Customers and Providers Rights & Obligations – Part 2 Joel Dohmeier Director - State Governmental Affairs TDS TELECOM June 16, 2009 MARC

TDS TELECOM TDS Telecom is a rural incumbent local exchange company in 28 states and headquartered in Madison, WI. Of the MARC States, TDS Telecom provides local exchange service in WI, IN, AR, MN, MI, OH, MO and OK. TDS Telecom has 226,755 access lines in the 8 MARC states we’re in. Average company size in the 8 states is 3,978 access lines.

Competition Is Coming From All Angles – Regardless Of Company/Market Size

Market Trends According to CTIA there are approximately 262.7million wireless subscribers; As a percentage of the total U.S. population, the wireless penetration rate is 83%; in Dec 05 the penetration rate as a percentage of population was 69% Merrill Lynch released report on May 19 th forecasting wireless only US Households to reach 28% by year end 2009 and 32% in In Dec the percentage was 8.4% NTCA has reported that cable telephony subscribers exceeds 19.6 million. Skype, Vonage and Magic Jack combine to serve over 7.7 million subscribers in the United States; There are 113 Wireless ETCs in TDS ILEC serving territories in the MARC states. Since January of 2007, TDS Telecom has lost 12.5% of its access lines in the MARC states. Comcast’s 3/11/2009 press release announced that they are the 3 rd largest Telephone Provider in the U.S. with over 6.4 million telephony customers

Regulatory Parity The cost of regulation, especially for small ILECs can be excessive, time consuming, and does not necessarily meet the demands of our customers. Small rural LECs do not possess market power State Commissions have little to no jurisdiction over the strongest competitors of the small LECs; cable telephony and wireless. Given the average size of our incumbent telephone companies (3,978 lines) competing against the likes of our competition (Cox, Charter, Comcast, T-Mobile, Verizon Wireless, AT&T Wireless, amongst others) – is there a need to regulate a company such as TDS Telecom?

Communication Providers – TDS Telecom Markets (not all inclusive) REGULATED TDS Telecom NON-REGULATED MediaCom Comcast AT&T Wireless Verizon Wireless Sprint-Nextel Alltel Wireless T-Mobile Pre-paid Wireless Skype Vonage Magic Jack

Regulatory Parity? Regulatory Requirements TDS TelecomCompetitors Answer TimesYesNo Reporting Requirements YesNo Availability of ServiceYesNo Repair ServiceYesNo Tariff RequirementsYesNo

Quality of Service Requirements QoS rules were developed during a monopoly era in which operating and cost efficiency were not a primary objective Today’s customers have different demands and expectations Outdated QoS rules impose significant operating costs that TDS’ competitors are not required to meet.

Quality of Service Rules Consumers are unaware when choosing a provider that certain consumer protections may not apply depending on whom they choose for telephony service. In addition, many consumer protection/QoS rules were put into place during a monopoly era. Life has changed. Today’s customers have different demands and expectations. Outdated QoS rules impose significant operating costs that TDS Telecom’s competitors are not required to meet.

Example: Answer Times TDS Telecom does not believe that answer times accurately reflect the attention the company pays to providing high quality service In 2007 TDS Telecom went to a nationalized specialized environment which broke our generalist customer service into sales, billing, repair, collections, service center, business/residential groups In 2007 TDS Telecom started to provide self service through the IVR for billing questions and payment options Specialization has allowed TDS Telecom to grow expertise in a function and give even better service to customers TDS Telecom’s focus is on resolving a customer issue on the first call

Example: Answer Times Our phone system based on customer input of their 10 digit phone number allows us to segment customers based on geography, billing amount, payment history, business versus residential so as to provide different levels of service where necessary Our repair queues are open 24X7X365, so any customer technical issues will be handled at any time of the day Other queues are generally 7-7, closed on Sundays These customer support enhancements were implemented by TDS to improve the customers experience and not in response to regulatory rules It is TDS’ experience that these factors are more important to customer satisfaction than answer times in general

Example: Availability of Service For TDS in FL, current rule requires primary installs to be completed at least 90% of the time on a quarterly basis within 3 days In many of our other states that have install rules, the requirement is 5 days Some may argue that if we complete a new service order in our FL market in 4 days that we are providing poor service. However, in MO, OH, OK or AR (as examples) where the interval is 5 days, if we complete the order in the same 4 days, we’re now providing outstanding customer service.

Availability of Service (cont.) Today, many of our requests for new service include DSL. To process a new install with DSL typically takes TDS 5 days Unlike most providers, TDS will install the DSL on the customers computer at no additional cost if requested TDS technicians complete the installation on the customer computer which involves more man-hours, in exchange for satisfied customers As a general question, ask yourself if you would you rather have your dial tone available in 3 days while cursing the geek squad as you install your DSL (or pay a large sum to have them do it) or have your dial tone and complete DSL installation in 5 days?

Universal Service ETCs receive federal dollars to take on carrier of last resort responsibilities. This mandate ensures the provision of local exchange service to even the most remote customers in an ILEC service territory. We accept some additional regulatory responsibilities as a result of this designation, however, there is no correlation with being an ETC and how many seconds it takes for a customer service advisor to answer the telephone. ILECs are acutely aware how important satisfying the customer in today’s market is – as the customer is the lifeblood of the business.

Conclusion There no longer is any rational basis for imposing different consumer protection regulations on different carriers because of the technology used or because one entity is an ILEC and the other entities are CLECs, Wireless or Cable Telephony Providers. If there is no need and/or authority to impose service quality obligations on 263 million wireless subscribers, over 19 million cable telephony subscribers, and over 7.7 million nomadic VoIP subscribers for a total of approximately 290 million non-ILEC customers, why is there a need to impose service quality requirements on TDS’ 225,755 customers within the MARC states. Competition is well entrenched, and the time is now to allow ILECs to compete on a level playing field.