The Evolution and Impact of Business VoIP: A Carrier’s View Mark Fishler Vice President – Product Management, Voice and Data Business Services

“Although the consumer market has attracted the most attention from the press, the fastest growing VoIP market is hosted IP voice services for business customers.” – IDC, September 2004 Source: IDC U.S. Hosted IP Voice Services Forecast, September 2004

39% of Respondents are Current IPT Users Source: The Yankee Group 2004 IP Telephony Deployment Strategies Survey Which best describes your current use of IPT? Partially Deployed 25% Fully Deployed 5% Currently Testing 9% Future Users 61% Current Users 39%

22% of “Future Users” Plan to Deploy Soon Source: The Yankee Group 2004 IP Telephony Deployment Strategies Survey Future Users: What are your future plans? Budgeted w/ in 12 mos 22% Test/Plan w/ in 24 mos 24% Test in 12 mos 15% Future Users 61% Current Users 39%

Source: Yankee Group Revenues Productivity Mobility Cost and Network Complexity Unified Communications Real-Time Customer Info Enterprise-Wide Networking Reduced Toll Charges Integrated Wiring and Maintenance More Operational Efficiencies New Multimedia Offerings Broadened Delivery Systems Increased Customer Contacts Anywhere, Anytime Accessibility Increased Employee Flexibility More Collaboration Options Maximize Operational Excellence and Innovation IP Services Present a Significant Value Proposition

Evaluating Critical Networking Needs Business Imperatives IT Applications LAN/WAN Implications one.two.three.

IP Telephony Deployment Questions What technology platform should I implement? Will I need to throw out my existing investment? Will I save money over my existing TDM solution? Can I operate in a hybrid environment? Do I have the staff to operate a VoIP network? When will my new VoIP investment become obsolete? Will my selected platform be able to support new applications? Do converged networks really work? Will my business really recognize the promise of VoIP? Can my LAN/WAN support VoIP today?

Hosted vs. IP PBX Preference Determinants Factors Favorable to Hosted Requires little in-house management expertise Multiple sites High percent on-net calling Longer VoIP migration period Mixed existing telecom platforms Limited capital Factors Favorable to IP PBX Available in-house management expertise Fewer sites Low volume of on-net calling Ability to perform a flash cut Available capital Existing WAN bandwidth

Customers Have Multiple VoIP Options Economies for Customer Reliance on Managed- Service Provider Low High Primarily VoIP PBX OptionPrimarily Network Softswitch Option Owned Managed Outsourced HostedHosted

IDC Hosted VoIP Cost Analysis Hosted voice services are less expensive than PBX equipment and have a fundamentally different economic structure from PBXs because: –Capital expense is reduced –Maintenance and equipment costs are greatly reduced –There is a wider opportunity to reduce long distance charges Source: IDC U.S. Hosted IP Voice Services Forecast, September 2004

U.S. Business Hosted IP Voice Forecast Sites (000) Growth %NA Users (000)753001,2506,00012,000 Growth %NA Users Per Site Monthly Revenue Per User Total Revenue Growth %NA Source: IDC U.S. Hosted IP Voice Services Forecast, September 2004

Growth Factors for VoIP Increased broadband penetration Improved voice quality Not subject to traditional telephony regulation Security

Core Network Evolution

Anytime, Anywhere Access: Integration Makes it Possible, Simple for Customers

Access from Any Place, Any Device

The Evolution and Impact of Business VoIP: A Carrier’s View Mark Fishler Vice President – Product Management, Voice and Data Business Services