1 Connecting All Americans Link Hoewing VP, Internet and Technology Policy July 15, 2007

2 Broadband Penetration Rankings – By Household EU25: 39% Internet, 23% Broadband US50: 70% Internet, 42% Broadband Source: Pew Internet & American Life Project, “Home Broadband Adoption 2006”, May 28, 2006 Source: European Commission, “E-Communications Household Survey”, July 2006 State Data Source: Render Vanderslice & Associates, September 2006 Key Takeaways: US Internet & Broadband Adoption Significantly Higher than EU Overall Internet US 70% vs. EU 39% Broadband US 42% vs. EU 23% On a state-by-state basis: The most penetrated US states compare favorably with the most penetrated EU countries (US States would be 8 of the top 10) The least penetrated US states are above the EU average (23%). Bottom 3 US States Top 3 US States Page 2

3 Platform Competition – Lacking in Europe Country Total country DSL lines Cable Internet broadband connections (total) Total Other BB infrast. (FttH, Sat., WLL, other) Belgium 1,351,482630,000 0 France 10,219,301600,000 0 Germany 11,305,352284,250 76,600 Italy 7,038, ,000 Netherlands 2,727,1211,550,000 63,000 UK 8,173,1132,870,354 8,500 Europe Total / Average 40,757,9595,934,604491,100 The majority of European markets have a small non-DSL infrastructure, and cable penetration – particularly – for most of Europe is at less than 21%. Unbundling of DSL throughout the EU is, in large part, to compensate for a lack of platform competition. European Competitive Telecom Association (ECTA), ‘Scorecard’ 1st quarter 2006.

4 Record Year for BB Growth  20 largest cable and telco providers in the U.S. combined added over 10.2 million new BB subscribers in 2006  For 2006, Verizon added 1.8 million new BB subscribers  These providers now serve over 53.3 million BB subscribers, with cable controlling ~55% Source: Leichtman Research Group

5 Broadband penetration in the U.S.,

6 Today’s U.S. Broadband Market is Highly Competitive Most households can get broadband: 82% DSL 94% Cable 50,000 WiFi Hotspots exist nationwide Broadband over powerline now competing in dozens of locations The percent of households subscribing to broadband has exploded: More than 50% of all homes have broadband Carriers are offering lower entry prices for their broadband services: Verizon offers $14.95 DSL Carriers are improving the high-speed options available to customers: Verizon FiOS 50 Mbps Cablevision 16 Mbps Mobile carriers have introduced new services and networks: EVDO (700 kbps average speed) available to 255 million Americans

7 Customer Time Spent in Selected Forms of Electronic Communication Consumers daily total use is 5.25 hours! Multitasking plays a role. No one form dominates. Sources: (1) “Multitasking Drives Consumer Consumption of Media”, Yankee Group, Jan 26, 2007, Exhibit 1 "Average Media Consumption (Hours per workday) in the United States… " (excerpts) (2) Households in US, (shows 113M HH in 2006) (3) “The VoIP Evolution Continues: Forecasting Broadband VoIP and Cable Telephony”, Yankee Group, Aug 2006, Exhibit 3 shows 8.5M VoIP HHs (4) “Worldwide Usage Forecast”, IDC, Dec 2005, Table 15 North American and Worldwide Average Daily Person to Person Messages Sent – shows person to person s sent. (5) “Daily Internet Activities”, shows 93M Adults use the Internet on any given day.

8 Verizon’s Broadband Strategy Includes...  Fiber-to-the-premises (FTTP) Next generation network technology 9 million homes passed by end of /2 Mbps; 15/2 Mbps; 30/5 Mbps; 50/5 Mbps (in some markets) – Advancing now to GPON and potentially 100s of megabytes to homes  DSL Continue to deploy as ubiquitous data network Speeds of 768 kbps and 3 megabytes available Deployed to over 80 percent of all our customers  Wireless 3G deployed today 255 million Americans (5/6s) can access today Up to 700 kbps on average available EVDO Rev A now being deployed in dozens of cities with upload speeds in particular several times higher than current EVDO Moving toward 4G - other wireless technologies (WiMax) in trials

9 Verizon FiOS Strategy FTTH/FTTP Update – April 1, 2007  FiOS – began in 2005 – an all-digital fibre-optic network that extends to the customers’ premises (FTTH / FTTP) - FiOS TV – now offered in 400 cities to over 3.5 million customers - “Triple play” – also supports voice and high-speed Internet at up to 100/10 Mbps in more than 1,600 cities in 16 states - More capacity for digital & HDTV, and unparalleled IP bandwidth for on-demand & niche programming - Unprecedented interactivity to support new business opportunities in voice, data, video, conferencing, etc. 2Q’07 Deployment Status:  Over 7 M premises passed  1 M FiOS high speed customers  350,000 plus FiOS TV customers  Nearly 1 million TV customers in total (satellite/FiOS) 2007 Deployment Objectives:  Pass 9M premises passed 2010 Deployment Objectives  Pass 18M premises by 2010 What is Verizon Doing? Page 9 Verizon CapEx spending on FiOS will total of $23 billion by 2010

10 Percent of Residents with No Choice in Internet Service Source: Pew Internet and Society Project

11 Connect Kentucky – the Model  Private-public partnership managed by a non-profit organization Trust, reliance on private sector wherever possible  Focus on BOTH supply and demand – build it and they will come not enough  Must find out where the “holes” are where broadband is not – mapping Work with companies to get data – strong non-disclosure agreement and non-profit not subject to FOIA Develop effective GIS mapping system  Continuously report progress to political leaders  Create eCommunity leadership teams Teams consist of local members from nine different groups (listed in next slide) Conduct economic and business analysis  Promote deployment – focused on private players first Aggregated demand and market analysis developed through eCommunity work Private players may decline and if so, other options – including RUS loans working with local governments – are used

12 Connect Kentucky - Mapping

13 The Connect Kentucky Model Works Kentucky went from among the bottom states on deployment to one of the top five Kentucky will be at 100% deployment by year’s end Kentucky has reached 42% penetration of broadband

14 Connect Kentucky Model Produces Results  U. S. model – platform competition, remove constraints on investment – has worked and is working  Mapping is important but it alone does not produce results In fact it can be harmful if not linked to effective programs focused on encouraging deployment and use  Non-profit led, private-public partnership is results focused Community based with objective to “fill the holes”  Data comes in many formats – gathering it and effectively teasing out key conclusions is not easy GIS systems are almost rocket science  Focusing on the demand/uptake side of the equation is critical too  Connect Kentucky results speak for themselves