1. Universal Service Modification Proposals: Surveying the Options Joel Lubin Vice President Regulatory Planning and Policy NARUC – New York City July 16, 2007

2. Page 2 AT&T’s Rural Broadband Pilot Highlights 2 year program: $2B total - $1B per year Federal-State collaboration Open and voluntary participation One-time funding for new capital investment in underserved rural areas Up and running in less than a year

3. Page 3 AT&T’s Rural Broadband Pilot Step 1 FCC establishes broad parameters – Service-related – Geography – Funding – Eligibility

4. Page 4 AT&T’s Rural Broadband Pilot Step 2 Providers file applications to request funding – Specific investment plans – For specific underserved areas – For a specific amount of funding

5. Page 5 States review and validate applications – Assess eligibility – Validate that application is for an underserved rural area AT&T’s Rural Broadband Pilot Step 3

6. Page 6 FCC decides which validated applications receive funding – Try to maximize number of households to which broadband is extended – Gain experience with different technologies, geographies and business plans AT&T’s Rural Broadband Pilot Step 4