2. Network Transformation: Opportunities & Challenges
Stan Holcomb, Vice President Lucent Worldwide Services
Internet Telephony Conference, San Diego October 12, 2006

3. Convergence Is Here Blending of Telecom, Internet & Content
“Is More Really Better?" - Juggling “Device & Info Fatigue"
Subscribers want:
Personalized, Content Rich, Blended Multimedia Services, Content Banking
Anywhere
Context-sensitive
Anytime
Personalized

4. IMS & Network Transformation: The Game Changers
Network Integration
Applications
Multivendor, Hosted & Managed Services: New Business Models
IMS Facilitates Network Transformation
to Blended Lifestyle Services

5. Focus on New, Blended Services to Differentiate and Avoid "Dumb Pipe" Trap
Inexpensive Access, Web Surfing & Calls
Higher Value Blended Lifestyle Services
Web Portals as Access Points or Applications?

6. Converged Services Segment Offers Significant Revenue Opportunity
Bundling alone will only shrink the customer’s spending as value is eroded
Seamless blending of voice (wireline and wireless), data and video services required to realize full converged revenue potential
US primary market research shows a revenue opportunity of ~$9.8B/year* for converged services
US Potential Converged Services Revenues and Take Rates $-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Million 0% 5%
10%
15%
20%
25%
30%
35%
Business Revenue
Consumer Revenue
Business take rate
Consumer take rate
2005
2006
2007
2008
2009
* Lucent commissioned primary research 06; Assumes a mobile penetration of 240M users in US

7. Communications Wallet of the Future
Services Bill
Connection Charge $ 5
Family Portal $20
Home/Sign-on security $15
Video/games on demand $25
TiVo My World $10
Mobile TV & LBS $10
Caller ID on TV $ 5
Connection Bill
Local service $20
Long distance service $15
International service $10
Feature Bill
Call waiting $ 3
Caller ID $ 3
Advertising-Supported
Various services Free
Providers Can Reap Benefits of Demand for Advanced Services

8. Network Integration & Support
Leverage Innovative Business Models
to Increase Competitiveness
Benefits
Network Integration & Support
Get to Market 6-12 Months Faster
Generate Revenue Sooner
Innovate to Become Industry Model
Refocus Resources
Minimize Capex
Mitigate Risk
Acquire Knowledge & Thought Leadership
Simplify
Improve network availability
Hosted Applications
Managed Services
“Over the next five years 60% of the world’s wireless operators will have some form of managed services”*
*Mercer Management Consulting: Who Will Manage the Telecom Network, 2006

9. Summary Convergence is Here
IMS & Network Transformation: The Game Changers
Focus on New, Blended Services:
Significant Revenue Opportunity
Network Integration & Support, Hosted, & Managed Business Models: Turbocharges Delivery

10. Q&A