FTTH/FTTPFTTH/FTTPUPDATEUPDATE

October, 2006October, 2006

Copyright 2006 RVAwww.RVALLC.com

Methodology

• Background research• Vendor/Expert interviews• Provider interviews• Random segment interviews • Consumer interviews

Is It Growing?

Source: RVA Render & Associates, LLC 2006

189,000

970,000

6,099,000

4,089,000

2,696,846

19,400 35,700 72,100110,000

180,300

1,619,500

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

FTTH Homes Passed (Cumulative – North America)

FTTH Homes Marketed(Cumulative – North America)

189,000413,221

5,079,999

3,218,600

1,754,300

19,400 35,700 72,100 110,000180,300

829,700

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

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

Source: RVA Render & Associates, LLC 2006

And The Big News…

FTTH Homes Connected (Cumulative – North America)

322,700

1,011,000

671,000

213,000

146,50078,000

64,70038,00022,50010,3505,500

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

Source: RVA Render & Associates, LLC 2006

Over 1 Million Connected!

Source: RVA Render & Associates, LLC 2006

FTTH Homes Connected (Cumulative – North America)

322,700

1,011,000

671,000

213,000

146,50078,000

64,70038,00022,50010,3505,500

0100,000200,000300,000400,000500,000600,000700,000800,000900,000

1,000,0001,100,0001,200,000

Sep-0

1M

ar-0

2Sep

-02

Mar

-03

Sep-0

3M

ar-0

4Sep

-04

Mar

-05

Sep-0

5M

ar-0

6Sep

-06

FCC Triennial Review

CouncilFormed

Are We There Yet?

Dial-up only28%

Broadband43%

No Internet28%

FTTH1%

Current Status of Fixed Connectivity

Source: RVA Render & Associates, LLC 2006

90

50

0

10

20

30

40

50

60

70

80

90

100

FiberCoaxCopper

??

Years to Reach 90% of Americans

Year-to-Year Growth in Homes Connected

0%

50%

100%

150%

200%

250%

300%

350%

400%

CopperCoaxFiber

Source: RVA Render & Associates, LLC 2006

20.0%

82.0%

213.0%

0% 50% 100% 150% 200% 250% 300%

U.S.

Japan

Europe

Approximate Annual Growth

in FTTH Subscribers

Source: RVA Render & Associates, LLC 2006

World’s FastestGrowing Major FTTH Market!

What About Take Rates?

Overall Take-Rate for FTTH

(Cumulative – North America by Year)

20.4%19.0%

35.4%

18.0%

26.0%

41.3%

35.9%

29.0%31.2%

34.5%

28.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

Source: RVA Render & Associates, LLC 2006

52.4%51.0%

43.7%48.2%47.4%

41.3%35.9%

29.0%31.2%

34.5%

28.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Overall Take-Rate for FTTH Non-RBOC(Cumulative – North America by Year)

Source: RVA Render & Associates, LLC 2006

Do Customers Value FTTH?

30%

63%

89%

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

FTTH

Cable Modem/DSL

Dial-up

Percent Satisfied With Type Of Service(Somewhat or Very Satisfied)

$2,485

$4,318

$5,500

0 1000 2000 3000 4000 5000 6000 7000

Average estimate fromdevelopers

Average estimate fromthose who have FTTH

now

Average estimate fromconsumers who don't have

FTTH

Estimates of the FTTH New Home “Price Premium”

Source: RVA Render & Associates, LLC 2006

Does It Really Matter?

Source: RVA Render & Associates, LLC 2006

Ports/WaterwaysPony ExpressStage CoachTelegraphRailroad

1900s Telephone1910s1920s Roads/vehicles1930s1940s1950s Airlines1960s Interstates1970s1980s1990s Internet2000s2010s FTTH?

Growth of GDP and Societal Empowerment Relates to SpurtsIn Private Technology Investment(1920s, 1950s, 1960s, 1980s…)

AND…

Paradigm Changes in Two-WayHuman Connections

Advanced Broadband Has Significant Implications

Does FTTH Spur Other Purchases?

CONSUMER ELECTRONIC SALES DRIVEN BY FTTH:

  PERCENTAGE  AVG

PRICE   TOTAL

           

HD televisions 15% x $1,400.00 = $210.00

Wireless networking equip. 10% x $200.00 = $20.00

Computers 6% x $1,000.00 = $60.00

Inside home wiring 4% x $2,000.00 = $80.00

Video conferencing cameras 1% x $50.00 = $.50

           

Total Average Per User         $370.50

FTTH Drives Other Purchases

Source: RVA Render & Associates, LLC 2006

FTTH Generates Billions in Economic Activity

(Estimated One-Year Activity, Spring 2005-Spring 2006)

•$1.2 Billion for Infrastructure Installation•$169 Million in Electronics Sales

(Estimated Total Activity, by 2010)

• $21 Billion for Infrastructure•$4.5 Billion in Electronic Sales

Does FTTH Create Economic Development?

Traditional Business Attracted Because of FTTH

PLACE POPULATION TYPE COMPANY  

Bristol, VA 17,271   (MUNI) Northrop Grumman  

Fort Wayne, IN 203,369   (RBOC) Raytheon  

Macon, MO 5,283   (ILEC) Onshore  

Mason County, WA 53,000   (PUD) Louisville Slugger, Sims

Quincy, WA (Grant County) 5,326   (PUD) MSN (Microsoft)  

Salem, IL 7,569   (CLEC)Midwest Ag Energy Ethanol Plant

Wenatchee, WA (Chelan City) 28,515   (PUD) Yahoo    

FTTH Micro Business Development

(In home / Small business)• Video Editing• Market Consulting• Game Development and Serving• Engineering / Drafting• Scientific Sample Analysis• Software Development• Independent Content Creation

Source: RVA Render & Associates, LLC 2006

Does FTTH Change Paradigms?

1.3

0.3

0 1 2 3 4 5

Non FTTH

With FTTH

Number of Days Worked From Home Per

Month

Source: RVA Render & Associates, LLC 2006

The Future Will Be Exciting!

Our Report…

Why The Report?

• Third party validation

• Deeper understanding… better strategy– Equipment Vendors– FTTH Service Providers– Content and Applications Providers

• More accurate forecasting

And critical market information helps you gain more FTTH customers.

The 2006 RVA report is now available!

www.RVAllc.com

FTTH/FTTPFTTH/FTTPUPDATEUPDATE

October, 2006October, 2006

Copyright 2006 RVAwww.RVALLC.com