracFone (AMX); Verizon (VZ); Wal-Mart (WMT); Windstream (WIN).

In the following brief excerpt from the 20-page report, M. Todd Holt, President of Knology, Inc., discusses the outlook for the sector and for investors.

M. TODD HOLT was appointed President of Knology in July 2008. Mr. Holt served as Chief Financial Officer of the company from August 2005 to July 2008 and as Corporate Controller from January 1998 to July 2005. In addition, he is a member of the American Institute of Certified Public Accountants previously practiced public accounting as an Audit Manager with Ernst & Young.

TWST: Let's start with an overview of Knology.

Mr. Holt: It's pronounced Knology (KNOL), silent "k" and "nology," which was a word that was derived from combining the words knowledge and technology. The company really got started in the 1993-1994 time frame. Cam Lanier, who is the Founder of the business, had a vision for a triple-play broadband voice, video and data company to compete with the big cable companies and the big telcos. As part of that strategy, he also wanted to compete in secondary and tertiary markets. We chose not to compete in the biggest metropolitan areas because he believed that in time, those big metropolitan areas were going to be the most competitive areas. The belief was that the big cable and telco companies would upgrade their networks and roll out new products and services in big markets before it would ever trickle down into the second-tier markets. When I say secondary and tertiary, I don't necessarily mean rural, I just mean not the Tier 1 markets. The history of our company really dates back to 1993 or 1994, as far as the founding of Knology. However, our telephone heritage dates back about 115 years. We actually merged Cam's family telephone business, which was a local telephone business in our headquarter town of West Point, Ga., into Knology in 1999. From an overview perspective, we now operate in 12 markets. Ten of the markets are in the southeastern U.S. and two markets are in the Upper Midwest, in the South Dakota, Minnesota and Iowa regions. As I said earlier, we're completely focused on secondary and tertiary markets, and that niche has worked very, very well for us. We're providing cable TV, high-speed Internet, and local and long-distance telephone services to both the residential community as well as the small-business customers.

TWST: Has the economic downturn impacted your business at all?

Mr. Holt: Yes, I think it'd be tough to find a business that hasn't been impacted to some degree from this economic environment. I would say that even though we're not completely recession-proof, our business and businesses like ours are generally recession-resilient. What we have learned is that people are not willing to give up their cable TV and their Internet services. If anything, I think people are giving up vacations and going out to eat as much. What that means is people are spending more time at home. So I actually think that people are placing a higher value on Internet and cable TV services. We've not seen any significant customer defections from our services. We have actually still been growing our customer base and our connection base, and I think that has a lot to do with the fact that if people are home, whether they are looking for jobs or just trying to stay current with the news, they are using our services more. If there is an area of softness that's due to the economic climate, we're probably seeing that softness in the premium video offerings.

TWST: What gives you a competitive advantage in the secondary and tertiary markets?

Mr. Holt: I would separate the business and residential universe in this aspect as well, because on the business side, as we discussed earlier, we definitely have a technology advantage with the IP and fiber-based solutions. On the residential side, I believe the reason that we continue to take market share in the residential environment is our customer service and the way we approach the entire customer experience. We've been in a competitive environment since day one. So it's really in our DNA. The whole premise of our business model was to compete. The people we are competing with today, they are former monopoly companies. The approach we take towards customer service is very different, and I think that's what consumers are looking for today in a competitive environment. We've got a couple of call centers. They are not only domestic call centers, but they are in our markets, and they are staffed with Knology employees. The staff are people who know the culture and the value system of Knology; they speak the language of our customers. We've got an enterprise-wide system in place that's not only our billing system, it's our whole customer care, dispatch and trouble-ticketing system. It handles all of those functions, which creates a lot of efficiency in that environment. We do things like guarantee a two-hour installation window instead of a half-a-day or full-day window. We take that stuff seriously. We look at call center stats every two hours. Roger Johnson, our Chairman and CEO, myself and Brett McCants, our EVP of operations, we look at a two-hour report from our call centers that tell us how many calls come in, how quickly they are answered, if the call relates to a sale, a service, a team data, which are our high-speed Internet experts and if any of those calls are abandoned. And that focus dictates a certain behavior in our organization. Our people know how serious we are about taking care of the customer. Having senior executives looking at call centers stats and that level of detail every two hours gives you some indication of how serious we are about customer service. We're not perfect. We've got room to make improvements in that area, but we are pretty darn good, and we are very focused on customer service.

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