Wireline Competition Bureau 2006 Annual Report January 17, 2007

2 WCB’s Mission Ensuring choice, opportunity, and fairness in the development of telecommunications and broadband services and markets; Developing initiatives that promote economically efficient investment in wireline telecommunications infrastructure; and Protecting consumer privacy

3 Source: FCC’s High Speed Services for Internet Access Report, (preliminary and unpublished) Facilitated Broadband Deployment 64.6 million total broadband connections in the U.S. as of June 30, 2006 –22.6 million ADSL connections (YoY growth = 38%) –28.5 million cable modem connections (YoY growth = 19%) –13.5 million other connections (e.g. fiber, wireless, satellite, BPL) (YoY growth = 517%) Cable Modem 44.2% ADSL 35.0% Other 20.8%

4 Facilitated Broadband Deployment Advanced “universal, affordable access to broadband technology” –Promoted Regulatory Parity through the BPL-Enabled Internet Access Service Order The Order placed BPL Internet access services on equal regulatory footing with wireline broadband Internet access service and cable modem service

5 Facilitated Broadband Deployment Advanced “universal, affordable access to broadband technology” –Established a Rural Health Care Pilot Program The Pilot Program will fund up to 85 percent of the costs of building state and regional broadband networks, as well as the costs of the advanced telecommunications and information services that will ride over those networks –Clarified rules to encourage investment in and deployment of network infrastructure in rural areas (Safety Net Additive Support)

6 Facilitated Broadband Deployment Advanced “universal, affordable access to broadband technology” –Broadband Data Collection Revised High Speed Services Report to include new data regarding: (1) speed of broadband services and (2) extent to which ILEC and cable companies’ DSL and cable modem service is available where they provide phone or cable television service In the July 2006 Report, growth in ADSL lines exceeded the increase in cable modem connections for the first time

7 Protecting Consumer Privacy CPNI Rulemaking –Sought solutions to the concerns identified by EPIC, including “pretexting” or the fraudulent acquisition of sensitive customer information, including call records –Proposed rules to protect consumers’ CPNI, including the use of password-protected access to call records

8 Promoted Competition Universal Service Contribution Reform –Adopted changes to stabilize the USF while the Commission considers further reform Raised the wireless safe harbor to 37.1% Extended USF contribution obligations to interconnected VoIP providers Established a safe harbor of 64.9% for interconnected VoIP providers

9 Advanced Public Safety and Homeland Security Disaster Preparedness –Disaster Planning and Recovery Orders Granted AT&T, BellSouth, Verizon, and Qwest Special Temporary Authority (STA) and waivers of the Commission’s structural separation requirements and network disclosure rules to support integrated disaster planning and response –1-800 RED CROSS Made permanent the reassignment of RED-CROSS to the American Red Cross to assist the disaster recovery efforts of the Red Cross as the primary agency in the nation’s National Response Plan

10 Advanced Public Safety and Homeland Security Relief to Hurricane Katrina Victims –Continued to provide federal USF support for relief efforts Low income program – Extended the availability of USF funds for carriers to provide free wireless handsets with at least 300 minutes E-rate program – Provided additional flexibility for schools and libraries in the disaster area applying for funding and treated directly affected schools and libraries at the highest level of priority for Priority Two services