1. © Copyright Ovum 2004 www.ovum.com Impact of the Wireless Telecom Industry on the US Economy Roger Entner Vice President Wireless Telecom Ovum roger.entner@ovum.com 617.722.4654

2. © Copyright Ovum 2004 2 How does the Wireless Industry benefit the US Economy

3. © Copyright Ovum 2004 3 Impact of Wireless Services on the US Economy  Wireless Services will provide a major stimulus to the US economy over the next 10 years of more than $617 billions in productivity savings from data and additional $750 billion consumer surplus from voice use and $450 billion GDP contribution from a bigger industry. All amounts in billions of dollars N.B.: The benefits flow to US businesses and consumers as a whole. We are not discussing the increase in revenue of the wireless industry.  To put this in context:  The size of the Bush Tax Cut over 10 years is $670 billion  The size of the Estate Tax Repeal over the 10 years will be $297 billion

4. © Copyright Ovum 2004 4 Annual Productivity Benefit from Wireless Data Application are Growing to more than $80 billion  In 2004 wireless data services only contributed $8 billion in productivity benefits to the US economy – roughly the size of Bahrain.  By 2015 these benefits have grown to more than $80 billion per year, which is approximately as big as the economy of Chile or the Philippines. All amounts in billions of dollars  All benefits are actually savings companies are reaping from reduced time – not from increases in sales. We used the $12.68 a tree trimmer earns per hour, not the $25+ that a company charges for the time to calculate the benefit

5. © Copyright Ovum 2004 5 Components of Future Economic Benefit  The two major components that will drive the future economic benefit are:  More Efficient Management and Documentation  Heath Care Efficiency Enhancements  Followed by still sizable benefits in:  Field Service Automation  Inventory Loss Reduction  Field Sales

6. © Copyright Ovum 2004 6 GDP Impact of $92 billion in 2004

7. © Copyright Ovum 2004 7 A consumer surplus of $157 billion – almost all from wireless voice  Consumer surplus measures how much US businesses and consumers are prepared to pay in excess of what they pay  Consumer surplus from use of wireless services was running at $157 billion at end 2004  Almost all of this surplus is associated with voice  We expect this surplus to grow:  To $260 bn by 2010 as  Voice volumes treble  Prices halve  To over $300 bn by 2015

8. © Copyright Ovum 2004 www.ovum.com Level 3More details on supply side effects © Copyright Ovum 2004 www.ovum.com

9. © Copyright Ovum 2004 9 US Wireless Industry Value Chain

10. © Copyright Ovum 2004 10 GDP Contribution of Wireless in Comparison with other Industries

11. © Copyright Ovum 2004 11 3.6 million US Jobs Depend on the Wireless Industry

12. © Copyright Ovum 2004 12 $63 billion in Government Revenue are Generated by the Wireless Industry  $14.6 billion in federal, state, and local sales and transaction taxes and surcharges on wireless services;  $0.9 billion in sales taxes on handset purchases;  $9.0 billion in employer-paid social security payments;  $9.0 billion in employee-paid social security payments;  $26.5 billion in income tax from workers dependent on the wireless services industry;  $2.6 billion in contributions to federal and state Universal Service funds.

13. Level 3Thank you very much! © Copyright Ovum 2004 www.ovum.com