It’s almost impossible to read a newspaper today and not come away depressed. Retail sales are at historical lows, banks are in trouble, home prices are down and corporate bankruptcies are in the news. You wouldn’t be human if you didn’t wonder what all this holds for ComNet. Over a year ago, ComNet’s senior management recognized that tough times were on the horizon. We then took steps to prepare for those times. We made selected personnel reductions in areas that weren’t showing success and we decided to stop our investment in the California office. These things were done with one thing in mind…to solidify ComNet’s balance sheet. I’m proud to say that we have been successful in this regard and that ComNet is debt free. ComNet’s senior management also recognized that a tough economy could afford us some tremendous opportunities. Many of ComNet’s competitors are financially strapped. One of our larger competitors has filed bankruptcy. The list of service providers that are able to support large national customers, primarily utilizing internal resources, is getting really short. In this economy, the strong will get stronger and the weak will get weaker. Through your efforts, ComNet has become one of the strongest companies in the industry. Let’s not forget the impact that all this has on customers. The risk of a contractor defaulting on a project or underperforming due to downsizing has come back into the marketplace. As a result, the economic period that we are in may represent the best opportunity in years for ComNet to develop new customer relationships. Customers that might not have talked to us a year ago are now looking for a company like ComNet that is financially sound. One of ComNet’s primary goals is to take advantage of this economy and establish as many new customer relationships as we can. These efforts may not pay off immediately, but 6-12 months from now, they will in a big way. Finally, let’s remember that ComNet has become a diversified company. We deliver many different services to our customers. We also touch many different market segments. Retail customers are having an especially difficult time right now and their spending will almost certainly be curtailed. However, less than 10% of ComNet’s total revenue comes from retail customers. One thing that we absolutely have to recognize is that our competition will be getting desperate. It is imperative that we do the best job possible on the operational end. We can’t give any or our existing customers a reason to look at other contractors. One way that we can do this is to be creative and find ways to give that “little bit extra” to our customers. It’s that “little bit extra” that separates us from our completion and makes us ComNet. Let me end by saying that anyone who knows me knows that I’m just an old farm boy at heart. It’s how I was raised and taught to follow the seasons during the year. There are times to plant and times to harvest. Now is the time for ComNet to plant new customer relationships and to do it in a big way. We have prepared ourselves for this and it’s an opportunity that we can take advantage of. We can’t control the economy any more than we can control the seasons. All we can do is recognize where we are and prepare as well as possible for when the season changes.

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It is virtually impossible to read a newspaper or watch television and not come away thinking...what next?   It seems like things are out of control, and in some regards this is probably true. Gordon Moore, one of Intel’s Co-Founders, developed an idea that came to be known as Moore’s Law. Moore theorized that the power of the microchip would double every 18 months, thereby exponentially increasing the power of computers. From a computer-user’s perspective, Moore’s Law has translated into unbelievable benefits. ComNet has also been a direct beneficiary of Moore’s Law. Much of ComNet’s work involves upgrading infrastructure and equipment that have been rendered obsolete by changes in technology. If Moore’s Law wasn’t in effect, ComNet would be a much smaller company. Unfortunately, there is another side to change and that is the stress that it puts on people and organizations. For every benefit derived from Moore’s Law, there will be an equivalent sacrifice. We see it every day by way of shortened project timelines and immediate bid requests. At times, I find myself thinking that customers simply haven’t done their job when we get urgent requests for bids or service. In some instances this may be true. The reality is that the customer is usually stuck on the same treadmill that we are and Moore’s Law says that the treadmill won’t slow down. It is encouraging to remember that ComNet is an organization that is built to adapt. Twenty years ago, ComNet did virtually no inside-plant cabling. Today, the majority of our revenues come from inside-plant cabling. Five years ago, ComNet wasn’t involved with point-of-sale equipment or networking equipment or wireless networks. Today, these are significant areas of growth. Four years ago, ComNet did $36 million in revenues. We project that 2008 revenues will be approximately $55 million. ComNet has been in business for 24 years and during that time we have seen at least 3 economic recessions, several wars and 9/11. We didn’t hang around by accident. We survived and excelled because we welcome change and adapt to new circumstances. The following are some basic principles regarding change that I try to remember. In today’s business environment, a company must be willing to accept chaos or at least "bounded instability" in its industry and its own marketplace as part of the reality of doing business. Focus on creating an organization that’s built for speed and for customers. Business is shifting from being about "transactions" to being about "value-added" interactions with customers. In a world where most products and services ultimately become commodities, customer care becomes the only true and lasting differentiator.

