1. E-Business in Telecommunications: The Impact of the Internet on the Communications Industry April 13, 2000

2. 1 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Contents Introduction - impact of the Internet on the communications industry Household Market Corporate Market

3. 2 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 E-Business Revenues by Industry - 2003 Projections - Source: Business Week Computing & Electronics TravelEnergy Financial Services RetailTelecomms E-Business Market Size$410B$67B$170B$80B$108B$15B Percent of Total Industry Revenues Despite playing a leading role in providing services for the Internet, the telecom industry lags other segments in generating revenues through E- Business initiatives Introduction

4. 3 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 PwC uses a 4-box model to explore the implications of the Internet within the telecom industry Degree of change to business model Role of E-Business Box 3: Industry Transformation Box 4: Convergence EnablerTransformer PwCs 4-Box Model SEC Box 1: Channel Enhancement SEC Box 2: Value Chain Integration Enabler Enhancing current channels and adding new channels to market Connections with trading partners and process changes across the value chain Transformer Restructuring the value chain to create many-to-many relationships, new value propositions & new business models Companies entering new industry sectors and competing outside of their core business areas 4-Box Model

5. 4 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 E-procurement E-HR (salary/ benefits admin) Financial and sales management and reporting Bill presentment, review, payment Self-service inquiries Individual product sales Order entry and status Employee enrolment Performance monitoring Online account management Current Activities Electronic catalogues Account profiles Account access Web-based CRM Integrated order provisioning Real-time cross-selling Virtual reps Product info/training Real-time inventory and transactions Network performance Integrated purchaser/ vendor Network activation Capacity provisioning Planned Activities Source: PwC Survey of Telecom E-Business Plans Box 1: Channel Enhancement Box 2: Value Chain Integration Our recent survey of telecom companies in the US and Europe revealed that E-Business investments are focused almost entirely on channel enhancement and value chain integration activities E-Business as an enabler

6. 5 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Personalization and recommendations across broad service set (wholesale and retail) Price buyer services Personal router management Traffic geolocation mapping Network E-products Multi-provider tracking Billing aggregator Total network inventory analysis and marketplace (public, competitor, corporate) 3G wireless infocom applications Home network services provision Household services management Integrated infocom services provision Personal infocom services management Applications and coms service hosting and provision Sources: PwC Survey of Telecom E-Business Plans, PwC Telecommunications Industry Visioning, internal review of E-Business activities across industries Box 3: Industry Transformation Box 4: Convergence We anticipate significantly more Box 3 and Box 4 activities as the industry transforms through the adoption of current and future E-Business applications E-Business as a transformer

7. 6 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 The impact of the Internet should be analyzed by market segment, given fundamental and increasing differences among the household, corporate and mobile segments Mass MarketCorporate Mobile Products Skills Processes Geographic Scope CompetitorsNetworkKey Success Factors Value ChainsBranding / BundlingValuation Metrics The skills and products needed to serve business customers are now very different from those needed to effectively serve the mass market The introduction of new services (advanced data services in business markets, mobility, Internet access, etc) in both markets has resulted in differing end-user requirements for both groups The geographic focus of the market segments differ - mass markets are more local, corporations are more global In addition, the operational demands associated with effectively serving customers with complex product requirements are very different Today we will focus on the Mass Market and Corporate Market Impact by market segment

8. 7 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Mass Market Corporate Customer segments source of demand for telecom products/services enabler transformer of business models The Internet as a... We will explore three areas related to the impact of the Internet on the communications industry Services Access Applications SEC SupplierEnterpriseCustomer Exchanges Auctions Aggregators SellersBuyers Telecom services Professional services Backbone capacity S EC SupplierEnterpriseCustomer Todays Business Focus Tomorrows Business Focus

9. 8 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Corporate Services Access Applications Customer segments source of demand for telecom products/services enabler transformer of business models The Internet as a... Mass Market

10. 9 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Sources: Census Bureau, Department of Commerce, FCC Industry Analysis Division, Paul Kagan Associates, CTIA, Simba, AOL Annual Reports, Lehman Brothers Monthly Spending per US Household on Telecom Services (1940-1998) 1996 Real $ Consumers have over the past 10 years increased their spending on telecommunications services as a percent of total household spending from 2.76% to 3.57%, belying the notion that telecommunications is a utility category Consumer spending on core telecommunications products has outstripped underlying economic growth by a factor of two, three and sometimes four Since 1978, spending on multi- channel television services has grown more than 14% per year, with cable penetration standing at over 66% in 2000 Internet usage has increased from 20% of households in 1997 to 30% of households in 1999. This number is expected to double over the next 5 years, reaching over 60% by 2003 Consumer spending

