1. One Gigabit or Bust TM Initiative: A Broadband Vision For California Kathie Hackler Research Vice President June 16, 2003

2. The Study Process and Outcomes Gartner assessed the economic potential of an acceleration of ubiquitous Next-Generation- Broadband utilization in California. Our assessment included interviews of the top broadband thinkers, policy makers and consumer advocates within the State, the nation and the world. The resulting report summarizes the economic benefit, key issues, and recommendations for next steps. © 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved.

3. Key Findings Significant economic growth opportunity for California A variety of agendas No new single killer application No agreement on the characteristics of broadband Leadership is essential Globalization requires action now

4. Waves of Technology Drive Windows of Economic Growth As each technology is absorbed it becomes the basis for another subsequent wave Economic Growth Time Telephony PC/LAN Internet Networked Economy Shows Wave of Technology in growth Wave of Technology falls off shows it is Industrialized © 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved.

5. Impact of the Introduction of Broadband on GDP/GSP $40K 50% 73% Main Telephone Lines GDP per Capital 20% Broadband Penetration $25K $39K 9%20% $46K GDPC in reference to PSTN Line % Additional Impact by Broadband on GDPC © 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. The Utilization of Broadband Can Have a Major Impact on Productivity

6. $376 Billion Opportunity Applying the methodology to a broadband penetration of 50% per capita produces a substantial opportunity to increase California’s Gross State Product by 2010 © 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. GSP per Capita: $46,447 $1.41-Trillion 10-Year Accum. Year 2000Year 2010 Base Point GSP per Capita: $39,698 $367 Billion Inc. $1.03 Trillion Baseline

7. Increases in jobs reflect new jobs created by reorganization of industries as well as retention of jobs within California industries © 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 20 Million Jobs Added Over Total of 10 Years Year 2000Year 2010 Base Point Jobs: 14 Million +2MM Incremental Jobs 18MM Base Two Million Incremental Jobs

8. Broadband must be integrated and utilized within the communications infrastructure — it must be ubiquitous. We do not advocate: Field of Dreams investments Massive government funding Waiting for a “Killer App” We advocate making Next Generation Broadband a viable communications platform Focusing on speed, bandwidth, capacity or a “Killer Application” ignores the real opportunity The opportunity is millions of ordinary tasks and events that are made better, easier or more productive. © 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. One Gigabit Is NOT About Technology, It Is About the Capabilities Enabled

9. © 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Dichotomy of Interests Our interviews repeatedly revealed conflicts of goals and objectives. Broadband means different things to people Only exceptionally strong leadership will succeed

10. © 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Broadband Vision and Leadership — Both Top-Down and Bottom-Up There must be leadership that can: Understand the interests of all stakeholders and bridge differences Understand the complex technology issues and separate the real issues from the red herrings Develop partnerships and collaboration between the hundreds, possibly thousands, of stakeholders Navigate the treacherous political waters and survive the boom or bust funding cycles

11. © 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Forward-looking Public Policy Can Clear the Way Encourage collaborative efforts of the State, counties and municipalities Establish a clearinghouse for best practices Create “regulatory free” zones Participate in solving intellectual property issues at the national level Eliminate administrative barriers (such as right-of-way) Require new housing developments to include fiber or conduits for fiber Become an anchor tenant Require broadband be capable of replacing existing communications services These actions do not require direct government funding

12. © 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Gartner Has Identified Several Action Steps Identification of a leader or leadership team Development of a business plan Construction of implementation scenarios Development of specific costs Demand aggregation and anchor tenancy Coordination of regulatory/legislative policy between federal, state and local entities Public and private partnerships Commercial broadband market test beds

13. A Call to Action California Has a Choice — Lead, Follow or Get Out of the Way Today, high technology, entertainment, biotechnology, agriculture and many more industries call California home. California has the most to gain from action and the most to lose from inaction. Other regions will welcome these industries and are taking steps to attract them. Now is the time to choose California’s future. © 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved.

14. One Gigabit or Bust TM Initiative: A Broadband Vision For California Kathie Hackler June 16, 2003