1. GLOBECOM 2004 IEEE COMMUNICATIONS SOCIETY Telecom Business Forum Thursday, December 2, 2004 The Telecom Recovery – A Service Perspective Adam Drobot Senior Vice President – Applied Research Telcordia Technologies 732 699-2100

2. The Telecom Recovery A Service Perspective — 2 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

3. The Telecom Recovery A Service Perspective — 3 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

4. The Telecom Recovery A Service Perspective — 4 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

5. The Telecom Recovery A Service Perspective — 5 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

6. The Telecom Recovery A Service Perspective — 6 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

7. The Telecom Recovery A Service Perspective — 7 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

8. The Telecom Recovery A Service Perspective — 8 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

9. The Telecom Recovery A Service Perspective — 9 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

10. The Telecom Recovery A Service Perspective — 10 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

11. The Telecom Recovery A Service Perspective — 11 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

12. The Telecom Recovery A Service Perspective — 12 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

13. The Telecom Recovery A Service Perspective — 13 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

14. The Telecom Recovery A Service Perspective — 14 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

15. The Telecom Recovery A Service Perspective — 15 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

16. The Telecom Recovery A Service Perspective — 16 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

17. The Telecom Recovery A Service Perspective — 17 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

18. The Telecom Recovery A Service Perspective — 18 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

19. The Telecom Recovery A Service Perspective — 19 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

20. The Telecom Recovery A Service Perspective — 20 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

21. The Telecom Recovery A Service Perspective — 21 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

22. The Telecom Recovery A Service Perspective — 22 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

23. The Telecom Recovery A Service Perspective — 23 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

24. The Telecom Recovery A Service Perspective — 24 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM and a positive attitude. GO—GO—GO! Disaster and attrition Deep freeze Survival Spring in the air? “One element of change is that something must change – things are different!

25. The Telecom Recovery A Service Perspective — 25 The Telecom Recovery – A Service Perspective  Worldwide growth in Telecoms – 0% < CAGR < 10%  Complex patterns of WINNERS and LOSERS  Fierce competition and transition to new order! Geography Value Chain Organization Consumer & Customers Policy & Regulatory Regimes Financial Markets Competitive Landscape Local/Global Demographics & Economics Technology Options Brownfields & Greenfields

26. The Telecom Recovery A Service Perspective — 26 The Telecom Recovery – A Service Perspective Unbounded Optimism OPM & A Positive Attitude Disaster and Attrition Deep freeze Survival Spring in the air? 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Standard & Poor’s -- SP500telco 250 200 150 100 50 0

27. The Telecom Recovery A Service Perspective — 27 Where are we now?  Of the world’s 100 largest companies, 12 are service providers for an industry that is about 3.5% of world GDP. That’s pretty good!

28. The Telecom Recovery A Service Perspective — 28 US Revenue Growth  Slow  Wireless and data growth are offsetting wireline decline! Revenue totals for: BellSouth Cingular SBC Verizon Revenue totals for: BellSouth Cingular SBC Verizon

29. The Telecom Recovery A Service Perspective — 29 Other Measures (US)  This slide shows ratios of various financial measures to revenues  Note the lack of trends, except in CAPEX  In particular, net cash from operations held up

30. The Telecom Recovery A Service Perspective — 30 EU company revenues  EU companies have stronger revenue growth than U. S.  This holds even before currency adjustments

31. The Telecom Recovery A Service Perspective — 31 Other European performance measures  This slide shows other measures as ratios of revenues – note the great difference in pattern from the U. S. companies  Losses mostly from Vodafone  Cash from operations holding fairly constant

32. The Telecom Recovery A Service Perspective — 32 Hot topics and hard problems  Converged networks – New services and new business models  Identity management – Database explosion  Trusted systems – Security and privacy  Economic growth – New customers  Technology investments – Riding the curve  Software – Cost and reliability