Fiber-to-the-Home Council

North America

Presented by:Michael C. Render

North American FTTH Deployment Update

Vendor information and interviews (nearly all)

Provider information anddetailed interviews (over 1/3)

Consumer input(initial 100K panel)

Current FTTH StatusCurrent FTTH Status

970,000

15,170,900

13,825,000

11,763,000

9,552,300

8,003,000

6,099,000

4,089,0002,696,846

19,400 72,100 180,3001,619,500

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

Sep-0

1

Mar

-02

Sep-0

2

Mar

-03

Sep-0

3

Mar

-04

Sep-0

4

Mar

-05

Sep-0

5

Mar

-06

Sep-0

6

Mar

-07

Sep-0

7

Mar

-08

Sep-0

8

Mar

-09

FTTH Homes Passed Cumulative – North America

RVALLC 2007

RVALLC 2009

10,082,065

13,875,600

12,369,000

413,221

7,996,400

6,643,000

5,079,999

3,218,600

1,754,300

19,400 72,100 180,300 829,700

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

RVALLC 2007

RVALLC 2009

FTTH Homes Marketed

Cumulative – North America

FTTH Homes Connected Cumulative – North America

3,760,000

4,422,000

2,912,500

322,700

2,142,000

1,478,597

1,011,000

671,000

213,000146,50064,70022,5005,500

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

RVALLC 2007

RVALLC 2009

FTTH PenetrationCumulative – United States

0%

2%

4%

6%

8%

10%

12%

14%

Passed

Connected

RVALLC 2007

RVALLC 2009

FTTH Video Homes Connected (Cumulative – North America)

1,641,000

2,195,000

2,654,300

110,000

1,054,000

611,400

408,800260,900101,40087,90037,5009,6751,925

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

1,750,000

2,000,000

2,250,000

2,500,000

2,750,000

3,000,000

RVALLC 2007

RVALLC 2009

Overall Take-Rate For FTTH

(Cumulative – North America)

28.8%

31.8%

30.4%

26.8%22.3%

19.9%20.8%

35.4%

18.4%

26.0%

41.3%

35.9%

29.0%31.2%

34.5%

28.4%

0%

10%

20%

30%

40%

50%

RVALLC 2007Note: Percent of all homes-marketed taking something over fiber..

RVALLC 2009

52.4%

52.6%51.9%51.5%

51.8%52.4%

51.0%

43.7%

48.2%47.4%

41.3%

35.9%

29.0%31.2%

34.5%

28.4%

0%

10%

20%

30%

40%

50%

60%

Overall Take-Rate For FTTH Non RBOCCumulative – North America By Year

RVALLC 2007

RVALLC 2009

RBOC Take-Rate For FTTH

Cumulative – North America

23.0%

27.0%

25.0%

19.0%17.6%

14.6%15.5%

3.0%

9.8%8.3%

0%

10%

20%

30%

40%

50%

RVALLC 2007

RVALLC 2009

Year-To-Year Growth In Homes Connected (12 month averages)

0%

50%

100%

150%

200%

250%

300%

350%

400%

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Copper

Coax

Fiber

Note: Years since start of installations RVALLC 2009

Current Status Of FTTH Growth

In North America By Country

United StatesCanadaMexicoCaribbean

Current Status Of FTTH Growth

United States By Provider TypeVerizonOther RBOCsTier 2 ILECsTier 3 ILECsCLECsMunisIntegratorsMSOs

1.8

2.1

2.2

3.4

4.4

5.1

0 1 2 3 4 5 6 7 8 9 10

Tel - RBOC

Tel - ILEC

MSO/Cable

Municipality/PUD

CLEC

DEV/Integrator

Three Year Change in Connections

RVALLC 2009

FTTH Homes Connected By SegmentCumulative – North America

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

1/3 of US (Aggressive ILECs)

Other 2/3 of US

RVALLC 2007

RVALLC 2009Note: Does not show first half 2009

Verizon (10% of their 32 million customers connected with fiber)

Drivers:- Need for new model

- FTTH Council member

- Visionary view

- Outside plant setup

- Regulation changes

Small Rural Telephone Companies (8% of their 8 million customers connected with fiber)

