FTTP (Fiber-to-the-Premises) Next Generation Broadband Access Network Vincent O’Byrne Director –Technology Verizon Tel: 781 466-2166 E-Mail: vincent.o’byrne@verizon.com July 2004 © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

Safe Harbor NOTE: This presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: the duration and extent of the current economic downturn; materially adverse changes in economic and industry conditions and labor matters, including workforce levels and labor negotiations, and any resulting financial and/or operational impact, in the markets served by us or by companies in which we have substantial investments; material changes in available technology; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations; the final results of federal and state regulatory proceedings concerning our provision of retail and wholesale services and judicial review of those results; the effects of competition in our markets; our ability to satisfy regulatory merger conditions; the ability of Verizon Wireless to continue to obtain sufficient spectrum resources; and changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings. © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

Technology Improvements Increasing Data Services Requirements Why FTTP? Why Now? What’s Different than before? Superior Full Service Network POTS, Data, Video Standards Based {G.983.x} Technology Improvements Reduced Costs (Actives & Passives) Low Cost compared with PMO Reduced Maintenance Costs {Passive Plant} Cost Improvements Continued Increasing Data Bandwidth Demand Demand for Video DSL Unlikely to Meet Longer Term Needs Increasing Data Services Requirements Competition Entertainment Video Changing Regulatory Environment Regulatory

What does FTTP mean to Verizon ? Re-inventing the Network New Network New Products/Services Increased Revenue Opportunity and Lower Cost New Processes New Regulatory Framework © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

PON Architecture (ITU-T G.983): A New Network Central Office EDFA (Erbium Doped Fiber Amplifier) Video 1550 nm Customer Premises Voice & Data Voice/Data & Video Downstream 1490 nm 1490nm/1310nm, 1550nm OLT (Optical Line Terminal) Optical Couplers (WDM) ONT (Optical Network Terminal) Upstream 1310 nm 1x32 Or Cascade Optical Splitter Video (RF) Data (AAL5) POTS (AAL2) Architecture FTTP integrates FTTH & BPON; represents a common technology & architecture for residence & small/medium businesses Single fiber Passive Optical Network (PON) WDM (3 wavelengths); Optical splitters (up to 1x32) Layer 2 transport for voice & data: ATM (APON: ITU-T G.983, FSAN standards) Bandwidth: 622 Mbps x 155 Mbps (1.25 Gbps future) for voice & data 850 MHz RF for broadcast video Bandwidths & Services Upstream Downstream 1310 nm 1490 nm 1550 nm Voice and Data @ 155 to 622 Mbps Voice and Data at 622 Mbps Video 42 MHz 550 MHz 860 MHz Analog TV Digital TV HD/VOD © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

G.983 Range defined by: 20 Km range defined by ranging protocol.   Range defined by: 20 Km range defined by ranging protocol. Used to align ONTs’ upstream data into timeslots Optical Budget (See below)   B-PON ODN Class Maximum Attenuation (dB) Minimum Attenuation Differential ODN Loss A 20 5 15 B 25 10 C 30 Enhancement Band system specific. Conventional RF video will require altered ODN Alignment w/ B-PON Max Attenuation allows common design max budget over 0-20 km range Enhancement Band system specific Can be reduced by video Receiver dynamic range. Analog video Receivers have dynamic range of 4-7 dB   © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

Fiber Efficiency WDM and fiber sharing; Reduced CapEx FTTP: A New Network Fiber Efficiency WDM and fiber sharing; Reduced CapEx PSTN POTS TR08 GR303 Class 5 TDM Switch TR57 CLEC Data LATA Core Router Internet Gateway Router OLT & Voice Gateway ONT EDFA Head End WDM ATM Aggregation Switch OC-3/12 1 x 32 Splitter Hub Video Passive Outside Plant minimal maintenance, reduced OpEx Power & Battery Broadband Service Capability Data: 622 Mbps x 155 Mbps (shared) Video: 860 MHz (Analog and digital channels; HDTV; VOD) © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

Dynamic Bandwidth Assignment (DBA) Minimum Guaranteed Maximum SLA (“VBR”) Demand Granted BW ONT A Demand A Demand B Demand C Grant A Grant C Grant B Minimum = 0 Maximum SLA (“UBR”) Total BW OLT ONT B Maximum = Guaranteed = Minimum SLA (“CBR”) ONT C © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

FTTP Architecture Home Outside Plant Central Office Feeder Splitter OLT Distribution WDM Terminal Video Amp (EDFA) Fiber Distribution Hub (FDH) Drop FDF Feeder ONT Equip Side APC Connector OSP Side UPC Connector Feeder Splitter Distribution Drop © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

UPC and APC Connectors Reflection Reflection PC Connectors ~ 8 degrees Reflection Reflection PC Connectors More prevalent, due to large deployment in digital systems Lower loss than APC connectors Historically issue was relative low optical return loss(ORL) ~ 50 dB, due to reflected signal being reflected back into fiber. Present ORL sufficient for digital systems. Newer mated connectors have much better ORL of – 60 dB. APC Connectors More prevalent in systems carrying video Historically higher insertion loss but this has improved over the last several years Higher ORL of ~ 60 dB+ due to angled fiber structure, which reflects unwanted signal into surrounding cladding regardless of mated or unmated state. More tolerant {from a reflection point of view} to moisture and dirt. © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

