U.S. Telecommunications Regulation and Market Developments September 2008

High Speed Line Growth (2000 – 2007)* All figures as of June 30th. Source: FCC’s High Speed Services for Internet Access Report, March 2008, at

High-Speed Lines in the US by Technology as of June 30, 2007 Source: FCC’s High Speed Services for Internet Access Report, March 2008, at 6. SDSL & Traditional Wireline 1%

U.S. Investment in Fiber Networks Telecommunications companies expect to make $50 billion in capital expenditures in regarding broadband investment.  Verizon has said it expects to invest $18 billion in net capital from in deploying their FiOS network. Spending by carriers on telecommunications equipment in 2008:  Fiber: $10.6 billion  Industry-wide, spending on fiber-related telecommunications equipment is estimated to grow almost $13.5 billion annually in the next three years.

$10 $20 $30 $40 $50 $ kbps - 1.5Mbps 1.5Mbps Wireline Broadband Prices and Speeds Declining Prices, Increasing Speeds Source: US Telecom: The Broadband Association, Wireline Broadband Pricing , June 2008 (Based on Maximum Advertised Price Downstream Speed Tier)

Wireline Broadband Year Source: USTelecom: The Broadband Association, Wireline Broadband Pricing , June 2008 Increasing Speeds for $50 (Speeds based on Maximum Advertised Price Downstream Speed Tier) 768 kbps 1.5 mbps Up to 3 mbps Up to 7 mbps Up to 15 mbps

Promoting an Open Internet In 2005, the Commission adopted an Internet Policy Statement that set forth four consumer-based principles: Consumers are entitled to access the lawful Internet content of their choice; Consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement; Consumers are entitled to connect their choice of legal devices that do not harm the network; and Consumers are entitled to competition among network providers, application and service providers, and content providers.

FCC Affirms Its Authority to Protect Vibrant and Open Internet Peer connections Terminated with False “reset” message All Internet Users Affected ISP #1 ISP #2 ISP #3 ? ? user seeking peer content user seeking peer content user seeking peer content ? User/peer w/ content User/peer w/ content

Total US Mobile Telephone Wireless Subscribers Source: Cellular Telecommunications & Internet Association, Semi-Annual Survey, 2007.

Growth in the Mobile Telephone Industry (June 2002 – June 2007) DOWN 43% From $0.12 per minute in June 2002 Subscribers Service Revenues Price per minute 243 Million Subscribers in June 2007 $133 Billion in Annualized Revenues June 2007 Price per minute $0.07 in June 2007 Source: Cellular Telecommunications & Internet Association; FCC. UP 88% From $71 Billion in Annualized Revenues June 2002 Minutes of Use 734 Avg Monthly MOUs in June 2007 UP 81% From 135 Million Subscribers In June 2002 UP 84% From 398 Average Monthly MOUs in June 2002

Comparison of 700 MHz and AWS-1 Auction Revenues vs. All Others 700 MHz Auction $19.1B All other auctions $19.1B AWS-1 Auction $13.7B Note: 700 MHz Auction revenues do not account for bidding credits. (FCC, April 2008)

700 MHz Auction: Openness Conditions Consumers will be able to use the wireless device of their choice; Consumers will be able to download the legal software they want; Consumers will be able to download the applications they want.