© Verizon Communications, Inc.

Unlocking the Power of NewCommunications TechnologyUnlocking the Power of NewCommunications Technology

Mark Wegleitner

CTO-Verizon Communications

Mark Wegleitner

CTO-Verizon Communications

2© Verizon Communications, Inc.

2001 Operating Revenues: $67.2 BEmployees: ~250,000

Domestic Telecom: ($43.1 B)U.S. Markets Served: 32 States & DCU.S. Access Lines: 61+ MHouseholds: 31+ MDSL Lines: 1.2+ MLong Distance Customers: 7.4+ M

Wireless: ($17.4 B)U.S. Wireless Customers: ~30 MU.S. Markets Served: 97 of top 100

International: ($2.3 B)Nations w/Verizon Investment: 19Nations w/Verizon Presence: 40

Information Services: ($4.3 B)Directory Titles: 2300Domestic Circulation: 106 MInternational Circulation: 44 M

Verizon Fact SheetVerizon Fact Sheet

3© Verizon Communications, Inc.

“Any sufficient advancedtechnology is indistinguishable

from magic.”

Arthur C. Clarke

4© Verizon Communications, Inc.

State of the IndustryState of the Industry

� Economic Recession– Reduced Capital Spending– Reduced Venture Capital– How Do We Fund Investment and

Innovation?� Revenues Are Down� Industry Restructuring� Investor Concerns� Bubbles Have Burst

5© Verizon Communications, Inc.

Competitive EnvironmentCompetitive Environment

Telcos

Other(DBS Companies, etc.)

CableCompanies

CellularProviders

CompetitiveLECs

6© Verizon Communications, Inc.

� One Stop Shop for All Servicesor

� Shop for Select Services� Information/Entertainment Access� Mobility� Control� Convenience� Ease of Use

Consumer TechnologyRequirementsConsumer TechnologyRequirements

7© Verizon Communications, Inc.

What a Difference a Few YearsMakesWhat a Difference a Few YearsMakes

Fixed Line57%

Broadband5%

Mobile38%

Mobile49%

Broadband15%

Fixed Line36%

2001 2006

Source: Forrester Research

Proportion of Typical Household Spending on Electronic Communications

More People are Communicating in More Ways

8© Verizon Communications, Inc.

Business TechnologyRequirementsBusiness TechnologyRequirements

� Increase Productivity� Maintain/Reduce Cost� Mobility/Transparency� Service and Network Control� Security� Evolve to Next Generation Technologies

9© Verizon Communications, Inc.

Regular Voice and Alternate Communication Modes

LandlinePhone 45 92%

E-mail 29 53%

InstantMessaging 16 17%

OnlineChat

24 9%

Consumers usingeach mode

Average DAILY minutes of useamong users

Source: Forrester Research and Sixth Annual CMRS Competition Report Wireless Competition Report (FCC 01-192)

WirelessMobile 20 39%

10© Verizon Communications, Inc.

Network RequirementsNetwork Requirements

� Broadband Access� Flexible Converged Service Access� Versatile, Cost Effective and Low Maintenance

Transport Infrastructure� Packet Capable Core Network� New Services:

� Converged� Broadband Vertical

� Service Management:� Network “Through the Edge”� Customer

11© Verizon Communications, Inc.

The Road to ConvergenceThe Road to Convergence

12© Verizon Communications, Inc.

(Some) Technology Initiatives(Some) Technology Initiatives

Access• DSL• Broadband Fixed Wireless• Fiber-To-The-Premises (FTTP)• Converged Access• DWDM

• DSL• Broadband Fixed Wireless• Fiber-To-The-Premises (FTTP)• Converged Access• DWDM

13© Verizon Communications, Inc.

Copper

NGDLC

Access AlternativesAccess Alternatives

Copper

NGDLC

BBFW

DSL(CO/RT)

FTTH

xDSL

CAS/BPON

SONET

BusinessConsumer

DWDM

Ban

dwid

th

14© Verizon Communications, Inc.

(Some) Technology Initiatives(Some) Technology Initiatives

Access• DSL• Broadband Fixed Wireless• Fiber-To-The-Premises (FTTP)• Converged Access• DWDM

• DSL• Broadband Fixed Wireless• Fiber-To-The-Premises (FTTP)• Converged Access• DWDM

Core• DWDM• Multi Service Provisioning Platform (MSPP)• Optical Switching

• DWDM• Multi Service Provisioning Platform (MSPP)• Optical Switching

15© Verizon Communications, Inc.

Target Transport NetworkTarget Transport Network

Collector Ring

Meshed Super Hubs• Photonic Switches• Optical Add/Drop Muxes• Optical Service Muxes

Collector Rings• NG-SONET• NG-DCS• Ring DWDM

Access Network• PON (Business, FTTH)• BB Fixed Wireless• DSL

Collector Ring

Collector Ring

16© Verizon Communications, Inc.

(Some) Technology Initiatives(Some) Technology Initiatives

Access• DSL• Broadband Fixed Wireless• Fiber-To-The-Premises (FTTP)• Converged Access• DWDM

• DSL• Broadband Fixed Wireless• Fiber-To-The-Premises (FTTP)• Converged Access• DWDM

Core• DWDM• Multi Service Provisioning Platform (MSPP)• Optical Switching

• DWDM• Multi Service Provisioning Platform (MSPP)• Optical Switching

Data• Gigabit Ethernet• IP Networking (Including VPN)• Multi Protocol Label Switching (MPLS)

• Gigabit Ethernet• IP Networking (Including VPN)• Multi Protocol Label Switching (MPLS)

17© Verizon Communications, Inc.

