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A new start in Warwick Valley

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THE EARLY DAYS
1900 Warwick served by Hudson River Telephone Co.
1902 Warwick Valley Telephone Co. established
1927 WVT purchased the Florida Telephone Co.
1940 First central office in Pine Island, N.J.
1951 Opens CO in Highland Lakes, and Upper Greenwood Lake in 1954.
1975 Era of digital switching begins with a Stromberg Carlson cross-reed EXC-1, PL2
1987 WVT formed wireless subsidiary: Warwick Valley Mobile Telephone Co.
1994 Warwick Valley Long Distance Company incorporated
1995 Invested $1.2 million in Hometown Online Internet service
1995 ISDN came and went
1998 DSL deployments began, company goes public.

THE NEW DAYS
2000 Invested in Datanet, Hudson Valley and Zefcom (dba Telispire)
2001 100% DSL coverage in ILEC territory, launches VDSL in 2002
2004
• Invests $950,000 in Empire State Independent Fiber Networ
• Lynn Pike, president and CEO resigns
• Herbert Gareiss named acting president and later CEO
• Company sells stake in Datanet
• CFO Philip Grybas resigns
2005
• Michael Cutler named CFO
• Requests and receives Nasdaq listing extension
• Shareholders vote “No Sale” on proposed sale of company
2006
• Nasdaq problems continue
• CFO Cutler resigns
• CEO Gareiss announces retirement
2007
• WVT names interim CFO Kenneth Volz who later signs on for good
• Names interim CEO Thomas Gray
• Names CEO Duane Albro

For about the first 100 years, WVT Communications, as it's now known, stayed within its traditional service territory. Oh, it extended facilities to New York and New Jersey and even built a central office in Jersey's Highland Lakes back in the '50s. The company didn't really have to expand. The world kept expanding to it. But that's all changed now.

About one hour outside New York City, Warwick Valley provides an affordable getaway for people working in the city. Its relative affluence also provides an attractive market to cable providers and other telecom competitors.

Around 1998, two years after the last Telecom Act ushered in competition, Warwick Valley Telephone Co. went on the move. After starting an Internet access business in 1995, it added DSL in '98, and like many rural providers, it established a CLEC business. It also established a wholesale entity. It went public, got really innovative and became an early adopter of video over DSL.

It had some growing pains and switched technologies a couple of times. Lately, it has had its share of turnover in the management ranks. The company's interim CEO, Tom Gray, who took over when former CEO Herbert Gareiss retired citing health problems in December 2006 — shortly after the company's chief financial officer resigned and after several directors followed — handed leadership to Duane Albro on April 23.

Albro convinced Kenneth Volz, interim chief financial officer, to stay on permanently as vice president, chief financial officer and treasurer of the company. Both are seasoned veterans.

Albro has 35 years of telecom experience, including a climb through the ranks from service technician in 1966 for New York Telephone to group vice president for NYNEX and Bell Atlantic. He has held executive positions at Cablevision Systems, Net2000 Communications (a CLEC) and led Refinish, a cell phone recycling company in Fort Worth, Texas.

“My qualifications were perfectly matched for what they were looking for,” Albro said. “And I was attracted to them because I knew them to be very in tune with their customers and very innovative.”

He also said that for rural LECs, having a good customer base is the minimum requirement for getting a ticket to the dance. “But to stay in the dance, you have to have a CLEC play and a wholesale play, and what intrigued me about WVT was that they had both.”

If Albro has his way, the company will soon have more. He said it has a plan for offering the quadruple play, which means the company will add a wireless component. He said it would introduce a quad-play service this year. Although he couldn't give details on what sort of wireless offering this would involve, Albro did say, “I don't see us buying spectrum. I don't want to build another wireless company.”

Albro said that cable companies are trying to commoditize the triple play by driving down prices. “We have to change that market paradigm and redefine it as a four-way market and make the essential products voice, video, Internet and wireless because the customer is blurring the lines between those product,” he said.

Albro said ADSL2+ is his technology of choice going forward. “Clearly, where I can economically deploy fiber, I will do so, but what I can't do is chase video customers with fiber today. It's just not a smart move,” he said.

His strategy is to continue to grow but to do so by staying contiguous with the company's existing footprint. “You won't see me trying to buy a CLEC in Texas,” Albro said.

Albro's mission in-region is to manage the business smartly by controlling costs and offering a good product package aggressively. WVT will be adding high-definition channels to its programming and, of course, the wireless component. Outside its region, WVT will continue to expand its CLEC business. “It's a solid plan being utilized by all the RLECs. You don't need more than that,” he said.

Being the head of a public company, Albro couldn't comment on the environment for consolidation or how he would like to see that play out in his little New York hamlet. However, analysts have said the Northeast continues to be an attractive target market for other independent telcos looking to expand.


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