© 2007 Verizon. All Rights Reserved. PTE12065 03/07

Chris BoamDirector, International Public Policyand Regulatory Affairs

7 October 2011 Washington, D.C.

Overview of Verizon &Overview of Verizon &Global Public Policy IssuesGlobal Public Policy Issuesfor the Internet Ecosystemfor the Internet Ecosystem

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Verizon CommunicationsVerizon Communications

WirelessWireless Consumer and Consumer and Small BusinessSmall Business Enterprise BusinessEnterprise Business

106M total connections

America’s largest and most reliable wireless network

Launched next-generation, 4G high-speed broadband wireless network in 2010

Broadband access in 264 U.S. major metropolitan areas

Industry-leading customer loyalty for U.S. wireless providers

Largest 100% fiber-optic network in the U.S.

Transforming from traditional telecom into a broadband and entertainment business

4.5M FiOS Internet subscribers and 3.84M FiOS TV subscribers

8.6M Wireline Broadband connections

16.1 million premises passed with FTTH

Enterprise (including 96% of Fortune 1000) and government customers worldwide

The world’s Most Connected Global IP Network. *

Manage 260K+ servers, routers, devices

Leading provider of managed information security services

150+ countries, 2700+ cities

485,000 route miles of cable over six continents

Innovative Communications, Information and Entertainment Innovative Communications, Information and Entertainment – – Around the GlobeAround the Globe

Statistics as of 8/11* Telegeography, Global Internet Geography Report, 10 Dec. 2010

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Verizon’s International PresenceVerizon’s International Presence

Global Internet Backbone

Investments in more than 80 Undersea Cables

Europe-India Gateway (EIG) next

International IP Network for Enterprise services

Connecting Customers around the Globe – the Power of IP Networks

Verizon Business in Europe:• Voice, Global Data Link (GDL), Private IP (PIP),

Frame/ATM, IP, Dial, and a premiere suite of managed service solutions, including – IT, security, communications, cloud-based applications and networking

• VzB-International Headquarters located in Reading, U.K. (approximately 1,800 employees)

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Expanding Broadband Deployment is a KeyExpanding Broadband Deployment is a KeySocial Policy Goal to which Verizon is CommittedSocial Policy Goal to which Verizon is Committed

Capital Expenditures (in US$ billions)

Source: All values from Yahoo Finance data, with the exception of:Deutsche Telekom, Telecom Italia, News Corp. – from earnings reports

Figures used are as of 1Q 2011

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Advancing 4G Wireless BroadbandAdvancing 4G Wireless Broadbandwith LTE/700MHzwith LTE/700MHz

What is our Open What is our Open Development Initiative Development Initiative

(ODI)?(ODI)?• Any device• Any application• Any content• Any distribution

Why Long Term Why Long Term Evolution (LTE)?Evolution (LTE)?

• Significant throughput• Low-latency, IP-based• Global standard• Scale economies

ODILTE

VZ 700

– Currently covering more than 160 million Americans in 143 markets; more than 185 million in 175 markets by EOY-2011

– Expand to national coverage of the U.S. by 2013

– Speeds 10 x faster; latency reduced by 50%

– LTE being deployed globally

– “It’s about a firefighter who can download the design of a burning building onto a handheld device, a student who can take classes with a digital textbook, or a patient who can have face-to-face chats with her doctor.” *

Moving Moving aggressively aggressively to utilize the to utilize the spectrum and spectrum and

deploy LTEdeploy LTE

* U.S. President Barak Obama, State of the Union Message, 25 January 2011

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What is FiOS?What is FiOS?

• Began in 2005 – to-date, $23 billion in an all-digital fibre-optic network extends to the customers’ premises (FTTP), with another $1.5 billion investment planned in 2011.

– “Triple play” – supports digital voice and high-speed Internet at speeds of up to 150/35 Mbps in more than 2,000 communities in 12 states and D.C.

– FiOS TV – Up to 597 total channels and on-demand now offered in 200 cities in 12 states + D.C., with web- and mobile-enabled programming guide, DVR programming and parental controls

Conducted 2nd successful field trial of an XG-PON system than can transmit data at 10 gigabits per second (Gbps) downstream and 2.4 Gbps upstream—trial demonstrates the future-proof capabilities of the FiOS network and how it will be ready to handle higher bandwidth demands (3DTV) (July 2010)

150 HDTV channels, 3D content (9/2011)– more than cable –

25,000+ VoD titles total

3,800 HD VOD titles each month

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Exceptional FiOS ResultsExceptional FiOS Results

Verizon FiOS TV Subscribers

3K348K

943K

1.9M

3.5M

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

2005 2006 2007 2008 2010

A 57% increase in availability, coupled with 28% in penetration.

