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Posted: June 05, 2009

Telecom CEO lays out energy ambitions

Arunas Chesonis sees PAETEC customers as natural solar, wind buyers

Mike Taylor

Arunas Chesonis heads the nation’s eighth-largest telecommunications firm, with revenues of $1.6 billion last year, but the founder and CEO of Fairport, N.Y.-based PAETEC Holding Corp. sees an even bigger future for his company in the retail energy field.

“Our energy business over the next 10 years will be bigger than our telecom business,” Chesonis said at a gathering hosted by CORE (Connected Organizations for a Responsible Economy) June 1 at the Molson Coors Tap Room in downtown Denver. “We’re looking to fund solar panels, wind turbines, do all kinds of creative things and fund it with telecom revenues.”

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Arunas Chesonis

Chesonis, 46, who earned a degree in civil engineering from MIT in 1984 and founded PAETEC in 1998, said that as a proven telecommunications provider he has built-in advantages for parlaying existing infrastructure and customer relationships into retail energy services, particularly sustainable energy such as solar, but including traditional forms like natural gas.

“We think over the next 10 years, CIOs (chief information officers, or chief technology officers) are going to be pulled more and more into energy-purchasing decisions – green initiatives, sustainability initiatives, facilities problems, real estate issues,” Chesonis said.

Making his point, Chesonis asked rhetorically, “Who’s the biggest energy hog in most companies, in office buildings? It’s IT. Who are the people who have to worry about backup power? IT. Who are the people who have to deal with all kinds of security, surveillance, telecommuting, all kinds of issues? It’s IT. Whether they like it or not, they’re going to get more and more into it.”

Publicly held PAETEC (PAET) is a provider of local and long-distance voice services, data and Internet services, and software applications. It serves medium and large businesses, colleges and universities, hospitals, hotels, governmental organizations and other institutions in more than 83 of the 100 largest U.S. markets, including Denver.

During his presentation, part of CORE’s Distinguished Speaker Series, Chesonis explained why he chose to attend MIT, in the process illustrating his lifelong penchant for big ideas. As a kid growing up in New Jersey, he dreamed of building underwater cities, and MIT had the nation’s only ocean engineering program.

“I went there and found out it was mostly shipbuilding, so I said, ‘What’s the next best thing? Well, civil engineering. Environmental engineering,” said Chesonis, who also holds an MBA from the William E. Simon Graduate School of Business at the University of Rochester.

Chesonis maintains close ties to MIT today. He chairs the school’s advisory committee for its Earth System Initiative, which seeks to further an understanding of the Earth’s physical, chemical and biological processes. Chesonis’ role is to promote the work of ESI beyond the academic community and help raise ESI’s visibility. He’s also co-director of SERP (Sustainable Energy Revolution Program) at MIT, which focuses on solar, wind, geothermal, biofuels and wave-energy research.

And he’s been instrumental in creating at MIT what he calls “ignition grants” – essentially pre-angel funds of $50,000 each for post-doctorate, graduate and faculty members with promising projects to get them from the proof-of-concept stage to where they can vie for angel funding. Chesonis says ignition grants totaling $500,000 in the past 2 ½ years have resulted in subsequent $8.8 million in funding by VCs, angels and other investors.

Chesonis’ presentation to the CORE gathering, “Philanthropic Investment in Our Planet’s Energy Future,” seems aptly titled. While he receives nothing tangible in return for his work with MIT – no intellectual property rights or shares in companies he might have had a hand in launching – he says it’s made him friends and kept him abreast of the latest developments in sustainable energy hatched at MIT.

“It’s my hobby,” Chesonis said of his efforts for his alma mater. “But it’s helping my business.”

Though he exudes the passion of a visionary, he’s also realistic about the obstacles facing solar and wind energy development. Taxing carbon emissions will only help solar and wind in the short term, and only in the U.S. For China and India to come aboard, the costs have to come down, he said.

“You’ve got to have solar or wind or both intrinsically cheaper than coal-generated plants,” he said. “You can do all the carbon taxing you want. That will help get us started, help get people focusing on it more. But you’re not going to get China and India to adopt renewable energy unless it’s cheaper than coal. It’s just the way of the world, so we’ve got to focus on that. We’ve got to solve the cost issue and we’ve got to solve the storage issue. The technology’s there to go totally solar from the collection of the energy and the transmission standpoints. It’s not there from the storage standpoint. Right now you couldn’t store the U.S. energy needs for solar.”

Nonetheless, Chesonis said he hopes over the next 10 years for PAETEC to have 5,000 to 15,000 solar panels and wind turbines distributed throughout the country. He foresees customers not only generating much of their own power, but selling their excess power back to other customers.

“It’s a lot more complicated than I’m making it out to be,” he said, “but the concept is distributed energy generation.”

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Mike Taylor is the managing editor of ColoradoBiz. He writes about small-business money issues and how startups are launched. Email him at mtaylor@cobizmag.com.

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