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Dennis Weller Chief Economist – Verizon Transatlantic Dialogue Seminar

Next – Generation Networks Challenges and Opportunities of Convergence. Dennis Weller Chief Economist – Verizon Transatlantic Dialogue Seminar Montpellier, November 22, 2005. About Verizon. Largest wireline operator in the US More than 50 million lines

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Dennis Weller Chief Economist – Verizon Transatlantic Dialogue Seminar

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  1. Next – Generation Networks Challenges and Opportunities of Convergence Dennis Weller Chief Economist – Verizon Transatlantic Dialogue Seminar Montpellier, November 22, 2005

  2. About Verizon • Largest wireline operator in the US • More than 50 million lines • Second largest wireless operator in the US • 43.8 million wireless subscribers (end of 2004) • 6.3 million new customers in 2004 • Largest directory publisher in the world • Revenue $71.3 billion in 2004 • There are about 110 million households in the US; on any given day about 100 million people are connected to a Verizon network

  3. Verizon Overview - Nationwide Presence in a Fragmented US Market • Local telephone services in 29 states and the District of Columbia • Wireless service nationwide • Long Distance • Broadband • Data services • Directories

  4. Transforming Verizon Through Investment in Next-Generation Networks and Services • Wireline: Fiber to the premise • 3 million homes passed by end of 2005 • Now in 15 states • Wireless: 3G broadband • Services and Integration • To deliver the greatest possible value to consumers • In rural areas • WiMax In Grundy, Virginia and other communities • Partnership between Verizon Avenue, local government, and Alvarion

  5. FTTP Overlay FTTP Full Build Small Businesses Splitter Hub ONT Splitter 2 – 4 POTS Enet Video OLT FTTP Full Build & Overlay Architectures Office Parks Small Businesses ONT ONT Residential Copper Distribution SAI Copper Feeder Circuit Switch

  6. Broadcast Video Broadcast Video HFCNetwork Data / Telephony / VOD FTTPNetwork Data / Telephony / VOD FTTP: The Perfect Broadband Platform Bandwidths & Services Upstream Downstream 1310 nm 1490 nm 1550 nm Voice and Data @ 155 to 622 Mbps Voice and Data @ 622 Mbps Video 42 MHz 550 MHz 860 MHz Digital TV HD/VOD Analog TV

  7. Leapfrogs Cable Modem & DSL! Verizon Fios Wireline Broadband Access

  8. Fios TV • First offering in Keller, TX in October 2005 • One million homes passed by year end 2005 • Will begin with: • 293 channels of video • 1800 choices for video on demand • Easy interface • Parental control • Will add: • Full interactivity • Two-way video • Integrated shopping (T-commerce)

  9. Verizon WirelessHigh-Speed Internet Access

  10. Verizon 3G Wireless Broadband • Verizon is US market leader in 3G rollout • Available to 150 million people by end of 2005 • CDMA technology – EV-DO • Card for laptop provides BB Internet access • Unlimited nationwide usage $69.95 per month

  11. Pricing of VCAST Service V CAST VPak $15 per Month Mobile Web 2.0 VZW Today Unlimited Browsing Unlimited Basic Video Clips News Sports Entertainment Weather Access to Premium Content Unlimited Data Transport Get It Now services Get Games** Get Tones** Get Wallpaper** Get Going** • Partners include Comedy Central, MTV, News Corp, • 20th Century Fox • NBC News tailored for mobile • Exclusive mini-episodes (“mobisodes”) of popular TV shows • More than 300 clips updated daily

  12. VoiceWing Personal Account Manager

  13. Verizon iobi HomeIP Enabled Telephone Service

  14. Access Point - Client CALL LOGS CALL FORWARDING VOICE MAIL CONTACTS • iobi desktop client allows users to manage their communications from their PC • Most convenient access point from your office or home PC • Send SMS or e-mails with a mouse click • View your weather information SEND MESSGAGES

  15. L1 Gateway EPG MSC MSC Internet SSP SSP Service Control Outlook IM SMS Messaging VM Alert VM Retrieval iobi End User Portal Broadsoft Application Server Conferencing And Collaboration Web Sharing Addr book Calendar Content Directories PSTN/VoIP Call Control ISCP™ MGC SIP Proxy VM TG

  16. T-Commerce Food Network - Groceries : Overview Opportunities for Integration TV and Broadband Commercial agreements with partners Convenience, security, ease of payment

  17. Policies ForNext-Generation Infrastructure • United States policy is to promote platform competition • Competition among wireline, cable, 3G wireless, others • Product differentiation • “Old wires old rules. New wires, new rules.” • Elimination of unbundling for new networks • Elimination of line sharing • Tradeoffs in policy – one wire or many?

  18. Policies ForNext-Generation Infrastructure • How do policy objectives from the old world translate into the new world? • Two examples: • What does universal connectivity mean in the new world, and how will it be achieved? • What does openness mean in the new world, and how will it be achieved?

  19. Policies ForNext-Generation Infrastructure • What does universal connectivity mean in the new world, and how will it be achieved? • Universal connectivity in the old world • Theodore Vail and the Kingsbury commitment, 1913 • Obligation to interconnect • Regulation as an necessary result • Universal connectivity in the new world • Worldwide connectivity on the Internet • Achieved without any obligation to interconnect, or any regulation • How has this been possible? • Efficient markets, valuation, and incentives to invest • Policy challenge: Keep Theodore Vail’s hand off the Internet • As next-generation networks grow, new world will displace the old

  20. Policies ForNext-Generation Infrastructure • What does openness mean in the new world, and how will it be achieved? • Openness to third party service provision in the old world • Services tied to the network platform • Third party provider rents part of network • Policy instruments have included open network architecture (ONA), equal access, unbundling • Openness to third party service provision in the new world • Services can be independent of the network platform • Openness means customer’s ability to reach third party sites

  21. Policies ForNext-Generation Infrastructure • Connectivity principles • Proposed by High-Tech Broadband Coalition two years ago • Broadband consumers should be able to: • Reach content of their choice on the net • Run any software • Attach any device • Obtain information about these abilities • As the High-Tech Coalition predicted, the market has observed these principles • Adopted by the FCC in August 2005 • Without any ex-ante rules to enforce them

  22. Connectivity Principles • Developed by a coalition of high-tech companies • Proposed to FCC in 2003 • Adopted by FCC as principles • No ex ante regulation to enforce principles • Ensure that bits are not blocked • Broadband customer can access any site, run any application • In world where applications are not tied to networks, principles ensure open market for service applications • Market for Integration • Customer chooses how much integration to buy, and from whom

  23. About Verizon • Largest wireline operator in the US • More than 50 million lines • Second largest wireless operator in the US • 43.8 million wireless subscribers (end of 2004) • 6.3 million new customers in 2004 • Largest directory publisher in the world • Revenue $71.3 billion in 2004 • There are about 110 million households in the US; on any given day about 100 million people are connected to a Verizon network

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