Technology Futures Inc.
FOR IMMEDIATE RELEASE PRESS CONTACT
Ms. Carrie Vanston,
Media Relations Director
(323) 436-0314
E-mail: cvanston@tfi.com

READER CONTACT
Ms. Debra Robison,
Publications Sales
(800) TEK-FUTR, (512) 258-8898
E-mail: pubsales@tfi.com

New Market Research Report

The Impacts of Competition and Technology on Local Exchange Outside Plant Assets

AUSTIN. Texas, July 2001-Technology Futures, Inc., an internationally-recognized leader in telecom forecasting, announces the publication of a new report entitled The Impacts of Competition and Technology on Local Exchange Outside Plant Assets, authored by Lawrence K. Vanston, Ph.D. (President, TFI). This report quantifies the impact of broadband technology and wireless competition on the ILECs' copper cable plant. It complements TFI's earlier report on switching assets. The research was sponsored by the Telecommunications Technology Forecasting Group (TTFG), a consortium of telephone companies comprised of Bell Canada, BellSouth, Qwest, SBC Corporation, Sprint, and Verizon.

According to author Dr. Vanston, "DSL technology is allowing the ILECs to compete with cable companies in providing residential broadband access. In the short run, this increases the utilization of some copper pairs, but the overall impact of broadband is to reduce the amount of copper used. First, it reduces the need for second lines, which is a problem for ILECs because not all broadband customers choose DSL. Second, as customers demand higher broadband data rates in the future (see graph), ILECs will be forced to replace most distribution copper with fiber, regardless of which access technology is used, be it VDSL, passive optical networks, or something else."

Dr. Vanston continues, "By including forecasts of all the important factors, we get a comprehensive picture of what is really happening to copper in the ILEC outside plant in the long term. This is the only way you can realistically estimate the impact of all these changes on the value of ILEC investment."

The report also quantifies the substitution of wireless for wireline voice service, forecasting the displacement of both ILEC access lines and usage. In addition, it assesses potential competition for cable voice and the Internet, including VoIP.

Households with High-Speed Access - Maximum Assured Data Rates

graph-households with high-speed access-maximum assured data rates

Source: Technology Futures, Inc.

The study provides reasoned, quantitative information about the likely pace of change. These forecasts have implications for many types of decisions ranging from R&D to market strategy to pricing. Some of the key findings that may be of particular interest to a broader audience can be found below.

Key Findings

This report would be of interest to the following groups: local exchange carriers, competitive LECs, cellular carriers, PCS carriers, wireless suppliers, interexchange carriers, cable MSOs, Internet service providers, telecom equipment manufacturers, regulators, depreciation experts, and property tax experts.

An expanded table of contents and a list of exhibits follow this press release. We would be pleased to have this report reviewed by your publication and/or be quoted for articles examining the subject matter. Dr. Vanston would also be glad to be interviewed and quoted for articles relating to the subject matter.

Author Lawrence K. Vanston, Ph.D., is an internationally-recognized authority in the use of technology forecasting in the telecom industry. His research reports and forecasts are used and referenced extensively worldwide. Dr. Vanston's views on telecom trends were summarized in a full-page interview by the Wall Street Journal entitled "Consultant's Call: Lawrence Vanston Makes Some Pretty Bold Predictions for the Future of Telecommunications. He Has Been Right Before."

Technology Futures, Inc. helps organizations plan for the future. Drawing on proven, quantifiable forecasting methods and strategic applications, we customize our approach to the technology, financial, and marketing issues facing our clients. Our services include consulting, research, and education. A partial list of TFI citations from many major publications can be seen at "TFI News."

PRESS CONTACT-Please contact Ms. Carrie Vanston by telephone at (323) 436-0314 or by e-mail at cvanston@tfi.com with questions about the report and/or to arrange an interview with Dr. Vanston or other technology and telecom experts at TFI. If you need assistance immediately and Ms. Vanston is unavailable, please contact the corporate offices in Austin at (512) 258-8898 or (800) 835-3887.

PURCHASING CONTACT FOR YOUR READERS-Readers interested in purchasing the report should contact Debra Robison, Technology Futures, Inc. at (800) TEK-FUTR or (512) 258-8898, fax (512) 258-0087, or send e-mail to pubsales@tfi.com The 154-page report is priced at $4,500 in North America and $4,515 elsewhere. Thank you for your attention.

