T-Mobile | stick together Saturday, April 01, 2017 Special Access Dave Conn Nat. Director, State Regulatory T-Mobile USA Bellevue, WA Presentation to NARUC Staff Subcommittee on Telecommunications July 14, 2007

Special Access Regulatory Framework T-Mobile | stick together Saturday, April 01, 2017 Special Access Regulatory Framework Two alternate regulatory processes used for Price Cap carriers: Phase I pricing flexibility allows contract tariffs, and term and volume discounts, but must maintain availability of price-cap tariffed offerings Phase II allows services to be offered free of constraints imposed by Part 69 (rate structure) and Part 61 (price caps) Determinations of whether "triggers" for alternate treatment have been met are made at the MSA level Triggers are intended to be a measurement of competition within the MSA If triggers are met, competition is assumed to be sufficient to constrain market power within the MSA Different triggers for: Channel terminations (dedicated circuit between LEC end office and customer premises) Dedicated transport services

Special Access Regulatory Framework T-Mobile | stick together Saturday, April 01, 2017 Special Access Regulatory Framework Triggers for Channel Terminations: Phase I pricing flexibility allowed if unaffiliated competitors: are collocated at 50+% LEC's wire centers within the MSA; or are collocated at wire centers accounting for at least 65% of the revenue within the MSA of the allows contract tariffs, and term and volume discounts, but must maintain availability of price-cap tariffed offerings Phase II pricing flexibility allowed if unaffiliated competitors: are collocated at 65+% LEC's wire centers within the MSA; or are collocated at wire centers accounting for at least 85% of the revenue within the MSA of the allows contract tariffs, and term and volume discounts, but must maintain availability of price-cap tariffed offerings Triggers for Dedicated Transport: are collocated at 15+% LEC's wire centers within the MSA; or are collocated at wire centers accounting for at least 30% of the revenue within the MSA of the allows contract tariffs, and term and volume discounts, but must maintain availability of price-cap tariffed offerings

Special Access: Why T-Mobile Cares Illustrative Network Design Cell Site Cell Site Cell Site DS1s 96% of links to cell sites purchased from ILECs CO 68% of Interoffice Transport links (Tandem to MSC) are purchased from ILECs DS1s (and sometimes DS3s) 94% of Interoffice Transport links (CO to Tandem) purchased from ILECs DS3 Tandem MSC

Special Access: Why T-Mobile Cares T-Mobile | stick together Saturday, April 01, 2017 Special Access: Why T-Mobile Cares Key T-Mobile Facts: 96% of "cell site to end office" links (DS1s) are purchased from incumbent wireline carriers 94% of "end office to tandem" links (special access DS1s and DS3s) are purchased from incumbent wireline carriers 68% of "tandem to mobile switch" links (DS3s) are purchased from incumbent wireline carriers

Special Access: Why T-Mobile Cares T-Mobile | stick together Saturday, April 01, 2017 Special Access: Why T-Mobile Cares Key Policy Facts: In areas where pricing flexibility has been granted to ILECs, special access prices have gone up, not down Qwest + 62% between 2002 and 2005 SWB +27% between 2002 and 2005 Pac Bell +15% between 2002 and 2005 Price-flex markets have DS1 rates that are 20% higher than price-capped markets today Special Access prices are usually 25%-200% higher than prices for equivalent cost-based UNEs ROI on special access of 37% in 2002, 43% in 2003 , and continues to climb Validate against results of AT&T/BS Merger Conditions

Special Access: Why It Matters T-Mobile | stick together Saturday, April 01, 2017 Special Access: Why It Matters Problems posed by the control of bottleneck telecommunications facilities Backhaul, primarily using bottleneck special access facilities, constitutes 30% of total wireless operating expenses, which in turn affects: The price paid by consumers The ability to expand and improve wireless coverage The quality of wireless service State Commissions are in a good position to evaluate the actual competition for special access services

Special Access: Next Steps T-Mobile | stick together Saturday, April 01, 2017 Special Access: Next Steps Understand that special access issues affect customers in your states, both in terms of price and in terms of quality of service NARUC Study underway Determine how special access competition should be measured Investigate whether special access markets are sufficiently competitive to warrant price deregulation Discover whether there are special access provisioning issues that affect competitors Examine data at a granular level Tell the FCC

T-Mobile | stick together Saturday, April 01, 2017 Thank you! Contact Information: Dave Conn National Director, State Regulatory 425 383 6151 Dave.Conn@T-Mobile.com