U.S. Telecommunications Regulation and Market Developments September 2008 US Online Population (2000 – 2007) 0 20 40 60 80 100 120 140 160 180 2000 2001 2002 2003 2004 2005 2006 2007 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Online Population (Number) Online Population (Percent) Millions of Adu l ts Percent of Population Source: Harris Interactive. 23.0 100.9 4.1 15.8 65.3 9.2 32.0 42.5 0 20 40 60 80 100 2000 2001 2002 2003 2004 2005 2006 M illio n s Power Line and Other Satellite and Wireless Devices Fiber Cable Modem SDSL and Traditional Wireline ADSL High Speed Line Growth (2000 – 2007)* • All figures as of June 30th. Source: FCC’s High Speed Services for Internet Access Report, March 2008, at 6. 2007 High-Speed Lines in the US by Technology as of June 30, 2007 Source: FCC’s High Speed Services for Internet Access Report, March 2008, at 6. Fiber 1% All Other 37% Cable Modem 34% ADSL 27% SDSL & Traditional Wireline 1% 2001 2007 $10 $20 $30 $40 $50 $60 768 kbps - 1.5Mbps 1.5Mbps Wireline Broadband Prices and Speeds Declining Prices, Increasing Speeds Source: US Telecom: The Broadband Association, Wireline Broadband Pricing 2001-2007, June 2008 (Based on Maximum Advertised Price Downstream Speed Tier) Wireline Broadband 2001 2002 2003 2004 2005 2006 2007 Year Source: USTelecom: The Broadband Association, Wireline Broadband Pricing 2001-2007, June 2008 Increasing Speeds for $50 (Speeds based on Maximum Advertised Price Downstream Speed Tier) 768 kbps 1.5 mbps Up to 3 mbps Up to 7 mbps Up to 15 mbps FCC Affirms Its Authority to Protect Vibrant and Open Internet Peer connections Terminated with False “reset” message All Internet Users Affected ISP #1 ISP #2 ISP #3 ? ? user seeking peer content user seeking peer content user seeking peer content ? User/peer w/ content User/peer w/ content Source: FCC, High-Speed Services for Internet Access Report, March 2008, at 24. Other New Broadband Technologies |Wireless Broadband zWiMax zLTE (Long Term Evolution) |Broadband Over Powerline |FTTH 700 MHz Band and the DTV Transition | 700 MHz band -- critical to development of an alternative broadband platform for: z Public Safety z Commercial Wireless Services | Open Platform for 1/3 of the band – consumers may use the wireless device of their choice | 10 MHz block (“D Block”) for the creation of a national public safety network z No bid met reserve price z FCC seeking comment on rules governing the public/private partnership to achieve public safety network goal Total US Mobile Telephone Wireless Subscribers 255.4 233 207.9 182.1 158.7 140.8 128.4 109.5 86 69.2 55.3 33.8 24.1 44 0 50 100 150 200 250 300 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Millio ns o f Subs c r i be r s Source: Cellular Telecommunications & Internet Association, Semi-Annual Survey, 2007. Growth in the Mobile Telephone Industry (June 2002 – June 2007) DOWN 43% From $0.12 per minute in June 2002 Subscribers Service Revenues Price per minute 243 Million Subscribers in June 2007 $133 Billion in Annualized Revenues June 2007 Price per minute $0.07 in June 2007 Source: Cellular Telecommunications & Internet Association; FCC. UP 88% From $71 Billion in Annualized Revenues June 2002 Minutes of Use 734 Avg Monthly MOUs in June 2007 UP 81% From 135 Million Subscribers In June 2002 UP 84% From 398 Average Monthly MOUs in June 2002