BackboneProviders

MetroIP

BackboneDSL

AccessNetwork

Enterprise

GigabitEthernetAccess

Networks

PSTN

ContentProviders

ISP

Enterprise

SME ConsumerConsumer

Metro IP NetworkingMetro IP Networking

Cellular2.5/3G

Data Network

18© Verizon Communications, Inc.

Multi Protocol Label Switching (MPLS)Multi Protocol Label Switching (MPLS)

ATM/FRATM/FR Network Network

IPIPNetworkNetwork

IPIPBackboneBackbone

EdgeRouter

EdgeRouter

19© Verizon Communications, Inc.

(Some) Technology Initiatives(Some) Technology Initiatives

Access• DSL• Broadband Fixed Wireless• Fiber-To-The-Premises (FTTP)• Converged Access• DWDM

• DSL• Broadband Fixed Wireless• Fiber-To-The-Premises (FTTP)• Converged Access• DWDM

Core• DWDM• Multi Service Provisioning Platform (MSPP)• Optical Switching

• DWDM• Multi Service Provisioning Platform (MSPP)• Optical Switching

Data• Gigabit Ethernet• IP Networking (Including VPN)• Multi Protocol Label Switching (MPLS)

• Gigabit Ethernet• IP Networking (Including VPN)• Multi Protocol Label Switching (MPLS)

Other

• VoIP• Integrated Access Devices (IADs)• Softswitch• Unified Communications• Broadband Vertical Services

• VoIP• Integrated Access Devices (IADs)• Softswitch• Unified Communications• Broadband Vertical Services

20© Verizon Communications, Inc.

SoftSwitch

UserData

MediaGateway

Controller

ApplicationServer

MediaGateway

SS7Gateway

Softswitch ArchitectureSoftswitch Architecture

SSP

UserData

ServicesControl

CallControl

Circuit Switch

SwitchFabric

PSTN

SS7

AIN

MediaGateway

IPNetwork

21© Verizon Communications, Inc.

VoATM TandemVoATM Tandem

STP

LocalSwitch

GatewayController

PSTNPSTN

IXCIXC

ATM/FR/IPATM/FR/IP Network Network

MediaGateway

LocalSwitch

MediaGateway

MediaGateway

MediaGateway

22© Verizon Communications, Inc.

ServiceNode

ServiceNode

ServiceNode

Routing

Optical Transport

Access

Reference ArchitectureReference Architecture

Access

23© Verizon Communications, Inc.

Roadblocks to Realizing NewTechnology Opportunities

Roadblocks to Realizing NewTechnology Opportunities

24© Verizon Communications, Inc.

Roadblocks to RealizingOpportunitiesRoadblocks to RealizingOpportunities

Operations Integration

� Heterogeneous Equipment� Legacy Operations Support Systems� Staff Training (At Scale)� NGN Sophistication

25© Verizon Communications, Inc.

Roadblocks to RealizingOpportunitiesRoadblocks to RealizingOpportunities

Financial

� Tight Capital -- Too Many Opportunities� Expense Pull Through for “Rollover”� Fear of Installing Newer Equipment Too

Soon� Shortened Life Cycles

26© Verizon Communications, Inc.

Roadblocks to RealizingOpportunitiesRoadblocks to RealizingOpportunities

Regulatory

� More Control Over Pricing� Design and Deployment Flexibility� Parity in Regulatory Process� Removal of Uncertainty� Freedom from Legacy Regulation

27© Verizon Communications, Inc.

Verizon StrengthsVerizon Strengths

� Scale & Scope� Network Evolution Plan� Understanding Stakeholder Requirements– Customers– Shareholders– Suppliers– Regulators

� Heritage & Culture

28© Verizon Communications, Inc.

4 Digital Switches4 Digital Switches500 Optical Transport Systems500 Optical Transport Systems

1,500 Channel Banks1,500 Channel Banks192,000 Digital Cross Connect Ports192,000 Digital Cross Connect Ports

683 Local Fiber Muxes683 Local Fiber Muxes967 Digital Loop Carrier Systems967 Digital Loop Carrier Systems

INTEROFFICE FACILITIESINTEROFFICE FACILITIES17,000 Fibers17,000 Fibers

4.4M Total Data Circuits4.4M Total Data Circuits2.7M Through Data Circuits2.7M Through Data Circuits

90,000 Message Trunks90,000 Message Trunks

OtherOtherC.O.sC.O.s

LOCAL LOOPS - FIBERLOCAL LOOPS - FIBER7,600 Fibers7,600 Fibers48,000 Voice Lines48,000 Voice Lines111,800 PBX Lines111,800 PBX Lines11,100 ISP Lines11,100 ISP Lines1.6M Data Circuits1.6M Data Circuits

Customer LocationsCustomer Locations

LOCAL LOOPS - COPPERLOCAL LOOPS - COPPER500 Copper Cables500 Copper Cables134,000 Voice Circuits134,000 Voice Circuits80,000 Data Circuits80,000 Data Circuits

Customer LocationsCustomer Locations

OtherOtherC.O.sC.O.s

140 West St.140 West St.140 West St.

29© Verizon Communications, Inc.

30© Verizon Communications, Inc.

31© Verizon Communications, Inc.

32© Verizon Communications, Inc.

ConclusionConclusion

� Times Are Tough (Right Now)� Customer Requirements Continue

To Grow� We Have the Building Blocks for

NGNs� Must Continue Our Work to Refine,

Design and Deploy� Keep Innovation Alive