April 2008

LESSONS TO LEARN 

Below you will find a re-print of an article from Business Week.  It explains, far better than I can, what happens when a really good company loses its core values.  Sprint Nextel employed some of the brightest managers in the business.  They had a sound strategy and an advantage in virtually every business and technological aspect. However, none of it mattered once they forgot about the customer.  I think that the lessons speak for themselves.     Best regards,  Alex Sprint's Wake-Up Call Reversing a miserable service reputation after the Nextel merger will be key to the company's turnaround by Spencer E. Ante When Daniel R. Hesse was named chief executive of Sprint Nextel in December, he figured that customer service was going to be one of his biggest challenges, given how poorly the wireless service provider had performed on that count in recent years. He quickly found out precisely how big. The lanky 54-year-old walked into his first operations meeting at Sprint headquarters in Overland Park, Kan., and found that customer service wasn't on the agenda at all. He changed course right away. Customer service is now the first item discussed at every one of the weekly meetings. "We weren't talking about the customer when I first joined," says Hesse. "Now this is the No. 1 priority of the company." With good reason. Since Sprint and Nextel merged three years ago, the deal has turned into something of a fiasco, with the company's stock down 66% since the agreement was struck. Poor service is a central reason. After the merger, unhappy customers defected in droves, and profits evaporated. On Jan. 31, Sprint Nextel said it would take merger-related charges of as much as $31 billion, wiping out nearly all of the deal's value. In addition, two lawsuits have been filed against the company for allegedly extending customers' service contracts without their consent. Employees like Paula Pryor saw the merger's impact firsthand. The 38-year-old, who worked in a call center in Temple, TX says the numbers-driven management approach implemented after the combination led to poor morale and deteriorating customer service. Even bathroom trips were monitored. "They would micromanage us like children," says Pryor, who was fired last year after taking time off when her father died. The toll on Sprint's reputation has been dear. The company has ranked last among the country's five major wireless carriers in customer service every year since the merger in 2005, according to annual surveys by J.D. Power & Associates. Now, two months into his job, industry veteran Hesse is disclosing for the first time detailed plans for turning around customer service. He's increasing investments in customer care, adding service technicians in retail stores, and reversing many management practices in customer call centers. Hesse is convinced that restoring Sprint's reputation with customers is the key to its future. "You will see progress," he says. "We have the right people in place. We will get it done." For the combined Sprint Nextel to be criticized for quality issues is a remarkable reversal. During the 1980s and '90s, when Sprint was the nation's third-largest long-distance company, it distinguished itself by advertising a fiber-optic network so high-quality you could "hear a pin drop." Nextel was known for its "push-to-talk" technology and the best rate of customer retention in the industry. When the two unveiled plans to merge in December, 2004, there was a certain logic to the deal. Separately, they were much smaller than AT&T (T) and Verizon Wireless, but together they would nearly rival the two wireless leaders in size. The theory was that, combined, they would have the bulk to get the latest phones, best prices on equipment, and most complete network for wireless customers. "The combination of Sprint and Nextel builds strength on strength," Gary D. Forsee, CEO of Sprint and later the combined companies, said then. But as the two formally combined in August, 2005, it became clear this deal would be even more complex than the typical megamerger. At the same time Forsee and Executive Chairman Timothy M. Donahue were piecing the two companies together, they laid out an aggressive strategy for the combined entity to become a leader in wireless broadband services and content. That led to plans to spin off Sprint's local telephone business, form partnerships with the cable industry, and develop a wireless technology known as WiMAX. "There was so much going on after the merger that there was a lack of focus," says one former senior-level insider. In September, 2005, the month after the merger closed, Forsee told Wall Street that the deal was going more smoothly than expected. He raised the projection for expected "synergies," or cost savings, to $14.5 billion, up from the original $12 billion estimate at the time of the merger announcement. That boosted pressures to find cost savings throughout the company, say former employees and executives. An important component of the effort was importing the quantitative management approach of Sprint to Nextel. While some of the new metrics worked well, others had detrimental effects, former employees and executives say. In particular, call centers began to be measured and viewed primarily as cost centers, rather than opportunities for strategic advantage. Customer service ended up a secondary priority, say former executives. Forsee, now the president of the University of Missouri, declined to comment for this story. In the fall of 2005, as board members gathered for their first meetings as a combined company, the directors from Nextel noticed another key change, according to the former senior-level insider. Before the merger, Nextel directors talked at every board meeting about "churn," the industry term for the percentage of existing customers who leave each month. The directors felt churn was a good shorthand way to understand the quality of customer service, and they prided themselves on Nextel having the lowest in the industry. But after the merger closed, the combined board paid little attention to churn, concentrating instead on the progress with synergies and strategic initiatives. "From the very beginning there was a philosophical difference on churn," says the former insider. In the trenches, meanwhile, workers