11. 10 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 In the future, traditional telecom services will become a smaller portion of overall service value; new services will be offered and could include retail transactions, entertainment, equipment leasing and billing Network Connections (flat rate) High Speed Access$70.00 Mobility$65.00 Unified Messaging$12.00 Digital Television Services DBS Package$60.00 VOD Hong Kong Gangsters (Movie)$2.95 Miss Internet Pageant (Event)$3.95 European Cup Final (Sports)$7.95 Monthly Internet Services Daily Customized News Service$5.00 Appliance Monitoring$6.00 Remote Security$15.00 Publix Grocery Delivery Services$120.00 Amazon.com Book of the Month$20.00 A Communications Solutions Provider Intermediary Plus Bill Summary On-Net Purchasing Victorias Secret$59.95 1-800 Flowers.com$49.99 On-Line Mall$275.00 Equipment Leasing/Financing HAN w/HCC$15.00 Mobile Web Surfers (2)$10.00 Total - All Services$797.79 Where local and long distance calling is free !! Change in Components of Spend Since 1970, household spending on telecommunications as a percent of discretionary spending has tripled. New communications services will perpetuate this trend The total pool of value available to telecom service providers is not fixed, but expanding rapidly In the not-so-distant future, one-stop shops will supply all basic and advanced telecommunications, entertainment and online purchasing needs -- with one bill and one point of customer contact Conservative assumptions regarding the proportion of consumer spending moving to Web-enabled channels over the next five years generates the monthly bill to the left. This will double the growth rate of the traditional telecommunications industry, adding $50 billion annually to the new industry value chain in the U.S. alone

12. 11 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 A variety of needs in the household market are increasing demand for bandwidth and driving the development of new applications that support the emergence of the home area network (HAN) Home Area Network Local Exchange Telco Fiber & Copper Local Server Cable Company Fiber & Coax Digital Terrestrial TV Telephone return path Satellite to TV Telephone return path HCC TV Smart Device Broa dban d Wirel ess. Mobil e Terrestrial Wireless (Narrow & Broadband) Needs Sharing of: – Peripherals: printers, scanners, cameras – Internet access – Files and application – Multimedia and games High bandwidth for voice and video applications High speed access for telecommuting Automation of home devices such as environmental controls and security systems Home Area Network

13. 12 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Increased demand for local bandwidth and exponential growth in Internet traffic is generating the development of multiple forms of broadband access and an increase in backbone capacity Broadband technologies xDSL Cable Modem Broadband Satellite Broadband Wireless Forecast of North American Residential Broadband Access Source: 1999 Communications Industry Researchers, Inc 328% 83% 260% 113% CAGR xDSL and cable modems are predicted to be the dominant forms of local broadband access xDSL is being driven largely by telcos who can build on their existing networks to provide broadband service Cable modems are being deployed by cable operators over existing cable TV lines already deployed in millions of US households Satellite technology is less developed than xDSL and cable modems, and will therefore take longer to be deployed - Satellite systems are well suited to provide service to developing regions because there is no need to deploy last mile infrastructure

14. 13 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 New applications and household devices that will increase the convenience and comfort of the home user will result from the emergence of the Home Area Network and deployment of broadband access Local Exchange Local Server Broadband Satellite HCC Terrestrial Wireless (Narrow & Broadband) New Generation CPE Control center for home communications High-speed Access xDSL Cable Modems E-Commerce/Home shopping Services Monitoring / Home Automation Security Electricity Heating Voice and video applications Digital video networking Video-on-demand Interactive programming Internet telephony Videoconferencing Internet radio Distance learning New Applications Fiber-to- the-home Home Area Network Applications

15. 14 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 An intelligent interface will develop, combining content and transport CommunicationsEntertainment Office Facilities Management Applets Voice Data Visual Key Characteristics Voice activated Intelligent search A Vision Of The Future Intelligent Interface Facility (Home And/Or Office)Intelligent Interface Source: Forrester Research, Telephony, PwC analysis Electricity Heating Security OFFICE FACITILITIES MANAGEMENT ENTERTAINMENT Electricity Heating Security COMMUNICATIONS Visual & Voice Data ILLUSTRATIVE Home Area Network Applications

