1. Chp. 3 – Industry Overview Traditional Telephone Companies & Cable TV Providers Mobile Providers Smaller Competitors Internet Based Competitors Why Governments Regulate Telecommunications

2. The Bell System in 1984 SBC purchased BellSouth, the former AT&T’s long distance and AT&T Wireless SBC changed its name to AT&T In 2005 after the above purchases

3. Incumbents: AT&T, CenturyLink and Verizon AT&T Inc. – AT&T Wireless – AT&T Landline services Residential Internet access, voice telephone & TV Business & Commercial offerings – broadband – Cloud and managed services – International Networks Wholesale offerings to other carriers Verizon Communications – Verizon Mobile Jointly owned by Vodafone and Verizon Verizon/CTLINK landline services Residential Internet access, voice telephony & TV Business & Commercial offerings – Business broadband – Cloud and managed services – International Networks Wholesale offerings to other carriers

4. Industry Overview Carrier/competitor Group 1: AT&T Inc., Verizon Communications, CenturyLink Group 2: XO, Level 3, Windstream Group 3: Apple, Google, Amazon, Netflix Group 4: Comcast and Charter Each group answer all questions What services do they offer? Who are their customers? What are their strengths? What are their challenges & weaknesses? 4

5. Mobile Providers Largest providers Verizon Wireless – 60% owned by Verizon – 40% by UK’s Vodafone AT&T Mobility Sprint Nextel T-Mobile USA – Owned by T-Mobile Germany – MetroPCS Industry issues Advantages – No wires! Challenges – Upgrades – Competition Margins Churn – Regulations – Capacity

6. Cable Multiple System Operators (MSOs) Largest cable MSOs Comcast Time Warner Cable Cox Communications Charter Offerings Triple plays – Pay TV – Internet access – Voice telephony Business offerings – Cloud & managed services – Fiber to the premise – Voice and long distance Wholesale offerings – Backhaul to mobile carriers – Metropolitan networks

7. Industry Segments Facilities based Carriers Resellers – Wireline – Wireless Cable TV vs. traditional phone companies Internet based competitors

8. Internet Based Competitors Amazon Apple Google Microsoft Netflix Technological enablers – Fiber – Broadband – Powerful computers – High-speed processors Competing offerings – VoIP – Streaming TV – Cloud services Netflix Comcast to homes

9. Results of Competition Providers - Comcast Local telephone companies: AT&T and Verizon and CenturyLink - Competitive providers: XO, Level 3 and Windstream -Vonage, Google, and Skype Wireless carriers: Sprint, T- Mobile, Verizon Wireless, AT&T Mobility, MetroPCS Competition What are benefits of competition? What are drawbacks of competition? How have your choices increased or decreased? What do you think are the result of so many mergers? 9

10. Rationale for Government Regulations  Safety  Security  Wars  National disasters  National defense  Consumer protection  Competition

11. Regulatory Issues Mergers Spectrum Intercarrier compensation Comcast Cable TV is too expensive! Can we change our provider?

12. Summary A complex industry – New competitors Technological enablers Changes in consumer access to entertainment Changes in modes of communications Why do governments regulate telecommunications? Regulatory impact – Competition – Licensing – Court decisions – Subsidies