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GLGi: Lightspeed vs. FiOS

GLGi: Lightspeed vs. FiOS . Council Member Biography

Mia_John
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GLGi: Lightspeed vs. FiOS

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  1. GLGi: Lightspeed vs. FiOS

  2. Council Member Biography • Joseph Savage is the Managing Director at Telecom ThinkTank Inc., a telecommunications consultancy. Mr. Savage is also the President of the Fiber to the Home Council, North America, a market advocacy group of 130 high-tech companies. He has more than 30 years of experience in telecommunications networking and services. He has been a consultant to equipment vendors, analyst firms, and service providers in the areas of strategic, business, technology and product line planning. He has worked on accounts for Alcatel, Lucent, ECI Telecom, Huawei, SBC, Verizon, Bell South, NTT, British Telecom, Teradyne and FastWeb. Previously, he was the President and Chief Executive Officer at Broadnet Technologies Inc., Radiant Photonics Inc, Geyser Networks Inc.; and Vice President-Research at RHK.

  3. Table of Contents • Description and comparison of the different network architecture approaches • Pros and cons of FTTN and FTTH in regards to capabilities and service performance • Current status of each project including issues confronted and resolved and those still outstanding • Future trends and possible changes to the network architectures

  4. About GLG Institute • GLG Institute (GLGiSM) is a professional organization focused on educating business and investment professionals through in-person meetings. It is designed to revolutionize the professional education market by putting the power of programming into the hands of the GLG community. • GLGi hosts hundreds of Seminars worldwide each year. • GLGi clients receive two seats to all Seminars in all Practice Areas. • GLGi’s website enables clients to: Propose Seminar topics, agenda items and locations View and RSVP to scheduled and proposed Seminars Receive a daily briefing with new posts on your favorite tickers, subject areas and from trusted Council Members Share Seminar details with colleagues or friends

  5. Gerson Lehrman Group Contacts • John Aronsohn • Vice President • Gerson Lehrman Group • 850 Third Avenue, 9th Floor • New York, NY 10022 • 212-984-3673 • jaronsohn@glgroup.com • Christine Ruane • Senior Product Manager • Gerson Lehrman Group • 850 Third Avenue, 9th Floor • New York, NY 10022 • 212-984-8505 • cruane@glgroup.com

  6. IMPORTANT GLG INSTITUTE DISCLAIMER – By making contact with this/these Council Members and participating in this event, you specifically acknowledge, understand and agree that you must not seek out material non-public or confidential information from Council Members. You understand and agree that the information and material provided by Council Members is provided for your own insight and educational purposes and may not be redistributed or displayed in any form without the prior written consent of Gerson Lehrman Group. You agree to keep the material provided by Council Members for this event and the business information of Gerson Lehrman Group, including information about Council Members, confidential until such information becomes known to the public generally and except to the extent that disclosure may be required by law, regulation or legal process. You must respect any agreements they may have and understand the Council Members may be constrained by obligations or agreements in their ability to consult on certain topics and answer certain questions. Please note that Council Members do not provide investment advice, nor do they provide professional opinions. Council Members who are lawyers do not provide legal advice and no attorney-client relationship is established from their participation in this project. • You acknowledge and agree that Gerson Lehrman Group does not screen and is not responsible for the content of materials produced by Council Members. You understand and agree that you will not hold Council Members or Gerson Lehrman Group liable for the accuracy or completeness of the information provided to you by the Council Members. You acknowledge and agree that Gerson Lehrman Group shall have no liability whatsoever arising from your attendance at the event or the actions or omissions of Council Members including, but not limited to claims by third parties relating to the actions or omissions of Council Members, and you agree to release Gerson Lehrman Group from any and all claims for lost profits and liabilities that result from your participation in this event or the information provided by Council Members, regardless of whether or not such liability arises is based in tort, contract, strict liability or otherwise. You acknowledge and agree that Gerson Lehrman Group shall not be liable for any incidental, consequential, punitive or special damages, or any other indirect damages, even if advised of the possibility of such damages arising from your attendance at the event or use of the information provided at this event.

  7. LightSpeed vs. FiOS September, 2007 Presented by Joe Savage TTTCo FTTX Status - 7

  8. Telecom ThinkTank Team • Joe Savage has more than 35 years of optical networking experience - in management, consulting, venture capital and telecommunication networking. Joe was Ass’t General Manager of NEC America’s Fiber Optic Transmission Division, and Vice President Planning and Engineering for Fujitsu’s Transmission Division. He was VP, Research at RHK, Inc from 1996 to 2000. Joe has also served as CEO and on the Board of Directors for Geyser Networks, Radiant Photonics and Broadnet Technologies. Joe holds an MSEE from Georgia Tech.