16. 15 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Access network providers Capture content spending Capture on-net spending Enable new applications Support the HAN Establish net currency Key Value Imperatives There are a number of key value imperatives in the new household communications industry

17. 16 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Corporate Telecom services Professional services Backbone capacity Customer segments source of demand for telecom products/services enabler transformer of business models The Internet as a... Mass Market

18. 17 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Growth of enterprise-wide applications ERP (eg SAP, Oracle) Knowledge Management (Lotus Notes) E-mail (MS Mail) Video Conferencing Growth of enterprise-wide applications ERP (eg SAP, Oracle) Knowledge Management (Lotus Notes) E-mail (MS Mail) Video Conferencing Internetworking Revolution Global Competition Privatisation and liberalisation Free trade (WTO, Single market, NAFTA) Emerging markets competition Global manufacturing, servicing and marketing trend Electronic channels to market Global Competition Privatisation and liberalisation Free trade (WTO, Single market, NAFTA) Emerging markets competition Global manufacturing, servicing and marketing trend Electronic channels to market Interoperability around Internet Technologies TCP/IP HTTP HTML,XML, Java Interoperability around Internet Technologies TCP/IP HTTP HTML,XML, Java Death of distance Optical fibre physical medium Transmission technologies (SDH/Sonet) Packet switching (frame relay ATM, IP) Telecom sector liberalisation (CLECs, infrastructure) Death of distance Optical fibre physical medium Transmission technologies (SDH/Sonet) Packet switching (frame relay ATM, IP) Telecom sector liberalisation (CLECs, infrastructure) Telco opportunities The Global LAN Growth of E-business Unbundling of the Corporation The internetworking revolution is transforming the corporation and creating new opportunities for telecom providers to service their emerging needs The Internetworking Revolution

19. 18 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 The Global LAN Global Network Desktop (LAN/WAN Integration)WANDesktop (LAN/WAN Integration) The global area network constitutes the virtual private network of the global enterprise, provided either end to end across owned facilities or through local service level agreements The Global LAN

20. 19 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 US Managed Network Services Revenues: 1998 - 2002 In market research undertaken by PwC in 1999; 40% of corporate customers had already established a global buying function for communications products, revealing the expectations of corporations to receive true global solutions, and not piece-meal national solutions Advanced Data Advanced Voice Total CAGR: 22% Advanced Data ATM Frame Relay SMDS X.25 Corporate Internet Access Advanced Voice 800/900 Services VPN Dedicated Access The creation of the global area network creates new opportunities for telecom providers in providing new services such as managed network services and network integration for advanced voice and data products The Global LAN

21. 20 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 The growth in E-Business will generate increased bandwidth demand and will provide new outsourcing opportunities in IT and communications services Growth in US E-commerce Transactions (Billions U$S) Source: Forrester Research Total CAGR:82% Both Business-to-Consumer and Business-to-Business commerce, will drive bandwidth demand - the creation of vertical marketplaces and increased supply chain integration require infrastructure and will be a major driver of demand The economics of the global economy will drive corporations to use the Internet to improve efficiencies and focus on their core competencies - will lead to increased outsourcing of non-strategic IT and communications activities (infrastructure, applications, network management, operations and IT support) E-Commerce growth

22. 21 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 As corporations increasingly outsource core IT, communications and operational activities to focus on their own core competencies, the internetworking providers will have to fundamentally change their business model from a network-centric focus, to a customer and solutions-centric focus IT/(E)-Business Consulting Systems Integration Applications Hosting Web Hosting Network Management Network Design and Integration Product DevelopmentCapacity Provisioning Service Activation Service AssuranceBilling Customer Care Sales Marketing Todays Business Focus Tomorrows Business Focus Customer Relationship Management Unbundling of the corporation

23. 22 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Billing and (Customer Management) Product and Content Providers End-to-End Communications Service Providers Business Customers Application and Professional Services Provider Customer ownership in the corporate market will shift from communications service providers to application and information service providers On-Net (Corporate) Customer ownership

24. 23 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Customer and solution-centric companies are showing signs of success in the market when compared to network-centric service providers Customer-centric companies, like Level 3, were able to increase their stock price by 271% over the past two years Integrated telecom companies like Bell Atlantic and AT&T have only increased their stock by 29% and 16% respectively over the past two years Application service focused companies like Exodus Communications were rewarded by the market with an increase in stock price of 3,216% since March 1998 Level 3 AT&T Bell Atlantic Market success

