The End of Long Distance Telephony?: the converging telco landscape

Bill BlessingSenior Vice President –

Corporate Strategy and Development

October 19, 2004

Copyright Sprint 2004. All Rights ReservedSprint, the diamond logo and all other Sprint trademarks and designs are property of Sprint Communications Company L.P.

All other trademarks are the property of their respective owners.

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The end of long-distanceThe end of long-distance….or the beginning of ….or the beginning of

convergenceconvergence

There are five convergences underway in telecom:

1. Local and Long Distance2. Wireline voice and data3. Wireless voice and data4. Wireline and Wireless5. Telecom and Video

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0%

50%

100%

150%

200%

250%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Convergence #1:Local and long distanceLocal and long distance

Wireline voice and dataWireline voice and dataWireless voice and dataWireless voice and data

Wireline and wirelessWireline and wirelessTelecom and videoTelecom and video

Revenue

Minutes

Yield

Voice Long DistancePer Minute and Allocated Monthly Charges

IXC Only Revenue

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Local and long distanceLocal and long distance

Wireline voice and dataWireline voice and dataWireless voice and dataWireless voice and data

Wireline and wirelessWireline and wirelessTelecom and videoTelecom and video

Convergence #2

Minutes Shift from Traditional Wireline

Mobile

Telco & IXC

Cable + Other VoIP

Total

Tri

llio

ns

of

Min

ute

s

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2003 2004 2005 2006 2007 2008 2009 2010

Voice Minutes

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Local and long distanceLocal and long distanceWireline voice and dataWireline voice and data

Wireless voice and dataWireless voice and dataWireline and wirelessWireline and wireless

Telecom and videoTelecom and video

Convergence #3

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LMDSB

roa

db

an

dN

arr

ow

ba

nd

Fixed Local Area

Wide Area

Typ

ical

Us

er D

ata

Ra

te

1G

2.5G

Bluetooth

Wi-Fi

Satellite

Proprietary

3G

Next GenerationTarget for

Open Standards

Dial-up

Cable/DSL

Source: FCC, 2002, with modifications by author

Local and long distanceLocal and long distanceWireline voice and dataWireline voice and dataWireless voice and dataWireless voice and data

Wireline and wirelessWireline and wirelessTelecom and videoTelecom and video

Convergence #4

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Local and long distanceLocal and long distanceWireline voice and dataWireline voice and dataWireless voice and dataWireless voice and data

Wireline and wirelessWireline and wireless

Telecom and videoTelecom and video

Convergence #5

DirectBroadcastSatellite

MobileCable Operators

Incumbent Local Exchange Carriers

Video Internet Telephony(LD + Local)

Mobile

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Implication #1Customer-centered, integrated Customer-centered, integrated carriers wincarriers win

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Implication #2Carriers must find partnersCarriers must find partners

ConsumerSegment

Cable MSOCooperation

Apps/ContentLayer

TransportLayer

MVNO and OtherWholesale

BusinessSegment

System IntegratorCo-Marketing

Inter CarrierNetworking

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Implication #3Last mile and licensed spectrum Last mile and licensed spectrum mattermatter

Analog Circuit Switching

- Internet Service ProvidersF

un

ctio

nal

ity

Time

Digital Circuit Switching

- VoIP and Other Competitors

Digital Packet Switching

+ Class Features

+ Call Management