1. © Copyright 2006, Verizon. All rights reserved. Verizon Laboratories Technology Update: Transforming Communications Verizon Labs in Waltham, MA

2. © Copyright 2005, Verizon. All rights reserved. 2Agenda 10:00Welcome & IntroductionsMark Marchand Director – Media Relations 10:10Transforming Communications Bill Garrett Director – Broadband Services 11:30Video Lab; Systems & Integration Testing Alex Laparidis Director – Video & Transport Testing 12:00FiOS TV – Product OverviewJoseph Ambeault Director – Interactive Services, PLM 1:30House LabJoanne LaCourse Director – User-Centered Design 3:00Close

3. © Copyright 2005, Verizon. All rights reserved. 3 Verizon Labs Profile Led by Mark Wegleitner, Verizon CTO Verizon’s centralized R&D group 500 technical staff Skills across the technology spectrum ISO-9002 compliant testing group 1200+ Patents Main centers in Waltham, MA and Washington Metro region Responsibilities Drive Verizon’s architecture vision Guide the application of technology Introduce platforms and products for all customers (consumer, business, wholesale) Champion usability and accessibility for customers with disabilities Prove that it all works together through comprehensive testing

4. © Copyright 2005, Verizon. All rights reserved. 4 Transforming the Network Delivering and managing voice, video and data over the customer’s home network A single integrated backbone network for converged voice, video and data Benefits for Verizon shareholders –New revenue –Higher operational efficiency Benefits for customers –Higher bandwidths –Enhanced video and interactive services Providing “Any to Any” access (e.g., FTTP, DSL, Ethernet) to home or business Access NetworkMetro Backbone NetworkNational Backbone Network Premises

5. © Copyright 2005, Verizon. All rights reserved. 5 Video Hub Office FTTP: The Residential Future Access NetworkMetro Backbone NetworkNational Backbone Network Service Edge Router Optical Line Terminal FTTP Premises Session Border Controller Voice Application Server Application Edge Router Verizon Online Servers Internet Peering Router Super Headend (SHE) Super Headend (SHE) PSTN Media Gateway Softswitch Broadband Premises Gateway Video Aggregation Switch IP VOD Server Video Distribution Router Local Content Provider

6. © Copyright 2005, Verizon. All rights reserved. 6 FTTP Advantages The key is dedicated wavelengths 870 MHz system 155 Mbps (1.2 Gbps with GPON) 622 Mbps (2.4 Gbps with GPON) Optical Line Terminal Fiber Amplifier Public Switched Telephon e Network IP/SS7 signaling Softswitch VOIP VideoVideo Optical Coupler IP Data / Internet Internet 1x32 Optical Splitter 1490 nm 1550 nm 1310 nm Broadcast Video Voice, Data, IP TV Optical Network Terminal

7. © Copyright 2005, Verizon. All rights reserved. 7 In-Premise Architecture Fiber Optic Cable Voice CAT3/ RJ11 Verizon Broadband Home Gateway Data Video Verizon Set Top Box Wireline Network Coax Reduces installation time and number of new wires Supports delivery of real-time IP traffic (e.g. Video on Demand, new services) Optical Network Terminal NIM CAT5/RJ45 MoCA Network Interface Module

8. © Copyright 2005, Verizon. All rights reserved. 8 Circuit Switch FTTP Implementation Splitter Hub Overlay Build OLT Splitter Hub Greenfield Build ONT Small Businesses ONT Premises passed 3M at end of 2005 6M by end of 2006

9. © Copyright 2005, Verizon. All rights reserved. 9 Consumer Bandwidth Demand Demand will soon outstrip current FTTC, FTTN or cable capacity … while FTTP has room for growth Total Downstream Demand (Mbps) 0 25 50 75 100 HD Video Streams (includes HD DVR) Video Games Music Voice Basic IP Data E-mail IM, Web Downloads File Sharing Videoconferencing E-mail IM Web Fast Downloads File Sharing YesterdayTodayTomorrow Growth Potential SD stream HD stream 2 SD streams High-quality audio Multichannel audio 3 HD streams HD videoconf- erencing and mail IM Web Instant downloads File sharing SD stream

10. © Copyright 2005, Verizon. All rights reserved. 10 Verizon FiOS TV Features Analog Basic HD Tier All Digital Core + Theme Tiers Niche Channels Premier Interactive Program Guide (IPG) Interactive Apps IP VOD STB DVR + Multiroom STB DVR + Multiroom HDTV Niche Channels Multi-player Games Entertainment on Demand Time-shift TV Videoconference

11. © Copyright 2005, Verizon. All rights reserved. 11 National programming is transmitted to our satellite farms, also known as Super Headends (SHE). In each market, a Video Hub Office (VHO) adds local channels, commercials and video-on-demand programs to the national programming. Video Serving Office (VSO) receive this feed, process the video signal, and relay it to...... Splitters that transmit content to up to 32 homes or MDUs with...... an ONT (optical network terminal) attached to the outside of each customer’s home or MDU. Internet SHE How FiOS TV Works Artwork by Donne Masaki (Verizon)

12. © Copyright 2005, Verizon. All rights reserved. 12 Video Lab Satellite Feed Video Hub OfficeVideo Serving OfficeSuper Headend

13. © Copyright 2005, Verizon. All rights reserved. 13 House Lab Usability testing guides product development Customers want the 4 C’s: Content - Tons of it, easily found Convenience - People want a “lean-back” TV experience Community - A sense of community among FiOS TV customers Convergence - IP and off-air TV converged seamlessly for all devices