U.S. Telecommunications Regulation and Market Developments September 2008

1. U.S. Telecommunications Regulation and Market Developments September 2008

2. High Speed Line Growth(2000 – 2007)* 2007 • All figures as of June 30th. Source: FCC’s High Speed Services for Internet Access Report, March 2008, at 6.

3. High-Speed Lines in the US by Technology as of June 30, 2007 SDSL & Traditional Wireline 1% Source: FCC’s High Speed Services for Internet Access Report, March 2008, at 6.

4. U.S. Investment in Fiber Networks • Telecommunications companies expect to make $50 billion in capital expenditures in 2008-2009 regarding broadband investment. • Verizon has said it expects to invest $18 billion in net capital from 2004 -2010 in deploying their FiOS network. • Spending by carriers on telecommunications equipment in 2008: • Fiber: $10.6 billion • Industry-wide, spending on fiber-related telecommunications equipment is estimated to grow almost $13.5 billion annually in the next three years.

5. Wireline Broadband Prices and Speeds Declining Prices, Increasing Speeds $60 (Based on Maximum Advertised Price Downstream Speed Tier) 768 kbps - 1.5Mbps $50 $40 $30 1.5Mbps $20 $10 2001 2007 Source: US Telecom: The Broadband Association, Wireline Broadband Pricing 2001-2007, June 2008

6. Wireline Broadband Increasing Speeds for $50 (Speeds based on Maximum Advertised Price Downstream Speed Tier) 2001 2002 2003 2004 2005 2006 2007 Year Source : USTelecom: The Broadband Association, Wireline Broadband Pricing 2001-2007, June 2008 Up to 15 mbps Up to 7 mbps Up to 3 mbps 1.5 mbps 768 kbps

7. Promoting an Open Internet • In 2005, the Commission adopted an Internet Policy Statement that set forth four consumer-based principles: • Consumers are entitled to access the lawful Internet content of their choice; • Consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement; • Consumers are entitled to connect their choice of legal devices that do not harm the network; and • Consumers are entitled to competition among network providers, application and service providers, and content providers.

8. FCC Affirms Its Authority to Protect Vibrant and Open Internet ? user seeking peer content ? ISP #2 user seeking peer content All Internet Users Affected ISP #1 User/peer w/ content user seeking peer content Peer connections Terminated with False “reset” message ISP #3 ? User/peer w/ content

9. Total US Mobile Telephone Wireless Subscribers Source: Cellular Telecommunications & Internet Association, Semi-Annual Survey, 2007.

10. Growth in the Mobile Telephone Industry(June 2002 – June 2007) $133 Billion in Annualized Revenues June 2007 734 Avg Monthly MOUs in June 2007 243 Million Subscribers in June 2007 UP 88% From $71 Billion in Annualized Revenues June 2002 UP 84% From 398 Average Monthly MOUs in June 2002 Price per minute $0.07 in June 2007 UP 81% From 135 Million Subscribers In June 2002 Price per minute Service Revenues DOWN43% From $0.12 per minute in June 2002 Minutes of Use Subscribers Source: Cellular Telecommunications & Internet Association; FCC.

11. 700 MHz Auction $19.1B All other auctions $19.1B AWS-1 Auction $13.7B Comparison of 700 MHz and AWS-1 Auction Revenues vs. All Others Note: 700 MHz Auction revenues do not account for bidding credits. (FCC, April 2008)

12. 700 MHz Auction: Openness Conditions Consumers will be able to use the wireless device of their choice; Consumers will be able to download the legal software they want; Consumers will be able to download the applications they want.