were dealing with fallout from the merger. Pryor remembers the conditions in her Texas call center, originally a Nextel facility, shifting dramatically in the first months after the merger closed in late 2005. Managers began tracking what she was doing on her computer. Overtime pay became much harder to get. Most puzzling for her was the pressure to keep customer calls short. At Nextel, she was judged only on the number of customer problems she solved each month, however long they took, and she would occasionally spend 30 minutes to resolve a thorny issue. But after the merger, speed was the priority, she says. "They would say, Your calls need to be shortened,'" she says. `LIKE NOAH'S ARK' Other employees say they felt similar pressure. Gayle R. Romero, who worked in Sprint Nextel call centers for six years, says that at one team meeting after the merger, a manager said, "if you don't think you can handle this, I hear McDonald's is hiring." Says Romero: "Everyone was scared." Customer service issues began to surface later that year. In January, 2006, Sprint unveiled plans to merge the two billing and customer care systems from the combined companies. But employees say there was little evidence of any progress in the following months. Service reps had to toggle back and forth between systems, and at times couldn't get access to billing or technical information for customers. "It was like Noah's Ark," says one former insider. "We had two of everything." Churn rose quickly, hitting 2.4% in the third quarter of 2006. That was the highest among the country's major carriers and far above the 1.4% rate Nextel reported before the merger. At the same time, Sprint reported softer-than-expected earnings, punishing its stock. As Sprint came under financial pressure in 2006, it began to ask call-center workers to engage more in sales. Whereas Nextel service reps had no sales quotas, workers at the combined companies were required to hit targets for renewing contracts or retaining customers who wanted to cancel accounts. One call-center employee says she was supposed to renew 600 to 900 contracts per month, and sometimes the target exceeded 1,000. In the customer retention unit, workers were given cash bonuses of $2,000 to $3,000 per month if they met monthly quotas. "They wanted those big bonuses," says Romero. Allegations in the two lawsuits against Sprint raise questions about how far Sprint workers went in meeting those sales quotas. Selena L. Hayslett, a realtor from Apple Valley, Minn., says she called Sprint Nextel four times in late 2006 to dispute charges on her bill. Then she realized that each time she called, Sprint was extending her contract, without her consent, according to an affidavit filed in one of the suits. "I felt tricked," said Hayslett. Her complaint is included in a lawsuit filed by the Minnesota attorney general, alleging that Sprint extended contracts when customers made small changes to their service. "It's kind of like the Hotel California," says Lori Swanson, the attorney general, "where you can check in and never leave." Sprint declined to comment in detail on the lawsuit. However, a spokesman says there are "discrepancies between our rec-ords and the lawsuit's portrayal of customer interactions." Paula Appleby, a plaintiff in the other lawsuit, claims she tried to cancel her Sprint contract a number of times. But "each time she has attempted to cancel her service she has been told that her contract had been previously extended," according to the complaint, a federal lawsuit filed earlier this month seeking class action status. Sprint said it is still reviewing the Appleby lawsuit and declined to comment on specific claims. In early 2007, as its financials deteriorated, Sprint cracked down on the freebies that call-center workers could give to keep customers happy, say current and former employees. One current manager in customer retention says that in the first half of 2007, Sprint cut back on virtually all the free minutes, service credits, and free phones that his workers used to be able to dole out. "One hundred minutes is it," says the manager, who asked for anonymity because he does not have authorization to speak to the press. NO STOPWATCHES The new policies hurt Sprint's ability to build its customer base. In the third quarter of 2007, churn stayed high, and Sprint saw its subscriber numbers remain flat, at 54 million, while rivals AT&T and Verizon added millions. In October, Forsee stepped down as CEO under board pressure. Today, Hesse is reversing course on several fronts, hoping to salvage what he can from the troubled merger. He and his lieutenants aren't eliminating the quantitative approach entirely, but they're changing many of the old metrics to now emphasize service over efficiency. Bob Johnson, Sprint's new chief service officer, has eliminated limits on the amount of time service reps spend on the phone with customers. Instead, he'll track how frequently reps resolve customers' problems on the first call. Employees who don't solve a minimum percentage on the first call won't be eligible for sales bonuses. He'll also track how quickly customer calls are answered, to ensure they're getting prompt attention. "My incentives and policies are all driven around improving the experience," says Johnson. He says the long-delayed combined billing system will be done by May. Hesse is also returning to the Nextel philosophy in a number of areas. Churn, for example, is once again a top priority, discussed at every operations meeting. The figure remained stubbornly high, at 2.3% in the fourth quarter of 2007. As for the allegations in the two lawsuits, Johnson says Sprint has implemented a zero tolerance policy for shoddy customer service, which includes a new focus on extending contracts only with detailed approvals from customers. Among other things, Sprint sends a letter to customers outlining any changes to their account, and customers have 30 days to cancel the changes. Hesse knows he has a long, hard road ahead of him. Still, he's convinced Sprint is at last moving in the right direction. "We're beginning to improve customer service already," he says. "There will be a lag between when it improves and when the world knows that Sprint's customer service has improved. There's always a perception lag."

