Stephen Sweet Director, Business Development

Where are we now?

VoIP Market Evolution Market Opportunity Newly minted carriers Under-financed Little operating experience Taking advantage of toll bypass Opportunities & low barriers to entryl Aggregators ITXC, iBasis, Net2phone Fiber barons moving into value added services in search of elusive profits. Global Crossing, Level3, etc. Established carriers making transition. Private vs. Public IP networks CLECs, LECs, ASPs, Web based portals.

Growth of International Carriers Source: Telegeography 2003 International Carriers

Competition = Lower Prices Wholesale Rate – China Proper US $0.32 per minute US $0.013 per minute

Optical Amplification WDM DWDM Capacity per fiber: Optical Amplification WDM DWDM Source: Telegeography

Voice Commoditization Source: Telegeography

International Re-file Market % of World Traffic % of World Traffic % of World Traffic % of World Traffic 2003 – % of World Traffic Source: Telegeography

Wholesale Rates F.o.B. New York

Relative Price Declines F.o.B. NY (12 Months)

Industry inefficiencies

AgricultureLumberPaperChemicalsTrucking & warehousing Insurance carriers Business services Telecom services Products 10% SG&A % of revenue in U.S. Industry 14% 12% 19% 25% Services Outsized Telecom SG&A Expenses Weighted average

Telco2 Telco3 elco4 Telco6 Telco5 Telco1 Identify counter party Negotiate Evaluate credit risk Execute contract Provision Interconnect Test quality Routing Billing Reconciliation Dispute resolution Settle Reciprocal Interconnection Bottleneck 2,800 Carriers equal 3,918,600 interconnects 3,918,600 contracts 3,918,600 settlements 6 Carriers equal 15 interconnects = n * (n-1) 2 Telco 1 Telco 2 Telco 3 Telco 4 Telco 5 Telco 6

Thexchange solution

Thexchange Model Web-based Exchange Originating carrier Web-based trading & dynamic routing on per-call basis One connection One contract Telecom Switch OSS Terminating carrier Call originators (buys) Call terminators (sells)

Automated LCR

1,000 Destinations e.g. Mexico current proper market Originating Carrier Proper Rate $ e.g. Mexico blended breakout Originating Carrier Blended Rate $ Merida - $ La Paz - $ Cancun- $ Leon - $ Veracruz - $ Terminating Carrier Breakout Routing Delivers 6% to 20% Price Improvement

Gross revenue Terminatio n costs Network operations Gross margin SG&AEBITDA Lower termination cost through breakout routing Higher utilization and fewer route changes through spot market Increase revenue & reduced costs boost Gross Margins Reduce sales, billing, reconciliation, legal, bad debt expenses Improved EBITDA margins Access to centralized mkt & better port availability increases revenue opportunities Base Costs Decreases Increases Legend thexchange Impact

 12 consecutive growth quarters  More than 250 Members  12 of the world’s 15 largest carriers  8 billion minute run rate  24 million minutes per day Market Acceptance Minutes (millions) ,000 1,200 1,400 1,600 1,800 2,000 Q Q Q Q Q Q Q Q Q Q Q Q Q2 2003

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