Drivers:- Aging copper lines

- Television opportunity

- Pioneering tradition

- Subsidies

Note: This rural telephone association map shows some, but not all, Tier 3 ILECs

2.5%

1.1%

3.2%

6.9%

4.2%

0.8%

0% 2% 4% 6% 8% 10%

5000 and above

1000-4999

250-999

75-249

25-74

Under 24

FTTH Connection Penetration By Zip Code Density

(Density = Homes per sq mile)

RVALLC 2009

1,125,600

3,300,300

0 1,000,000 2,000,000 3,000,000 4,000,000

3 RBOCs (mostly Verizon)

681 Other providers* x1653 average

The Importance of Smaller Players

RVALLC 2009* Includes CLECs that are divisions of ILECs

25%

14%

43%

18%

0% 20% 40% 60% 80% 100%

Very unlikely

Somewhat unlilkely

Somewhat likely

Very likely

Likelihood Of Deploying FTTH Within 3 Years

Tier 3 ILECs Currently Not Deploying FTTH

RVALLC 2009

44%

32%

0% 20% 40% 60% 80% 100%

Homes passed

Homes connected

Additional 2009 Growth Anticipated

Tier 3 ILECs Currently Deploying FTTH

RVALLC 2009

Current ProspectsCurrent Prospects

00.20.40.60.8

11.21.41.61.8

2

Mil

lion

s

Housing starts

New home sales

New home inventories

Housing Statistics

25%

14%

43%

18%

0% 20% 40% 60% 80% 100%

Very unlikely

Somewhat unlilkely

Somewhat likely

Very likely

Likelihood Of Deploying FTTH Within 3 Years

Tier 3 ILECs Currently Not Deploying FTTH

RVALLC 2009

44%

32%

0% 20% 40% 60% 80% 100%

Homes passed

Homes connected

Additional 2009 Growth Anticipated

Tier 3 ILECs Currently Deploying FTTH

RVALLC 2009

Effect of U.S. Stimulus Plan

• Some “de-stimulus” early 2009

• Some stimulus beginning late 2009

29%

37%

45%

58%

0% 20% 40% 60% 80% 100%

Grants

Tax deductions

Tax credits

Low interest loans

Likelihood Of Deploying More By IncentiveTier 3 ILECS

(Percent rating somewhat or much more likely)

RVALLC 2009

9%

9%

54%

86%

0% 20% 40% 60% 80% 100%

Grants

Low interest loans

Tax credits

Tax deductions

Likelihood Of Deploying More By IncentiveMunicipalities

(Percent rating somewhat or much more likely)

RVALLC 2009

Consumer ResponseConsumer Response

2008 Research Continues To Show FTTH Users Work One

AdditionalDay Per Month At Home Due To

FTTH

- Nearly 9% work more from home directly because of FTTH – an average of 11 days more

Days worked from home increased:

30%

60%

66%

86%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

FTTH

Cable Modem*

DSL*

Dial-up*

Internet Customer SatisfactionComparison With Other Services

(Those somewhat or very satisfied)

RVALLC 2009* From 2006 data

9.915.1

30.9

23.017.1

12.79.47.05.2

63.6

46.6

34.2

25.1

18.413.5

20.527.8

37.8

51.3

69.6

94.5

0

10

20

30

40

50

60

70

80

90

100Download Mbps

HD Devices Mbps

Total Mbps

RVALLC 2009

Peak Bandwidth Demand Per Average FTTH UserIncluding Internet Download And IPTV HD Devices

17%

19%

20%

21%

23%

27%

29%

32%

0% 10% 20% 30% 40% 50%

Online face-to-face visits with doctorsand nurses

Switching between TV, Internet, andphone with one device

Viewing advanced websites with fullscreen video pages

Monitoring home or pets via videowhile away

Making two-way "video calls" (highquality picture)

Advanced online shopping (enhancedviewing, etc.)

Work from home with morespeed/video conferencing, etc.

Advanced online college opportunities(lecture on demand, etc.)

Percent Believing Future Non Entertainment

FTTH Applications Are ImportantAmong Those 55 And Over

RVALLC 2008

Fiber-to-the-Home Council

North America

Presented by:Michael C. Render

North American FTTH Deployment Update