Report on PTC Hawaii

1. CANADA WEST Report on PTC Hawaii TELECOM GROUP Pacific Telecom Council’s Annual Conference January 18-23, 2003

2. PTC Hawaii • 25th annual conference in Hawaii (www.ptc.org). • PTC brings together operators from different regions of Asia-Pacific to share their experiences • PTC has evolved to include traditional and convergent telecom technologies, industries and markets. • The annual conference also hosts associated events on • China Telecom • Pan Pacific Distance Learning • Pacific Island Telecommunications • Pacific TeleHealth • CWTG members Telos Technologies and Daniels Electronics participated in the show and Convedia, fSona and Norsat sent product brochures for distribution at the CWTG booth.

3. Conference Hob-Nobbing Ind. Cda. Bruce Drake & Dave Fransen S,R&D Minister Rey Pagtakhan

4. Conference Topics • How to Successfully Deploy Telecom/ Broadband Access • China as the success model • Regulatory, legal, IP issues • Distance Learning Case Studies • N.B. MIT OpenCourseWare • Mitigating Business Risk in Dangerous Times • Bandwidth Economics & Project Financing • Satellite & Submarine Cable systems

5. Conference Highlights • Telecom demand still growing at 7-8% per year • Internet still adding 5M+ subs per year • May have to work off an ~10 year Telecom ‘overhang’ (over capacity) • Think of Long Distance as free

6. How Telecom Is Becoming A Cyclical Industry Eli M. Noami, Columbia University, USA - Opening Plenary • Cyclicality will be an inherent part of the telecom sector in the future • not a one-time recovery from a one-time boom and bust • To deal with such instabilities, companies and investors will seek consolidation and cooperation • Oligopoly is likely to be the equilibrium market structure • Government, will need to reassess its basic policy approach that has long been focused on the enabling of competition • The future network industry will look a lot more like the old telecom industry and less like the new internet

7. Drivers of Cyclicality • Demand growth has slowed. • Investment and regulatory lags prevented adjustment. • Network externalities and lumpiness in investments amplified the swings. • Economies of scale and network externalities created strong incentives for growth strategies, at the expense of profitability. Financial markets encouraged this strategy. Managers benefited from it in the short run. • While expansion made sense for each firm individually, it created a major oversupply in the aggregate.

8. Economies of ScaleCapacity Over-Build

9. Future Project Finance Structures Robert W. Stuart, InDepth Financial Advisors LLC, USA • Project Financiers will look for simplest financing stories, easily understood both in credit approval and syndication process. • e.g. single project builds serving the well-documented needs of a finite marketplace • with Management “A Teams” • Regional aggregation or feeder systems will be financed first (when the financial markets again become receptive) • Bankers may restrict additional borrowings even those structurally subordinated to its own senior secured debt • Only fully funded Business Plans will be secure project debt funding;

10. Heterogeneous Mobile Networks: Getting a WIFI of 3G Peter Waters, Hong Kong SAR, China Bernadette Jew and Rob Nicholls, Australia

11. Conference Reports Conference Papers can be viewed/downloaded from www.ptc.org, user=ptc25, p/w=broadband Reports picked up at the Conference: • CD - The APT (Asia-Pacific Telecommunity) Yearbook 2002 • Newsletter - AsiaCom, Dec 2002 - including Asia Broadband Subscriber Counts • Magazine - Pacific 2003 Alamanac: Global Broadband, Regional Divides • Journal PTR - Pacific Telecommunications Report, Q1 2002 • Journal PTR - Pacific Telecommunications Report, Q4 2002 • Workshop Handouts - Paul Weis: Asia's Telecommunications Markets (Finance outlooks) • Journal - Preston Gates Guide to Telecommunications in Asia (Legal summary of national markets) • Workshop Handouts - Gilbert & Tobin: IT & Communications (WiFi, China CATV, Interconnect) • Magazine - Outside Plant, Dec 2002

12. Purchased IEC Reports • CD Web Proforum Tutorials Vol. 9, on ATM, Broadband Access, Optical Networking, SS7, Wireless • CD/HC Annual Review of Communications, Vol 55, 2002 • CD/HC Telecom Outlook Report - Executive Analysis • HC only Telecom Outlook Report: Millennial Edition • CD/HC Telecom Outlook Report on Wireless • CD The New Satellite Industry • CD/HC IP Applications & Services 2003 • CD/HC IP and the Intelligent Network • CD/HC The Business of Broadband: Access & Applications • CD/HC Broadband Access and Services in the Local Loop • CD/HC Operations Support Systems 2002 • HC only Knowledge Management for the Telecommunications Industry * Additional IEC Reports available at 50% of list price

13. Trade Show • Conference Attendance was down ~20% from last year; down 30% from peak in 2001 • 1,800 in 2001 1,500 in 2002  1,200 in 2003 • Trade show participation down by similar factor • Most significant change is reduced participation by larger vendors and carriers • smaller presence and delegations • But exhibitors still reported making the senior-level contacts the conference is renown for • PTC also has an aging membership problem

14. Trade Show Layout

15. Booth Setup

16. Business Results • In general, there was stronger interest in products offering incremental expansion of, or new services on, existing networks, such as IP Telephony, than in new network builds. • ~40 contacts, 6 leads (for Convedia) • As for the past year, vendors with business in China reported good results.Also reports of smaller networks in emerging regions such as Africa and the Pacific.