Confidential and proprietary material for authorized Verizon personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. A Look to the Future: Communications Trends to Watch in the Next 5 Years David Young, Vice President – Public Policy Verizon December 2013

2 Agenda 21 st Century Communications encompasses Devices, Applications, Content and Communications –Quick review of how we got where we are today –Impact of Communication, Innovation and Investment The Internet of Things –Sensors everywhere –Ubiquitous broadband connectivity –Powerful analytics in the cloud What Does it Mean? –Smart Grid –Smart Transportation –Smart Buildings –Smart Healthcare –Smart Manufacturing –Precision Agriculture

Confidential and proprietary material for authorized Verizon personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Broadband Internet Ecosystem: Devices, Applications, Content and Communications Signals

4 Cable TV Direct Broadcast Satellite Broadcast: TV Radio Consumer Electronics – TV sets Radios Phone Hand Sets Print: Newspapers Magazines Programming: Movies, TV shows, News Computer Bulletin Boards: AOL Compuserv Prodigy Traditional “Communications” FirmsOther Components of Communications Sector U.S. Communications Sector ~ 1992 Telephone: Local Long Distance Cellular Personal Computers Application Software, like word processing and spreadsheets.

5 Broadband Phone Networks Broadband Wireless Networks Broadband CableTV Networks Computers, Smartphones & Internet-Ready TVs Operating Systems, Apps, Search Engines Content – Cable Channels, OTT Video, YouTube, Netflix Digital Technologies and Broadband Have Converged Industries and Blurred Boundaries Advances in Information Technology (everything into digits) and Communications (broadband) is What Drives Convergence and Dynamic Competition

6 The Internet Ecosystem Platform ApplicationsContent Communication s Devices Platform

7 Dynamism: Virtuous Circle of Innovation and Investment

8 Dynamic Competition Has Driven a Whole New Network of Networks Driven by competition, broadband technology has transformed our lives and our work – and is poised for even greater growth.Driven by competition, broadband technology has transformed our lives and our work – and is poised for even greater growth. In less than a decade, we’ve moved from narrowband, voice-centric, copper-based, regulated communications to a broadband, multimedia, fiber-based, competitive system that is delivering products and services that benefit consumers. 2000Dec 2012 Internet connection speeds 768/128 kbps (Cable modem) 500/100mbps (Fiber) Residential fixed broadband lines 3.2 million80.7 million Price of connection 768/128 kbps = $50 per month 768/128 kbps = $20-22 per month Up to 15 mbps = $30 per month Wireless subscribers 90.6 million326 million Wireless-only households Less than 1%38.2% Text Messaging Less than 1 billion per month171 billion per month Residential cable telephony 1.3 million customers26.7 million customers # of households passed by fiber million

9 ILEC’s Now Provide Phone Service to Fewer Than 37% of Homes Source: FCC local Telephone Competition Status as of December 31, 2012 and Morgan Stanley Wireline Overview, November 4, 2013 – Wireless Substitution Figures

10 Progressive Policy Institute: Investment Heroes Top Non-Financial US Capital Investment ($B)

11 Job Impacts of Broadband Investment Source: BEA Multipliers, Singer/Crandall Study on Broadband Economic Impacts

Confidential and proprietary material for authorized Verizon personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. Internet of Things: Crossing the Cyber and the Physical Divide

13 Abundant sensors More than 50% of Internet connections are things. In 2011, there were more than 15 billion things on the Web, with 50 billion+ intermittent connections. By 2020, there will be more than 30 billion connected things, and more than 200 billion with intermittent connections.

14 Ubiquitous Broadband Verizon Data Coverage Machine-to-Machine Communications Today 24% of the world’s mobile connections are broadband; as operators aggressively migrate to a common global standard network technology — long-term evolution (LTE) — that percentage will rise to 53% by 2017.

15 Big Data and Actionable Analytics Cloud, packaged analytics and big data accelerates in 2013 and You'll be able to perform analytics and simulation on every action taken in business. Mobile devices will have access to the data, supporting business decision making.

Confidential and proprietary material for authorized Verizon personnel only. Use, disclosure or distribution of this material is not permitted to any unauthorized persons or third parties except by written agreement. What Does it Mean? Transforming Businesses and Processes

17 Internet of Things Brings Disruption and Opportunity From: Products to Services Response to Anticipation Transaction to Engagement.

18 Smart Manufacturing

19 Smart Grid

20 Smart Transportation

21 In Conclusion... In 1935 the DuPont company introduced an advertising slogan that captured the spirit of the age: “Better Things for Better Living... Through Chemistry.” If we were to update this slogan we might now say, “Better Things for Better Living... Through Data.” Better living through data is the theme for our time and age.