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January 2008

LOOKING AHEAD TO 2008    

2008 looks to be an extremely interesting year with its own set of challenges for ComNet. The commercial construction market forecasts to be extremely strong during most of 2008. Architects and engineers have full order books and this work will flow out to specialty contractors, like ComNet, throughout the coming year. This also holds true for data center activity which is in the early innings of a multi-year upgrade cycle.   However, we also have to assume that our technology service offerings will be under pressure during 2008. Retailers are lowering their profit expectations and the financial sector is a disaster. While it is almost impossible for these customers to remain competitive if they stop spending on technology, it will likely lead to smaller projects as technology spending will be more targeted. There will almost certainly be greater pricing pressure on service providers like ComNet. ComNet is well positioned to withstand whatever the market brings us and even succeed in the process. As I have stressed on many occasions, companies that manage their cash and manage their risk will get through anything. In our business, risk management focuses on a few primary areas: · What projects do we pursue? This involves value judgments regarding the customer and the market segment. It’s no secret to anyone that all customers are not created equal. · How do we price the various projects? I hope that we would view the risks associated with working for a sub-prime lender differently from the risks associated with working for a large insurance company. If so, then we should acknowledge this risk when bidding the work (assuming that we would even want to) and price it accordingly. In simple terms, the higher the risk, the higher the price. · What contractual terms do we work under? If we weigh out everything above and decide to work for a riskier customer, then how do we protect ourselves? We do this through the contract negotiation process. First and foremost, this involves cash management. We try and negotiate up-front payment where possible. We stay overbilled and we collect our receivables aggressively. · How do we get the job done? If we take a look at the other side of the coin, we will quickly see that if things get difficult for ComNet, then they will be equally difficult for our subcontractors. The labor source that we rely on to get the job done involves a risk management decision. I think that everyone intuitively knows this, but it is worth re-stating. ComNet has some very good subcontractors, but as a general rule, subcontracting involves more risk than utilizing our internal labor force. This applies not only on the job site, but also in the eyes of our customers. I realize that we can’t get ComNet employees to every location, but we had better get accustomed to our customers “wanting to make sure that we are using our own employees”. Thankfully, I have a few people in the Bethel office that went through the Great Depression and they keep things in perspective for me. With the exception of 2001-2003, we have all participated in a good economy for the past 15 years. During that time, the concept of risk has faded into the background. We have seen this in the stock market and in interest rates. I think that it would be prudent of us to re-acquaint ourselves with the concept of risk and the process of risk management. Being unrealistically optimistic obviously isn’t managing risk. However, it is equally important to stress that being completely conservative isn’t managing risk either. ComNet is in the business of risk management, not risk avoidance. Managing risk effectively involves a process, which has been discussed above. If you haven’t gone through the process, then you haven’t managed the risk - you just got lucky. As you can also see from above, it involves everyone within ComNet. No one gets a free pass. All this may sound as if I have lowered my expectations going forward. Nothing could be more wrong. I firmly believe that tough times tilt the odds toward the strongest companies. It*s the weaker companies that suffer. We have all put a lot of time and energy into making ComNet the best run company in our industry. This means that we have built an organization that expects to succeed regardless of the challenges.