25. 24 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 IT/IS Consulting IS/IT Consulting Systems Integration Corporate Network Integration Managed Network Services Basic Access and Transport Services Network Infrastructure Provision IT ServicesCommunications Services Application Development Systems Integration Software Integration and Support Hardware Integration and Support IT Training and Education Corporate Network Management Application Outsourcing Services Business Process Outsourcing Process Services Network Consulting and Integration IS Outsourcing Desktop Management Services Network Management Managed Voice Services Managed Data Service Local Service LD Service Dedicated Access Wireless Private Circuits Dark Fibre Right of Way Private Circuits IRUs The issue for operators is to decide where to play in the value chain

26. 25 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 A number of players are currently addressing this opportunity... IS/IT ConsultingSystems Integration Managed Network Services Basic Access and Transport Services Network Infrastructure Provision Corporate Network Integration Corporate and Network Management Non coreMidCore Non core Core Non core Core Non core MidCore MidCore Non core Mid CoreNon core CoreMid Core Non core EQUANT

27. 26 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Enter the human capital business End-to-end 100% ownership Own the desktop Be global Build Wholesale Business Key Value Imperatives Value Imperatives

28. 27 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Corporate Customer segments S EC SupplierEnterpriseCustomer source of demand for telecom products/services enabler transformer of business models The Internet as a... S EC SupplierEnterpriseCustomer Mass Market

29. 28 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Telcos are pursuing a variety of E-Business initiatives in eMarketing, eSales and eCare to more effectively interact with the customers E-Business Initiatives Perform Marketing Develop Products/ Services Sales Service Activation & Assurance Billing Customer Care E-Business Capabilities Selected Customer Touchpoints Quickly test and deploy alternative pricing, terms, or product strategies in days rather than months Use agents to develop pricing or promotion response Customer segmentation capability Widespread access to real time service/product availability Push product information and tailored promotions to customers Extend brand Provide rapid alerts to changes in inventory, pricing and promotions Identify customers at risk of churn Develop customized products Integrate various products and services offerings Improve new product take rates, and bring products to market more quickly Simulate and rapidly test new product ideas through online research or direct customer inquiry Differentiate product offers Establish key customer focus groups to collaborate in product packaging Reduce cost of sales through electronic transactions Provide real time inventory of product availability Establish one touch and done customer product inquiry - order Synchronize demand forecasts with inventory Provide high value customers with tailored services Promote real time cross-selling and up- selling Enable the timely and accurate distribution of sales leads Create and manage price, terms, conditions, service level agreements and contracts Collect order information, and generate service order Provide on-line credit validation Reduce product delivery costs Enable customers of low value commodity products self activation of service Enable account management from sales through implementation among equipment, network facilities, suppliers and customers Collaborative management of network services and inventory management Communicate test and turn-up of service/service activation Automatically update resource loads, service and provisioning schedules, force management and provide updates to customer order tracking files Provide intelligent virtual service representative Allow widespread monitoring and management of customer Provide information and internet-based training on new products/services Improve timeliness and quality of service Monitor and track performance vs. SLAs Electronic billing, review and inquiry Electronic bill payment eMarketingeSaleseCare

30. 29 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 By focusing on the customer rather than on the enterprise, the web provides a more efficient and effective medium for the delivery of telecom services The Case for eCare eMarketing Improved customer loyalty (win-back) Increased analysis of marketing program effectiveness Improved visibility to win-rate comparisons for different prospect types Extending the life of customer eSales Increase cross/up selling Increase margin contribution Increase average order size Increase win/loss information eCare Increased customer satisfaction Increased lead conversion rates Additional sales channels through live contacts and teleweb Effectiveness eMarketing Decreased customer churn Improved profitability comparisons for different prospect types Accurate profitability comparisons for orders from different channels eSales Decrease lead turnaround time Increase margin contribution Decrease sales cycle Decrease promotion cost/discounts per order Decrease training time Decrease average time per sale eCare Increased speed and accuracy of resolution Increased outbound call capacity Decreased cost per service customer Efficiency +

