1. The End of Long Distance Telephony?: the converging telco landscape Bill Blessing Senior Vice President – Corporate Strategy and Development October 19, 2004 Copyright  Sprint 2004. All Rights Reserved Sprint, the diamond logo and all other Sprint trademarks and designs are property of Sprint Communications Company L.P. All other trademarks are the property of their respective owners.

2. 2 10/19/04 The end of long-distance ….or the beginning of convergence There are five convergences underway in telecom: 1.Local and Long Distance 2.Wireline voice and data 3.Wireless voice and data 4.Wireline and Wireless 5.Telecom and Video

3. 3 10/19/04 Convergence #1: Local and long distance Wireline voice and data Wireless voice and data Wireline and wireless Telecom and video Revenue Minutes Yield Voice Long Distance Per Minute and Allocated Monthly Charges IXC Only Revenue

4. 4 10/19/04 Local and long distance Wireline voice and data Wireless voice and data Wireline and wireless Telecom and video Convergence #2 Minutes Shift from Traditional Wireline Mobile Telco & IXC Cable + Other VoIP Total Trillions of Minutes - 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2003 20042005 20062007 2008 2009 2010 Voice Minutes

5. 5 10/19/04 Local and long distance Wireline voice and data Wireless voice and data Wireline and wireless Telecom and video Convergence #3

6. 6 10/19/04 LMDS Broadband Narrowband Fixed Local Area Wide Area Typical User Data Rate 1G 2.5G Bluetooth Wi-Fi Satellite Proprietary 3G Next Generation Target for Open Standards Dial-up Cable/DSL Source: FCC, 2002, with modifications by author Local and long distance Wireline voice and data Wireless voice and data Wireline and wireless Telecom and video Convergence #4

7. 7 10/19/04 Local and long distance Wireline voice and data Wireless voice and data Wireline and wireless Telecom and video Convergence #5 Direct Broadcast Satellite Mobile Cable Operators Incumbent Local Exchange Carriers VideoInternetTelephony (LD + Local) Mobile

8. 8 10/19/04 Customer-centered, integrated carriers win Implication #1 Customer-centered, integrated carriers win

9. 9 10/19/04 Carriers must find partners Implication #2 Carriers must find partners Consumer Segment Cable MSO Cooperation Apps/Content Layer Transport Layer MVNO and Other Wholesale Business Segment System Integrator Co-Marketing Inter Carrier Networking

10. 10 10/19/04 Last mile and licensed spectrum matter Implication #3 Last mile and licensed spectrum matter