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Christmas 2007

SEASONS GREETINGS   

I want to sincerely thank everyone for all their efforts during 2007. This year has been a challenge in many ways and everyone has worked hard to overcome the obstacles. This is a credit to the professionalism and dedication of ComNet’s employees. I take enormous pride in the men and women that I get the privilege of working with every day. I believe that you are the best team in the industry. During the holiday season, you should take a few minutes to think about what ComNet has accomplished this year and you should be proud of your contribution to those achievements. Every day, I become more and more convinced that ComNet provides a level of service that our customers desperately need. Our integrity, attention to detail and professionalism truly are rare commodities. I see this demonstrated every time a customer comes back to ComNet after trying out one of our competitors. Through your determination, ComNet is stronger and better positioned in the market than it has ever been. I look forward to 2008 and expect it to be ComNet’s best year ever. This past year has convinced me even more that one of ComNet’s greatest assets and the single biggest differentiator between us and our competition will be our ability to staff major projects and structured roll-outs with ComNet employees. I believe that our success will increasingly depend on our ability to combine our project management capabilities with an expanded in-house technician footprint. Customers have come to expect this level of commitment, and our success will enable us to attract and retain the national customers that make up the core of ComNet’s business. At this time of year, I hope that you will be able to spend time with your families and enjoy the things that matter most. Please remember the troops during this holiday season and give thanks for their sacrifice. Best wishes and seasons greetings!!

 

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December 2007

BACK TO THE BASICS   

I recently read a story about Home Depot’s “warm transfer” policy and how they shift a customer from one employee to another. Say you’re in aisle eight and you want a screwdriver, which happens to be in aisle five. The employee in aisle eight is supposed to walk you to aisle five and either show you the screwdrivers or introduce you to the employee in that aisle. The essence of the story wasn’t about Home Depot’s success with warm transfers, but the fact that Home Depot has let the practice lapse. The story goes on to suggest that Home Depot’s drift away from their core values has been partially responsible for their disappointing financial results of late. This caused me to think about how a well run company should react when things don’t go its way. Home Depot is one of many companies currently being impacted by the downturn in residential home construction. Home Depot didn’t cause the downturn and they certainly can’t stop it. In a similar light, I don’t think that it is a surprise to anyone that ComNet has also been impacted by circumstances that are outside of our control. We have had to deal with the impact of corporate mergers and changes in real estate philosophy at some of our larger customers, which have had a negative impact on the company. This is just part of business. Sometimes these things work in our favor and sometimes they don’t. This year, several of these factors haven’t worked in our favor. The big question is, what do we do about it? I think that we learn our lesson from Home Depot and go back to basics. We focus on servicing our customers to the very best of our abilities. We don’t let e-mail be our only method of contact. We pick up the phone more often and let our customers know that there is a real person working to resolve their problems. We become fanatical in our attention to detail and bring in our projects as profitably as possible. We adhere to the financial principles that have served us well in the past by managing our cash as prudently and as effectively as we can. A company that excels at customer service, profitability and financial discipline will be around a hundred years from now. ComNet will be that company. If you’ve read this and have the impression that times are desperate, nothing could be further from the truth. ComNet will be profitable again this year and we have as many positive things going on as any company in our industry. However, I think that there are things that we can do better. I believe that ComNet is a great company and great companies are able to identify and address issues before they become a problem. Let the other guys practice crisis management.