31. 30 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Customer Base/Needs Product/ Service Offering EconomicsCare Needs The distinct character and needs of the each market suggests that the household market should focus on marketing and sales activities, whereas the corporate market should focus on customer care Over 15 million customers Bundling emphasis Standard service offerings Voice and simple data Very high volumes TBR < $100/ month Fixed pricing Lower margin services Routine interactions Simple inquiries Service availability Customer Markets ePriorities Degree of Loyalty Low Customers price sensitive Market Household Corporate Less than 1 million customers Solutions emphasis Customized service offerings Voice & data Hosting (web/applications) Network management Negotiated pricing Contracts, SLAs master service agreements Very high volumes TBR < $100/ month Higher margin services Routine and complex interactions Service availability and SLA reporting Billing analysis Long-term relationships eCare eMarketing and eSales

32. 31 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Corporate Customer segments Exchanges Auctions Aggregators SellersBuyers source of demand for telecom products/services enabler transformer of business models The Internet as a... Todays Business Focus Tomorrows Business Focus Mass Market

33. 32 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 New business models are already beginning to impact the way telecom services are packaged and marketed Aggregators Exchanges Demand TraditionalReverse Auctions eRetailers LD Beyond LD reseller Supply directory Definition Exchanges provide a market mechanism for trading commodity assets online. They work effectively when there are multiple buyers and sellers, the asset is a defined and uniform good and there is market liquidity. Traditional auctions are seller driven online auction for wide variety of products and quantities Reverse auctions are buyer driven online auctions where there is one buyer and many suppliers Supply aggregators - consolidate telecom and/or other services on a portal or other platform. Demand aggregators consolidate the needs of fragmented markets to gain purchasing power with suppliers eRetailers are facilities based service providers that use the Internet as a sales and delivery channel V-o-IP LD providers Unified Messaging Free ISPs Web-based Competitive Segmentation Introduction to Web-based business models Resellers usually capture retail revenues, complete the entire transactions on their web site, and many times provide billing and customer care to the end- users Directories act as neutral navigators allowing buyers to comparison shop, customize, evaluate and purchase products/service s on the Web Revenue Model Advertising. Retail revenues Volume/ wholesale discounts Transaction commissions Advertising. Commerce revenue. Licensing fees Advertising Bounties/ commissions paid by service providers Advertising Transactions commissions Advertising Transactions commissions Subscription fees Advertising Transactions commissions Subscription fees Markets Household Wireless Small Business Household Wireless Small Business Household Wireless Small Business Large Business Wholesale Large Business Wholesale Small Business Large Business Household Wireless Small Business

34. 33 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Most new telecom eMarketplace players fall in the Supply Aggregator category Communications Industry Web-based Business Models Aggregators Exchanges Demand TraditionalReverse Auctions eRetailers reseller Supply directory 1stUp.com Dialpad.com Deltathree.com eVoice Fax Sav (Mail.com) Juno Linx Comm. Net2Phone.com NetZero OneBox.com Phone.free.com RocketTalk Talk.com ThinkLink U-Reach.com Z-Tel BuyTelco.com CollegeClub. com Essential. com Extant MVX.com ServiSense Telegea.com Telstreet.com Universal Access Utility.com BizBuyer BuyersZone DealTime.com Decide.com Lowermybills.com MyRatePlan.com MySimon.com OfficeClick.com Onvia.com Point.com Reasonware.com ShopNow.com Simplexity.com LetsTalk.com Totally Wireless (ePhones.com) Demandline. com Accompany. com Mercata.com Arbinet Band-X Enron RateChange BandX CommerceOne Bandwidth.com Band-X FreeMarkets imandi.com Killerbiz.com Priceline.com Web-based players

35. 34 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Emerging web-based business models will have varying impact on different sectors of the communications industry Local LD Wireless Internet Access Vertical Services BellSouth.com Aggregators Exchanges DemandTraditionalReverse Auctions eRetailers reseller Supply directory Consumer Non-complex Businesses Communications Industry Web-based Business Models Local LD Wireless Internet Access Vertical Services BellSouth.com Complex Businesses Local LD Wireless Internet Access Wholesale BellSouth.com LD coming * * Note: Harvey ball refers to Entertainment services, not Vertical services Summary of impact

36. 35 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014 Telcos should aggressively manage those business models that represent the most opportunity for growth and the largest threat of disintermediation such as supply aggregators, both resellers and directories FightIgnoreJoin Support Create Buy Stake/ Acquire Summary of Strategic Direction Business Impact High Low Summary of strategic alternatives

37. 36 Notice: PricewaterhouseCoopers Proprietary Information. Not for use/disclosure outside PwC except under written agreement. DRAFT - For Discussion Purposes Only E-BizTelecom021100, 6/1/2014