The Impact of New Technology on the Public Switched Telephone Network

Bob Calaff

Director, Technology Policy

T-Mobile USA

2

T-Mobile Overview

Financials (1Q08) 30.8 Million customers $4.6 Billion in service revenues $690 Million in capex 41,000 cell sites (13,000 UMTS capable)

Key Initiatives MyFaves - 5.5 Million subscribers as of 1Q08 FlexPay - Payment option offering postpaid benefits to credit

challenged consumers without need for a deposit ‘3G’ Service - launched in NYC in May; in 20-25 core markets

by EOY HotSpot @Home - converged Cellular/Wi-Fi service

3

Impacts of New Technology

An inexorable march of a number of interrelated factors Wireless displacement Broadband, including 3G Packet (esp. IP-based) Networks Fixed-Mobile Convergence Miniaturization & Personalization

4

Wireless Services Key components

– Radiofrequency spectrum– Cell sites– Interconnection, backhaul, transport & termination– Numbering resources– Handsets

Takeaway: Wireless service only ‘wireless’ from handset to cell site

Cell

Site

Cell

Site

DS1s

Tandem

DS1s (and sometimes

DS3s)

DS3

MSC

CO

5

Wireless Displacement

Source: Goldman Sachs (May 2008)

One perspective: According to Goldman Sachs, 1Q08 RBOC performance “highlights the decreasing relevance of wireline voice for consumers.”

6

Wireless Broadband

• 3G uptake in the US is accelerating, reflecting global trends

• Data revenues are an increasing part of the revenue mix for US wireless operators

Source: Lehman Brothers, May 2008

7

Wireless Broadband (‘3G’)

HD video streaming Multi-view real time

video streaming Interactive 3D graphics

High-resolution video streaming

Mobile Web 2.0

Virtual reality Context &

Preference-Aware Advanced video

display

SMS, Internet Browsing

GPRS/EDGE

UMTS/ TD-SCDMA

HSPA

LTE/Wi-MAX

IMT-Advanced

~ 200kbps

~ 300kbps to 14 Mbps

~ 10 to 100 Mbps

~ 100 Mbps to 1Gbps

Show Time7:30pm

Song 1

Song 2

Purchase

• Why? Increased data rates mean richer services for consumers

Source: Texas Instruments, 4G Mobile Forum (Oct 07)

8

HotSpot @Home

Home PhoneBroadband phone service for life at home

• Convergence brings GSM service richness and coverage benefits inside the home

9

HotSpot @Home

Mobile solution launched last June

Currently trialing home phone solution in Dallas & Seattle

10

What Can State Regulators Do?

You are doing much already. Intermodal Porting Special Access

Calls to intervene re new technology – considered judgment needed

Why intervene?– Market failure– ‘Essential’ service– Market working, but policymakers disapprove of some

aspect How intervene?

– Refrain, as market forces bringing value to consumers– Industry self regulation– Stakeholder agreement– Ex ante regulation

11

Thank you!

Bob Calaff425/383-5543

bob.calaff@t-mobile.com