  9. North America Ramping Up • USA - FTTP Verizon, FTTN/P AT&T • Canada - FTTN and DSL, FTTH SaskTel, Telus • Mexico - Community Trials Underway, Monterrey

  10. Cable Operators Fierce Triple-Play Competition • Cable MSOs - $110 Billion Network Investment from 1994 to 2007 • Voice Service Deployments Accelerating • HDTV ubiquitous in 2006 • DVR, PVR part of service offerings • Interactive offerings increasing • Pursuing Business Customers • Footprint expanding to offer leased line and IP Services, Seeking Cellular Backhaul • Comcast, Time-Warner, Cox, Cablevision, Rogers, Shaw

  11. Current Status of Fixed Connectivity 1.2% of US Households are FTTH Subscribers Source: 2007 RVA

  12. FTTH Homes Passed(Cumulative – North America) Source: 2007 RVA

  13. FTTH Homes Connected(Cumulative – North America) Source: 2007 RVA

  14. FTTH Other Providers Source: 2007 RVA

  15. FTTH Industry Overview - RBOCs • Verizon passing 3 million homes per year – Tellabs (BPON/GPON), Motorola (BPON/GPON) and Alcatel (GPON) • AT&T passing 0.3 million homes per year – Alcatel (FTTN, GPON), Ericsson • Qwest has no public FTTH plans • Bell Canada –Lucent (FTTN) TTTCo Lightspeed vs FiOS-

  16. Verizon FTTP Deployment 2Q’07 Deployment Status: • 8 M premises passed in 16 states • 1.1M premises connected 0.5 M FiOS TV Subscribers 2007 Deployment Trends: • Pass 9M premises • 1.5 M Subscribers 2010 Deployment Objectives • Pass 18M premises by 2010 • Over 50% of households • 7.1 M FiOS Subscribers • 4 M FiOS TV Subscribers FTTP Deployed • CapEx $23 billion 2004 to 2010 • $0.10 dilution per share from FiOS roll out TTTCo Lightspeed vs FiOS - 16

  17. Video Franchise Status Number of Franchises 4Q’05 Current 2006 Projected Households with Franchises (M) Statewide legislation passed or local franchises granted Other State Franchises in N. Carolina, S. Carolina, Michigan, …. 50% US population 4Q’05 Current 2006 Projected TTTCo Lightspeed vs FiOS- - 17

  18. FiOS Data – Early Results Subscribers/Penetration % Homes Marketed To 35-40% 17M 6M – 7M 15% 5M 725K • 55% market share by 2010 goal TTTCo Lightspeed vs FiOS- - 18

  19. Early FiOS TV Results Verizon FiOS TV Subscribers • Monthly Churn less than 1.5% • 99.4% subscribe to Premier Tier • 60% have HD and/or DVR • 37% subscribe to movie or sports package • 12% of gross sales have included Home Media DVR 175K FiOS TV Subscribers About two-third of subscribers are cable defectors TTTCo Lightspeed vs FiOS- - 19

  20. Penetration – FiOS Video Subscribers/Penetration % Open for Sale 20-25% 15M 3M – 4M 10% 1.8M 175K Target - 26% market share by 2010 TTTCo Lightspeed vs FiOS- - 20

  21. Distribution Terminal Verizon Access Network Status Legend: GPON -- Gigabit Passive Optical Network OLT -- Optical Line terminal Cost Per Premises Passed • Lower material cost • New & improved technology • Innovations • Training & productivity TTTCo Lightspeed vs FiOS- - 21

  22. Verizon Maintenance (OpEx) Savings Network Report Rate - Outside Plant 80% Total field maintenance dispatches and OSP-related dispatches showing solid declines TTTCo Lightspeed vs FiOS- - 22

  23. Strong Demand for Bundles FiOS TV Customer Base • 99% of FiOS TV base has 2nd product • Bundled line churn is 50% lower than voice-only lines • 56% of FiOS TV sales include FiOS Internet Triple Play 79% FiOS TV Only FiOS TV + Data FiOS TV+ Voice TTTCo FTTX Status - 23

  24. Compare Verizon and AT&T: TTTCo FTTX Status - 24

  25. AT&T (and Bell South) • AT&T – FTTN passing 18 million homes by 2008 (behind schedule) • New technology issues (VDSL, MSoft) • Cost of Outside Plant higher than planned - $250 per home passed more like $700 • U-verse in 23 Markets, but limited reach • Some FTTH (Alcatel 7342 B/G PON) • Video Transport in Place, VSO’s in construction (Scientific Atlanta partner) TTTCo Lightspeed vs FiOS- - 25

  26. AT&T Lightspeed StatusJuly 2007 • Markets – • 1Q – 15 Cities • 2Q – 23 Cities • Homes Passed • 1Q – 2 Million est • 2Q – 4 Million • Subscribers • 1Q – 20,000 • 2Q – 51,000 • End 2007 Goals • 8 Million Homes Passed • 200,000 Subscribers • 2008 Goals • 18 Million Homes Passed • 5 M Subscribers? TTTCo Lightspeed vs FiOS- 26

  27. AT&T In North Texas FTTN in Frisco TX FTTH Pearson’s Farms TTTCo Lightspeed vs FiOS- - 27

  28. Bell Canada • Bell Canada – only customer for Lucent Stinger products (Lucatel merger issues) • Committed to FTTN architecture, “split node” migration to FTTH • FTTN issues with HDTV • Voip from CATV MSOs very successful TTTCo Lightspeed vs FiOS- - 28

  29. Qwest • Qwest Still Limited by debt • Issued RFP for GPON FTTH equipment • Pushed by Planned Community Builders • Uses Alcatel xDSL and FTTH gear • Numerous Municipal and Open Networks in its area TTTCo Lightspeed vs FiOS- - 29

  30. Market Forecast – KMI – Dated 2004 16 million subscribers in 2011 AE – Muni’s, Utopia, Overbuilders PON – RBOC’s, IOCs, Utilities 2007 transition year BPON to GPON Almost zero GEPON TTTCo Lightspeed vs FiOS- - 30

  31. Thank You For Your Attention www.tttco.com LightSpeed vs. FiOS September, 2007 TTTCo FTTX Status - 31

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