# # #

New Market Research Report
The Impacts of Competition and Technology on Local Outside Plant Assets

Table of Contents

Chapter One
Introduction
Chapter Two
Forecasts for Fiber in the Feeder Network
Chapter Three
Forecasts for Distribution Fiber
Chapter Four
Depreciation of Metallic Cable
Chapter Five
Forecasts for Internet Access
Chapter Six
Forecasts for Local Competition
Appendix A
Tabular Data

List of Exhibits

1.1Forecasting Approach
1.2Depreciation Recommendations for Metallic Loop Cable
1.3Local Exchange Network Architecture
2.1Percentage of Working Feeder Lines
2.2Feeder Forecast, Percentage of Total Lines, with Substitution Universes
2.3Fiber Feeder Forecast, Percentage of Working Feeder Lines
2.4Comparison of 1997 Fiber Carrier Forecast with Actual Data and 2000 Forecast
2.5Metallic Feeder Survivors
3.1Households with High-Speed Access -- Maximum Assured Data Rates
3.2Minimum Availability & Adoption of High-Speed Access
3.3Average Percentage Distribution Distance of Fiber
3.4Distance Assumptions for Fiber-in-the-Loop Forecasts (Applied to Distribution Only)
3.5Average Percentage Loop Distance on Fiber
3.6Distance Assumptions for 2000 TFI Fiber-in-the-Loop Forecasts (Applied to Entire Loop)
3.7ADSL Households -- Middle Scenario
3.8Average Percentage Loop Distance on Fiber -- Comparison of 1997 and 2000 Forecasts
4.1Metallic Loop Carrier Survivors and Depreciation Lives (Technology Substitution Only)
4.2Combining Feeder and Distribution Metallic Survivors Forecasts -- Early Distribution Scenario (Technology Substitution Only)
4.3Combining Feeder and Distribution Metallic Survivors Forecasts -- Middle Distribution Scenario (Technology Substitution Only)
4.4Combining Feeder and Distribution Metallic Survivors Forecasts -- Late Distribution Scenario (Technology Substitution Only)
4.5Combined Loop Metallic Survivors Forecasts (Technology Substitution Only)
4.6ILEC-Provisioned Access Lines
4.7Indexed Utility Remaining per Existing ILEC-Provisioned Access Line
4.8Loop Copper Survivor Forecasts (Technology Substitution and Competitive Impacts) -- Middle Scenario
4.9Loop Copper Survivor Forecasts (Technology Substitution and Competitive Impacts)
4.10Metallic Cable -- Estimated ARLs (1/1/2001)
4.11Indexed Utility Remaining per Existing ILEC-Provisioned Metallic Access Line
5.1U.S. Adoption of Home PCs and Online Services -- TFI Base Forecast
5.2U.S. Adoption of High-Speed Access -- TFI Base Forecast
5.3U.S. Adoption of High-Speed Access -- TFI Forecasts
5.4U.S. Adoption of High-Speed Access - Percentage of Online Households
5.5Examples of Consumer Adoptions (Gompertz Model)
5.6Historical Comparisons for Home High-Speed Access Adoption
5.7Minimum Availability & Adoption of High-Speed Access
5.8Minimum Availability & Adoption of High-Speed Access
5.9Modem and DSL Speeds
5.10Performance Improvement Rates
5.11Households with High-Speed Access -- Maximum Assured Data Rates
5.12Households with High-Speed Access -- Maximum Assured Data Rates
5.13Households with High-Speed Access - Average Available Bandwidth
6.1Logic for Voice Access Lines
6.2Forecast of Wireless for Wireline Access
6.3Market Penetration of New Telecom Competitors
6.4Wireline Primary Voice Households by Provider
6.5ILEC-Provisioned Voice Access Lines -- Percentage of Wireline Households
6.6ILEC-Switched Voice Access Lines -- Percentage of Wireline Households
6.7Primary Voice Access Market Shares -- Percentage of Households
6.8ILEC Voice Access Lines to Households
6.9Logic for Data Access Line Forecasts
6.10U.S. Adoption of High-Speed Access -- TFI Base Forecast
6.11Online Households by Primary Data Access Type
6.12Market Shares for Low-Speed, Dedicated Data Lines
6.13ILEC-Switched Narrowband Access Lines
6.14Households with High-Speed Access -- Maximum Assured Data Rates
6.15Market Shares for High-Speed Access Lines, 10 Mb/s & Below
6.16Market Share Assumptions for High-Speed Access Lines, 10 Mb/s & Below
6.17ILEC-Provisioned Access Lines
6.18Logic for Voice Usage per Active Wireline Access Line
6.19Wireless for Wireline Forecast
6.20Households by Wireline/Wireless Type
6.21Base Wireline Voice Usage Left after Impact of Wireless
6.22Voice Usage Displaced by e-communications (Among Online Users)
6.23Base Wireline Voice Usage Impacts of e-communications
6.24Base Wireline Voice Usage Left After Combined Impacts
6.25Logic for Combining Access & Usage Forecasts
6.26ILEC-Switched Narrowband Access Lines
6.27Usage Remaining per Narrowband Access Line (No Revenue for High-Speed Data)
6.28Usage Remaining per ILEC-Switched Narrowband Access Line (No Revenue for High-Speed Data)
6.29Indexed Utility Remaining per ILEC-Switched Narrowband Access Line
6.30Indexed Utility Remaining per ILEC-Provisioned Access Line
6.31Indexed Utility Remaining per ILEC-Provisioned Metallic Access Line

Technology Futures, Inc.
13740 Research Boulevard, Building C
Austin, TX 78750
(800) TEK-FUTR (U.S. and Canada)
(512) 258-8898, Fax: (512) 258-0087
e-mail: cvanston@tfi.com