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

2005 2006 2007 2008 2010

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Subscribers Penetration

1.5M

21%15%

687K375K

12%

2.5M

24.9%

70% of subscribers are new to Verizon broadband70% of subscribers are new to Verizon broadband

Verizon FiOS Internet Subscribers and Penetration

27.2%

3.9M

* Green box figures as of 2009, all others 12/2010

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Decreasing Cost and Transforming Decreasing Cost and Transforming the Maintenance Processthe Maintenance Process

1.01

0.20

Voice & DSL FiOS

Network Trouble Report Rate – Outside Plant (per 100 subscribers)

80%

Total field maintenance dispatches and OSP-related Total field maintenance dispatches and OSP-related dispatches are already showing solid declinesdispatches are already showing solid declines

* Percentages reflect 2006 data

$1,220

$880

$700

$933

'Jan 06 'Aug 06 'Dec 06 'proj. 10

Cost Per Premises Connected

Well on the way to where we wanted

to be.

One of the benefits of fiber,

certainly, but PON architecture, particularly

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Verizon’s Network: an IntegralVerizon’s Network: an IntegralPart of the InternetPart of the Internet

• Every day, more than 100 million people connect using a Verizon network:

– 1.7 billion text messages are exchanged (> 190 billion in the 2nd quarter of 2011 alone)– 50 million video/pictures exchanged– 400 million emails received– 8.7 petabytes of video streamed – the equivalent of 4 million full-length movies– 5 billion potential threats monitored and acted upon– 1 billion phone calls are connected

• Network management – constant technical innovation, enabling services for businesses (for example):

– Blocking a distributed denial of service attack – Facilitating seamless video and interactive conferencing solutions– Providing virtual private networks (VPNs)

For consumers (for example):– Blocking spam or phishing emails – Enabling real-time home medical monitoring– Delivering the highest quality IP television experience

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Verizon’s Position on Net NeutralityVerizon’s Position on Net Neutrality

• Verizon continues to champion the consumer-driven open Internet.– Verizon agrees that the Internet must remain an unrestricted and open platform to

access lawful content, services and applications, a principle we affirmed with our wireless Open Development Initiative and the proposed framework we announced with Google in August 2010.

• Verizon believes that Europe adopted a sound policy around these issues in the course of its Electronic Communications Framework Review, with:

– An emphasis on transparency– Recognition of the importance of network management– Reliance on ex post competition law to address alleged problems, use of case-by-case

approach, possibility of minimum QoS obligations

• In December, the FCC issued an order on network neutrality that also emphasizes transparency – we support the notion of appropriate transparency, though we note that too much disclosure can be problematic in some areas (e.g., security practices).

• Importantly, the FCC adopted a case-by-case approach to addressing issues that might arise. The FCC also exempted enterprise services from these obligations.

• These points notwithstanding, Verizon is concerned that the FCC has acted outside of the authority available to it by law. That concern about legal jurisdiction is the focus of our judicial appeal.

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Next Steps for U.S. BroadbandNext Steps for U.S. Broadband

• There is no doubt that U.S. policies have produced results:

– Approximately 98% of the U.S. has access to at least one platform (cable) for broadband service (85% have access to at least two, including cable and DSL)

– Only 37% of U.S. broadband subscribers rely on DSL for their broadband, a strength in platform competition that is rare globally.

– Over 68% of American households take-up broadband.

– The ITU ranks the U.S. 4th in average broadband price, behind Macao, Israel and H.K.

– The take-up of mobile Internet by users is roughly 30% of all U.S. subscribers (highest globally), whereas it’s 19% in Japan, 16% in the U.K., 7% in France.

• But as highlighted in the FCC’s National Broadband Plan:

– We need to reach those who don’t have broadband, but to do so, we need to take a hard look at our subsidies – how we support efforts to build out to underserved areas

– Mobile broadband rollout in the U.S. has been rapid and a global leader, but for it to continue, we need more spectrum and an open and orderly process to access it

– Addressing demand will be critical, to emphasize to the remaining 32% of U.S. households, who don’t take-up broadband, the relevance of it to daily life

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Action Agenda – Action Agenda – Unlocking PotentialUnlocking PotentialFrom the Internet EcosystemFrom the Internet Ecosystem

• What we know: The Internet Economy, supported by information and communication technologies, will strengthen our capacity to improve the quality of life for all our citizens. *

• What we need:– A stable, reliable and trusted infrastructure, capable of addressing and responding

to emerging risks and threats. *

– Foster innovation and ongoing expansion of the Internet by avoiding regulation that could jeopardize “the open, decentralized and dynamic nature” of the Internet. **

– Stimulate investment and competition in the development of high-capacity information and communication infrastructures. **

* From the “Declaration on the Future of the Internet Economy.” ** From “Internet 2018: a Business Vision paper for the OECD Ministerial.”