1. Dennis Weller Chief Economist – Verizon Transatlantic Dialogue Seminar Montpellier, November 22, 2005 Next – Generation Networks Challenges and Opportunities of Convergence

2. 2 About Verizon t Largest wireline operator in the US 3More than 50 million lines t Second largest wireless operator in the US 343.8 million wireless subscribers (end of 2004) 36.3 million new customers in 2004 t Largest directory publisher in the world t Revenue $71.3 billion in 2004 t There are about 110 million households in the US; on any given day about 100 million people are connected to a Verizon network

3. 3 Verizon Overview - Nationwide Presence in a Fragmented US Market Local telephone services in 29 states and the District of Columbia Wireless service nationwide Long Distance Broadband Data services Directories

4. 4 Transforming Verizon Through Investment in Next-Generation Networks and Services 3Wireline: Fiber to the premise ä3 million homes passed by end of 2005 äNow in 15 states 3Wireless: 3G broadband 3Services and Integration äTo deliver the greatest possible value to consumers 3In rural areas äWiMax In Grundy, Virginia and other communities äPartnership between Verizon Avenue, local government, and Alvarion

5. 5 FTTP Full Build & Overlay Architectures Office Parks SAI Small Businesses Residential Circuit Switch Copper Feeder Copper Distribution ONT FTTP Overlay Splitter Hub OLT Splitter ONT Small Businesses FTTP Full Build 2 – 4 POTS Enet Video

6. 6 FTTP: The Perfect Broadband Platform 1310 nm1490 nm DownstreamUpstream Voice and Data @ 622 Mbps 1550 nm Video Digital TV Analog TV HD/VO D 550 MHz860 MHz42 MHz Voice and Data @ 155 to 622 Mbps Bandwidths & Services FTTP Network HFC Network Data / Telephony / VOD Broadcast Video Data / Telephony / VOD

7. 7 Verizon Fios Wireline Broadband Access Leapfrogs Cable Modem & DSL!

8. 8 Fios TV t First offering in Keller, TX in October 2005 3One million homes passed by year end 2005 t Will begin with: 3293 channels of video 31800 choices for video on demand 3Easy interface 3Parental control t Will add: 3Full interactivity 3Two-way video 3Integrated shopping (T-commerce)

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10. 10 Verizon Wireless High-Speed Internet Access

11. 11 Verizon 3G Wireless Broadband t Verizon is US market leader in 3G rollout t Available to 150 million people by end of 2005 t CDMA technology – EV-DO t Card for laptop provides BB Internet access 3Unlimited nationwide usage $69.95 per month

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13. 13 Pricing of VCAST Service V CAST VPak $15 per Month Mobile Web 2.0 VZW Today Unlimited Browsing Unlimited Data Transport Get It Now services Get Games** Get Tones** Get Wallpaper** Get Going** Unlimited Basic Video Clips News Sports Entertainment Weather Access to Premium Content Partners include Comedy Central, MTV, News Corp, 20 th Century Fox NBC News tailored for mobile Exclusive mini-episodes (“mobisodes”) of popular TV shows More than 300 clips updated daily

14. 14 VoiceWing Personal Account Manager

15. 15 Verizon iobi Home IP Enabled Telephone Service

16. 16 Access Point - Client CALL LOGS CONTACTS SEND MESSGAGES CALL FORWARDING VOICE MAIL iobi desktop client allows users to manage their communications from their PC Most convenient access point from your office or home PC Send SMS or e-mails with a mouse click View your weather information

17. 17 Service Control ISCP™ VM Outlook PSTN/VoIP Call Control iobi End User Portal Addr book Calendar Content Directories Conferencing And Collaboration Web Sharing IM SMS Messaging VM Alert VM Retrieval Broadsoft Application Server MGC SIP Proxy TG MSC MSC SSP SSP Internet L1 Gateway EPG

18. 18 T-Commerce Food Network - Groceries : Overview Opportunities for Integration TV and Broadband Commercial agreements with partners Convenience, security, ease of payment

19. 19 Policies For Next-Generation Infrastructure t United States policy is to promote platform competition 3Competition among wireline, cable, 3G wireless, others äProduct differentiation 3“Old wires old rules. New wires, new rules.” 3Elimination of unbundling for new networks 3Elimination of line sharing 3Tradeoffs in policy – one wire or many?

20. 20 Policies For Next-Generation Infrastructure 3How do policy objectives from the old world translate into the new world? 3Two examples: 3What does universal connectivity mean in the new world, and how will it be achieved? 3What does openness mean in the new world, and how will it be achieved?

21. 21 Policies For Next-Generation Infrastructure 3What does universal connectivity mean in the new world, and how will it be achieved? 3Universal connectivity in the old world äTheodore Vail and the Kingsbury commitment, 1913 äObligation to interconnect äRegulation as an necessary result 3Universal connectivity in the new world äWorldwide connectivity on the Internet äAchieved without any obligation to interconnect, or any regulation äHow has this been possible? äEfficient markets, valuation, and incentives to invest 3Policy challenge: Keep Theodore Vail’s hand off the Internet äAs next-generation networks grow, new world will displace the old

22. 22 Policies For Next-Generation Infrastructure 3What does openness mean in the new world, and how will it be achieved? 3Openness to third party service provision in the old world äServices tied to the network platform äThird party provider rents part of network äPolicy instruments have included open network architecture (ONA), equal access, unbundling 3Openness to third party service provision in the new world äServices can be independent of the network platform äOpenness means customer’s ability to reach third party sites

23. 23 Policies For Next-Generation Infrastructure 3Connectivity principles äProposed by High-Tech Broadband Coalition two years ago 3Broadband consumers should be able to: äReach content of their choice on the net äRun any software äAttach any device äObtain information about these abilities 3As the High-Tech Coalition predicted, the market has observed these principles 3Adopted by the FCC in August 2005 äWithout any ex-ante rules to enforce them

24. 24 Connectivity Principles 3Developed by a coalition of high-tech companies äProposed to FCC in 2003 äAdopted by FCC as principles äNo ex ante regulation to enforce principles 3Ensure that bits are not blocked äBroadband customer can access any site, run any application 3In world where applications are not tied to networks, principles ensure open market for service applications 3Market for Integration äCustomer chooses how much integration to buy, and from whom

25. 25 About Verizon t Largest wireline operator in the US 3More than 50 million lines t Second largest wireless operator in the US 343.8 million wireless subscribers (end of 2004) 36.3 million new customers in 2004 t Largest directory publisher in the world t Revenue $71.3 billion in 2004 t There are about 110 million households in the US; on any given day about 100 million people are connected to a Verizon network