The Impact of New Technology on the Public Switched Telephone Network

1. Benjamin J. Aron, Esq. State Regulatory, Northeast Government Affairs Sprint Nextel Corporation Reston, Virginia 20191 (703) 592-7618 Phone (703) 592-7407 Fax MACRUC Summer 2008 Williamsburg, VA The Impact of New Technology on the Public Switched Telephone Network Broadband Impact on PSTN

2. Narrowband vs. Broadband Next Generation Wireless Broadband Networks Will Enable Wider Range of Applications Traditional Wireless Broadband Networks Are Optimized for Voice and Narrowband Data Broadband Impact on PSTN

3. Spectrum for Wi-Max • Spectrum Allocation is in the 2.5 GHz Band • FCC Licenses Channels are 10 or 20 MHz • Up to 100 MHz in many top 100 markets (compares to running average of approximately 30 MHz for winners of the recent 700 MHz Auctions) Broadband Impact on PSTN

4. Download Speed: Up to 6 megabits/sec. Upload Speed: 1 – 2 megabits/sec. The Wi-Max Network Broadband Impact on PSTN

5. Wi-Max Build-Out • Intend to offer commercial service available to 100 Million potential customers by late 2009 • Buildout dynamics • Major emphasis on using wireless backhaul to avoid the largely broken Special Access market • NARUC already studying competition in the market • Sites by Year (Approximate) • 2009 ≈ 15,000 • 2010 ≈ 20,000 • 2012 ≈ 22,000 Broadband Impact on PSTN

6. Customer/Line Loss Dual subscribership still the norm Oldest segment of population still has highest reliance on PSTN: percentage of wireless only use will increase over time Divestiture Impaired Provision of Services Universal Connectivity Unaffected Competition May Bring Positive Impacts Broadband Impact on PSTN Broadband Impact on PSTN

7. Good Competition Level Playing Field Bad Competition Unfair Competitive Advantage Role of State Regulators Broadband Impact on PSTN

8. Role of State Regulators • Target Subsidy Narrowly to Ensure Healthy Market for Competitive Services. • Current Regulatory Regimes Predominantly Favor Embedded Monopolies. • Switched Access subsidy & pricing above cost on other essential network elements • Regulators should target subsidy to only those areas/carriers that cannot average their expenses between high cost – low cost dichotomy. • Central feature of Sprint CURE USF Reform proposal Broadband Impact on PSTN

9. Role of State Regulators • Removal of Subsidies Will Enable Greater Investment of Capital into Market and Lower Prices • US is currently 15th of 30 developed nations in broadband deployment (OECD). • By removing subsidization the market will efficiently allocate these ‘liberated’ funds towards new products and services, and will also be reflected by lower cost products and services Broadband Impact on PSTN

10. Role of State Regulators • Promote Equal Interconnection Rights for IP Technology • Make VOIP a “full citizen” in the Interconnection Family • Some LECs refuse to interconnect directly with VOIP carriers. • LECs commonly require segregation of traffic • Demand network interconnection based on engineering efficiency rather than on arbitrage opportunities allowed by flawed intercarrier compensation regimes. • Gateways (IP Peering) instead of Switches Broadband Impact on PSTN

11. Role of State Regulators • Engage the Broadband Carriers • Kentucky, Maine, Ohio, Vermont • Promote Broadband Buildout • Broadband networks are being built now, the opportunity to sculpt that buildout is now Broadband Impact on PSTN

12. Role of State Regulators • Issues on the Horizon • Interconnection Rights for Broadband Telephony • Telephone numbering for wireless VOIP telephony over broadband networks • Preventing a Broadband Divide • Regulators should stay tuned and active – the status/role of state regulation is still in development and the people in the audience today can have an impact on the development of that policy. This story is not yet written. Broadband Impact on PSTN