1. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR1 NRIC Focus Group One Subcommittee 1 Network Assessment January 14, 1999 Gerry Roth Vice President GTE Technology Programs This document and the information contained herein is intended, and for all purposes shall be deemed, a Year 2000 statement and a Year 2000 readiness disclosure as those terms are defined under United States federal law

2. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR2 Scope of Effort Provide assessment of Year 2000 compliance of Public Switch Telephone Network (PSTN) –Participants: 7 Large Local Exchange Carriers (LEC) 98.5% 22 Medium to Small Local Exchange Carriers.5% 3 Large Inter-Exchange Carriers (IXC)82.0% –For addition in April following FCC questionnaire Wireless Cable Satellite International Assessment –Presentation by relative risk and potential impact of Year 2000 non-compliance –Risk to U.S. ranked by traffic volume Methodology –Direct query of Large Local Exchange Carrier and Inter-Exchange Carrier Participants in November September 1998 and December 1998 (estimates) –Indirect query of medium and small Local Exchange Carriers September 1998 only –International 6 data sources--risk assessments weighted and combined Correlation to 1997 international calling patterns from/to the U.S.

3. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR3 Participating Local Exchange Carriers & Inter-Exchange Carriers Industry Coverage Coverage by Participating Inter-Exchange Carriers (as a percentage of 1997 Total IXC Revenue) Total95.1B Participating78.3B Coverage by Participating Local Exchange Carriers (as a percentage of Total U.S. Access Lines) Total193.6M Participating190M Participating Companies 99% Others 1% Participating Companies 82% Others 18%

4. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR4 Y2K Assessment Coverage by Participating Carriers Participating Companies Others

5. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR5 Y2K Lifecycle Compliance Status Large and Medium Size Local Exchange Carriers September 30, 1998 Large CompaniesMidsize and Small Companies 94% 71% 54% 62% 47% 39% 50% 84% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% AwarenessRenovationValidationImplementation

6. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR6 Y2K U.S. Public Switched Telephone Network Compliance Status Large and Medium Size Local Exchange Carriers September 30, 1998 Large CompaniesMidsize and Small Companies % Switches Y2K Ready% Non-Switch Network Components Y2K Ready % Network & IS Applications Y2K Ready 63% 64% 62% 65% 60% 73% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

7. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR7 Y2K Lifecycle Compliance Status Rate of Change Large Local Exchange Carriers September - December 1998 94% 71% 54% 62% 98% 86% 74% 81% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% September 30, 1998December 31, 1998 AwarenessRenovationValidationImplementation

8. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR8 Large Local Exchange Carrier Compliance Status Rate of Change September - December 1998 73% 63% 64% 85% 79% 86% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% September 30, 1998December 31, 1998 % Switches Y2K Ready% Non-Switch Network Components Y2K Ready % Network & IS Applications Y2K Ready

9. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR9 Public Switched Telephone Network Y2K Readiness Major Inter-Exchange Carriers December 31, 1998 % Switches Y2K Ready% Non-Switch Network Components Y2K Ready % Network & IS Applications Y2K Ready 74% 84% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

10. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR10 Level of Risk Medium Low International Status by Region Perceptions of Risk High 1.0 2.0 3.0 4.0 5.0 Cent & South America Sub Sahara Africa Indian sub continent Eastern Europe (inc. Russia) Middle East & North Africa (not Israel) Asia Pacific North America Western Europe (inc. Israel) Regional Average Score The scores blend such that the following score ranges apply: 4.1 - 5.0=Low Risk 3.1 - 4.0=Medium Risk 1.0 - 3.0= High Risk; based on uncertainty Regional Range of Responses

11. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR11 International Status by Country Perceptions of Risk Afghanistan BangladeshColumbia EgyptEl Salvador GuatemalaLaos NigeriaSomalia VietnamZaire Nepal Kuwait Armenia Costa Rica Ecuador Ethiopia Saudi Arabia Morocco No. KoreaRomania Uruguay Yugoslavia KenyaSri Lanka Cambodia China 0.0 1.0 2.0 3.0 4.0 5.0 Level of Risk Low Medium High The scores blend such that the following score ranges apply: 4.1 - 5.0=Low Risk 3.1 - 4.0=Medium Risk 1.0 - 3.0= High Risk; based on uncertainty Zimbabwe Lithuania Philippines Mexico Venezuela Argentina Chad Mozambique Russia India Indonesia Brazil So. Korea Denmark Israel JordanPakistanPuerto RicoThailand Turkey South Africa Hungary GermanyItalyJapan Malaysia Austria Bulgaria Czech RepFijiPoland SudanU.A.E. Finland Taiwan Bahrain ChileFrance Belgium New ZealandNorway Portugal Sweden Switzerland Caribbean Is. Hong KongNetherlands PeruSingapore AustraliaCanadaIrelandSpain Bermuda PanamaUKUSA

12. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR12 International Status by Country Perceptions of Risk Impact

13. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR13 Countries of Major and Significant Interest to the U.S. ( as determined by Intercontinental Traffic Patterns, sorted by Perceived Risk) * Minutes of use from 1995 Data (Source: INGBarings - Telecommunications Map of the World, 2nd Edition, September 1997)

14. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR14 Y2K Risk to U.S. Intercontinental Traffic (determination of risk by country of originating / terminating traffic) * mMiTT: million Minutes of Intercontinental Telecommunications Traffic Source: Telecommunications Map of the World, 2 nd Edition, September 1997 Medium Risk 4728 mMitt* Low Risk 5599 mMitt* High Risk 1645 mMitt* 36% 21% 43%

15. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR15 Year 2000 Assessment Conclusions General –All participating companies are progressing at approximately the same rate –Small companies somewhat behind the larger ones –Progress to date is very encouraging –All participating companies on a trajectory for timely completion of PSTN –Results of this study become a good benchmark for non participating companies to follow Local Exchange Carriers (LEC) –Participating LECs cover 99% of all switched access lines in U.S. –Small to medium companies lag large Local Exchange Carriers by 10-15% –All participating companies were better than 65% complete by September 1998 December estimate at 76% Readiness –All large companies projecting readiness complete June 30, 1999 –Medium and small LECs 50% by end of 2nd Quarter 1999 32% by end of 3rd 18% by end of 4th –Participating companies are 29/1300 = 99% of all access lines 1271 companies constitute the remaining 1%

16. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR16 Conclusions Inter-Exchange Carriers (IXC) –Participating IXCs represent 82% of inter-exchange market –Most network elements have been certified compliant and are being rolled out –Participating IXCs will be in a position to support the LEC completion date of June 30, 1999 –Major IXCs at 60% readiness or better as of September 1998 December estimate at 81% –All IXCs project a June 30, 1999 readiness

17. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR17 Conclusions International –North America, Asia Pacific, and Western Europe are medium to low risk –North East Asia, Middle East & North Africa, and Eastern Europe are medium to high risk –Central & South America, India & Subcontinent, Sub Sahara Africa are high risk –Regions and countries of most concern to U.S. identified –Regional impact of risk varies widely by country and telecom provider –Most information is based on perception of risk or is anecdotal -- based on inconsistent and unofficial information

18. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR18 Recommendations Increase activity in Wireless assessment led by FCC Map key U.S. Government installations nationwide to telecom compliance areas U.S. Government engage in direct inquiry on Y2K status to countries determined essential to U.S. telecommunication traffic patterns –Work with the ITU, U.S. State Department, and others to accurately assess the true risk to the U.S. Add the risk of methodology inconsistencies to perceived completeness of plans –Specifically test deficiencies –Effective quality programs Assess results of this study with respect to other economic sectors to determine potential secondary risks and impacts

19. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR19 Recommendations A more proactive role should be undertaken by the FCC (working the appropriate government offices) to support those countries requesting assistance from the ITU and World Bank and/or that have high telecommunications traffic with the U.S. For countries whose Year 2000 readiness may be an issue to U.S. companies, we recommend that the FCC assign an International Contingency Planning Coordinator to support interested U.S. companies in their contingency planning around regions or specific countries that are perceived to be high Y2K risk

20. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR20 Summary Public Switched Wireline and Long Distance Telephone Operations in the United States (and North America) appear to be on an appropriate path for Year 2000 compliant operations More and better information is required for a complete global assessment, including wireless and cable operations Lack of information in and of itself does not necessarily indicate lack of progress

21. NRIC Focus Group I, Subcommittee 1 Year 2000 Readiness of the Telephone Industry Final.v1 990114/AGR21 Future Work Marry FCC questionnaire results in NRIC sources for a more inclusive report Update International data sources and measure their improvement Re-question the LEC and IXC data sources for: –validation of December 1999 data –Actual data for February 1999 –Estimation targets for March 1999 Increase Wireless participation and measure their network completion