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July 2007

EXECUTING THE PLAN  

In the previous newsletter, I described a number of initiatives that ComNet has invested in this year. In brief, these were:   A start-up office in southern California Expanding our presence in the north Florida commercial market Developing an audio/visual service offering in Texas Developing a security system offering in Connecticut Implementing a new work order system I hope that you get as excited as I do when you think about the possibilities and opportunities that these ideas can generate. However, ComNet is now faced with the task of executing these plans and turning good ideas into real-world capabilities that contribute to the profitability of the company. To use a cliché, this is where the rubber meets the road. An organization’s ability to effectively execute its plans is what separates the great companies from the good ones. We operate in a rapidly changing industry and the needs of our customers seem to change overnight. As a result, ComNet’s need to evolve along with our customers will never cease. Our ability to accomplish these initiatives is critical to our success going forward. ComNet isn’t like some of our large customers who seem to have unlimited cash resources. In order to ensure the successful execution of our plans for the future and to evolve along with our customers, it is essential that we pay close attention to cash at all times. Our ability to finance future growth is dependent upon turning our plans into profitable ventures. The initiatives noted above will touch every employee within ComNet. I am proud of the team that we have assembled and ComNet’s success calls for the best efforts of everyone in the Company, at all levels.

 

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April 2007

LAYING THE FOUNDATION  

WHO IS YOUR CUSTOMER?

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December 2006

HAPPY HOLIDAYS

I want to sincerely thank everyone for all your contributions during 2006. A little more than a year ago, ComNet established 6 Strategic Principles that would govern the company for the next 5 years. For new employees, these principles were: Grow revenue at 15% per year Broaden our scope of services Train and promote from within Extend our geographic range Build the ComNet brand Go where the money is These goals represent a significant challenge to any organization and our only chance of meeting them lies in the dedicated efforts of all of ComNet’s employees. In just a year’s time, we have made tremendous progress, which benefits everyone at ComNet. Through your hard work, we are creating a much stronger and resilient company that is far better able to weather troubles when they come. At this time of year, I hope that everyone will be able to spend time with your families and enjoy the things that matter most. Please remember the troops during this holiday season and be thankful for their sacrifice that allows us to live in the most prosperous country in the history of mankind. You don’t have to watch much television to be thankful for all the places that you don’t live. You should also take a few minutes to think about what ComNet has accomplished this year and take pride in those achievements. You have been part of setting a goal and meeting its challenges. That’s something that few organizations, or individuals, can say for themselves. I take pride in the men and women that I get to work with every day. You are truly a special group. Best wishes and seasons greetings!!

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October 2006

FROM GOOD TO GREAT  ... 

 A SOLID START

IT'S ALL IN THE PROCESS

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January 2006   

  ATTENTION TO DETAILS....KEY TO SUCCESS!  