System Performance Testing:Illustrative example Connector: System Testing showed that a single Fabry-Perot cavity caused by two connectors caused a reduction in CNR at the receiver when the ORL was < 30 dB Six connectors would imply that this be increased to ~ 34 dB. Open/Dirty UPC Connectors would result in a 12 dB reduction in CNR Open/Dirty APC connectors would result in negligible penalty. Unterminated Splitter UPC Splitter has ~ 31 dB ORL placing it on the edge of system degradation if CO UPC had ORL< 31 dB. APC has ORL > 65 dB, resulting in no CNR penalty. APC Splitter UPC Open/Dirty APC Dirty UPC Splitter © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

Fiber Distribution Hub (Medium) 39”H x 25”W x 20”D Premises/ONTs: 216 Max 175 Typical Pole or Pad Mount ~125 lbs. © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

FTTP Full Build and Overlay Architectures Copper Feeder Circuit Switch Small Businesses Office Parks Residential Distribution |X| SAI ONT Splitter Hub FTTP Overlay ONT ONT ONT Small Businesses New Buried Development FTTP Full Build ONT Splitter Splitter OLT FullBuild: Driver FTTP initial Capex near parity with PMO (DLC/copper/DSL) Lifecycle considerations favor FTTP (reduced Opex, deferred Capex, declining prices, increased revenues, regulatory relief) FTTP Built to Serve All Homes and Businesses (All Services) in Distribution Area (DA) Used for Greenfield All services offered over fiber Overlay: Primary deployment driver is broadband service demand Benefits, in addition to new services & revenues: Capex avoidance for legacy plant modernization Operations/Maintenance savings for customers transitioned to FTTP Improved quality of service Regulatory relief Used in Established Neighborhoods for Broadband Service Demand and Plant Modernization (Relief and Rehab) Applications Overlay (No Replacement) FTTP Alongside Existing Access Network (Initially) Customers Transitioned to FTTP Over Time Feeder and Distribution Fiber Placed Initially Passed all Homes and Businesses Electronics Added As Customers Transition Makes Costs More ”Subscriber Driven” Broadband Services Available to all Homes and Businesses Passed Employ connectorized drop, saving time,expense and maintenance costs. Rate of Transition Triggered by Broadband Service Demand and Repair ONT Splitter ONT ONT ONT Splitter ONT © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

FTTP Architecture & Services Overview Target Market Predominantly residential neighborhoods Serves all Consumer & Small/Medium Business services Residence & business customers on same PON; different ONTs/CPE Services: Residence - 2 to 4 POTS; 10/100BaseT; 860 MHz RF Video ( Analog & digital channels; HDTV; VOD) Business - 10/100 BaseT; 1-4 DS1; POTS; Specials (adjunct IAD) Multiple Dwelling Units {MDUs with 12 living units} 12 Ethernet/VDSL {for longer inside wiring distances} 24 POTS Video © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

FullBuild: Driver FTTP initial Capex near parity with PMO (DLC/copper/DSL) Lifecycle considerations favor FTTP (reduced Opex, deferred Capex, declining prices, increased revenues, regulatory relief) FTTP Built to Serve All Homes and Businesses (All Services) in Distribution Area (DA) Used for Greenfield All services offered over fiber © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

Overlay: Driver Primary deployment driver is broadband service demand Benefits, in addition to new services & revenues: Operations/Maintenance savings for customers transitioned to FTTP Improved quality of service Used in Established Neighborhoods for Broadband Service Demand and Plant Modernization (Relief and Rehab) Applications Overlay (No Replacement) FTTP Alongside Existing Access Network (Initially) Customers Transitioned to FTTP Over Time Feeder and Distribution Fiber Placed Initially Passed all Homes and Businesses Electronics Added As Customers Transition Makes Costs More ”Subscriber Driven” Broadband Services Available to all Homes and Businesses Passed Employ connectorized drop, saving time,expense and maintenance costs. Rate of Transition Triggered by Broadband Service Demand and Repair © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

Web-based Order Fulfillment Re-Inventing the Network: FTTP Process Legacy Access Network FTTP Access Network Manual Order Taking Web-based Order Fulfillment Copper Pair Allocation Bandwidth Allocation Service Activation via Installation Dispatches Software-based Service Activation Limited Fault Isolation With Traditional NID Proactive Performance Monitoring at ONT Manual Asset Inventory Auto-discovery and Reporting of Assets © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

FTTP Deployment Activities TimeLine Verizon, SBC and BellSouth launched a joint effort in February 03 to develop common FTTP requirements Standards Stimulate and Focus Suppliers; Drive Volume; Reduce Prices Joint RFP issued June, 2003 Final vendor recommendation in September timeframe Contract signed in January Fiber being propositioned since early 2003 Verizon FTTP general deployment planned to begin in 2Q04 Overlay contiguous COs in key market areas Virtually all Greenfield to be built with FTTP Pass about 1 million homes in 2004 Potentially double in 2005 Two FOA sites 2Q 2004 100 Central Offices in 9 states © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

New and Innovative solutions to cost of deployment in Buried Areas. Challenges Cost, Cost, Cost Cost of ONTs Need continued “Partnership” between vendors and Operators to all mutually invest in FTTP Need cost reduction in ONT components Triplexors New and Innovative solutions to cost of deployment in Buried Areas. Need interoperability between vendors equipment © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.

FTTP (Fiber-to-the-Premises) Next Generation Broadband Access Network Vincent O’Byrne Director –Technology Verizon Tel: 781 466-2166 E-Mail: vincent.o’byrne@verizon.com April 2004 © Verizon 2004 All Rights Reserved Information contained herein is subject to change without notice.