Congratulations to all of ComNet's employees for making 2005 the most successful year in our history. You should take pride in what you have accomplished this year because it is truly a testament to your dedication, hard work and flexibility.   I believe that one area in which you have really excelled during 2005 is your attention to detail. Your ability to break complex tasks down into their individual functions has enabled ComNet to take on projects of increasing size, and has allowed ComNet to continue expanding our service offerings. We all know that ComNets emphasis on solid cash management requires continuous attention to detail. In fact, attention to detail impacts all aspects of ComNet*s business and is a characteristic of every well managed company. It is no surprise that ComNet has struggled in the past when we became overwhelmed by the forest and lost our ability to focus on the trees. Just as important is the impact that attention to detail has on our customers. Put yourselves in their shoes. Think about the times that you have been to a hardware store or to a department store. I am sure that everyone has experienced store personnel who didn’t have time for you and lacked knowledge about the merchandise. I am also sure that on rare occasions you have found personnel who were extremely knowledgeable about their store and the products they sell. They were willing to take the time to make sure they understood exactly what you needed so that you left the store feeling good about your purchase; in other words, a satisfied customer. Wasn’t the latter experience like a breath of fresh air? This is how our customers should feel about ComNet; that we are focused on every detail of their project to ensure that their every expectation is met. Attention to detail has helped us succeed during 2005 and will be a critical factor in achieving our 5-year strategic plan. Thanks again for all your efforts. For want of a nail, the shoe was lost. For want of a shoe, the horse was lost. For want of a horse, the rider was lost. For want of a rider, the message was lost. For want of a message, the battle was lost. For want of a battle, the kingdom was lost. And, all for the want of a nail.

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December 2005

  HAPPY HOLIDAYS

I want to sincerely thank everyone for all your efforts during 2005. While we have experienced some growing pains, 2005 will be another extremely successful year for ComNet. We should all take pride in this accomplishment, because consistent, predictable performance is the trademark of every well managed company. This indicates that you have developed the ability to effectively manage risk. Our business will always contain risks, but ComNet*s success will depend on our ability to deal with those risks. We must continue to price in relation to the risks that we assume. We must identify and, if necessary, avoid those opportunities that involve excessive risk. Consistent performance has also allowed us to set a new course for ComNet. Last month, I spoke about the 6 Strategic Principles that will govern ComNet for the next 5 years. Enclosed with this newsletter is a laminated card reflecting the 6 Strategic Principles and a brief statement about ComNet. I hope that you will carry this card with you to serve as a reminder of who we are and how we will Build Our Future Together. By putting these principles into action, we will take ComNet to a new level. Thank you again for your contributions throughout the year. Your hard work and dedication have made a real difference. Nothing makes me prouder than to be part of the ComNet team.

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October 2005

CUSTOMBER SERVICE IS A CONTACT SPORT

BREAKING NEWS

There are a number of exciting things taking place at ComNet as we move into the second half of 2005. ComNet has recently hosted exhibits at the Interop show in Las Vegas and the C3 Expo in New York City. These events are great opportunities to showcase the services and capabilities that ComNet can bring to a customer. At Interop, ComNet was the only service company out of 350+ exhibitors. Our position was truly unique and the response from the attendees was terrific. In addition to trade shows, ComNet has made a concerted effort to increase its internal sales capabilities by targeting the most talented individuals available. Al Williams has joined ComNet as Director of Carrier Sales. Bill Steele, Jim Galarneau and Jay Toumey have come on-board as Account Executives in Florida, California and Texas respectively. These are extremely talented professionals who will be tremendous assets to ComNet as we go forward in 2005. You may be wondering why the company is taking these steps now given its successful history. I believe that ComNet has a great story that needs to be told. We need to tell people that ComNet has been providing the telecom industry with the best service available for over 20 years. We need to do a better job of telling the industry about the new service offerings and capabilities that ComNet has developed. We have a story of sound management, financial stability and operational performance that is second to none and it needs to be told. ComNet’s management is no longer satisfied with being the best kept secret in the industry and we are committed to doing a better job of telling ComNet's story, your story. Make no mistake, this is the story of each and every employee of ComNet. We don't sell products or materials, we sell service. Service is nothing more than the collective efforts of talented and dedicated employees. If we continue to passionately focus on customer service, then we will be able to write a new chapter in the ComNet story and this one could be the greatest story that we have ever told.

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CHAOS IN THE TELECOM INDUSTRY...Friend or Foe??