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

Forecasts of Access Line Competition in the Local Exchange

AUSTIN, Texas, December 2003-Competition is having a major impact on incumbent local exchange carriers (ILECs). For example, after years of high growth, the number of ILEC retail narrowband switched access lines peaked at 181.3 million lines in 1999 and has continuously declined since then, falling to 162.7 million lines by December 2002. So what does this mean to the telephone industry?

Technology Futures, Inc., an internationally-recognized leader in telecom forecasting, has just completed a new report to address these impacts. "Forecasts of Access Line Competition in the Local Exchange," authored by Lawrence Vanston, Ph.D. (President, TFI), documents TFIs latest forecasts of the future of competition in the local exchange and its impact on the ILECs. Key findings of the report are listed below.

The research was sponsored by the Telecommunications Technology Forecasting Group (TTFG), a consortium of telephone companies comprised of Bell Canada, BellSouth Telecommunications, Qwest, SBC, Sprint, and Verizon.

According to Dr. Vanston, "Competition from wireless, cable telephony, and broadband makes continued erosion of ILEC voice access lines inevitable. If ILECs want to be more than custodians for a dying network, they must seize the initiative for the next generation of broadband and video services." He adds, "This will require massive, staged investment in network upgrades, as well as recovery of the investment in the existing network. The forecasts are intended to assist with both missions."

A 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 cited 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 have also been cited in many major publications including "The Wall Street Journal," "Telephony," "America's Network," and "Lightwave."

For 25 years, TFI has helped organizations plan for the future by offering outstanding technology forecasting, strategic planning, trend analysis, and technology market strategies services in high-technology and telecom technologies. Drawing on proven, quantifiable forecasting methods and strategic applications, we combine the vision of the futurist with the down-to-earth judgment of the technologist. Let us be "Your Bridge to the Future."

We are always happy to comment on the subjects of technology and telecom trends. For a list of citations by our staff members, please see "TFI News"

PRESS CONTACT: Please contact Ms. Carrie Vanston by telephone at (323) 436-0314 or by email 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: Report details and ordering information is available at http://www.tfi.com/pubs/r/r02003_falcle.html. Readers interested in purchasing a copy may also contact Debra Robison, Technology Futures, Inc. at (800) TEK-FUTR or (512) 258-8898, fax (512) 258-0087, or send email to pubsales@tfi.com. The 180-page report is priced at $495 in North America and $510 elsewhere.

Thank you for your attention.

# # #

December 2003
Technology Futures, Inc.
13740 Research Boulevard, Building C
Austin, TX 78750
(800) 835-3887 or (512) 258-8898
Fax: (512) 258-0087
www.tfi.com

Forecasts of Access Line Competition in the Local Exchange

Table of Content
Chapter One: Introduction and Summary
Forecast Overview
Key Forecasts
Comparison to Previous Forecasts
Impact on Depreciation Lives
Forecasting Approach
Chapter Two: Depreciation Lives for Local Exchange Network Equipment
Metallic Distribution Cable
Switching Equipment
Circuit Equipment
Chapter Three: Residential Narrowband Competition
Impact of Broadband and Wireless on Residential Access Lines
Forecast of Competition from CLECs
Summary Impact of Competition on ILEC Residential Narrowband Access Lines
Chapter Four: Residential Broadband Competition
Forecasts for Residential Broadband
Cable Modem and DSL Market Shares of Wireline Broadband
Wireless Competition for Residential Broadband
Forecast for Fixed Wireless Residential Broadband
Transition to Very-High-Speed Broadband
ILEC Broadband Connections Summary
Chapter Five: Non-Residential Narrowband Competition
Impact of Broadband and Wireless on Non-Residential Access Lines
Forecast of Competition from CLECs
Summary Impact of Competition on ILEC Non-Residential Narrowband Access Lines
Chapter Six: Non-Residential Broadband Competition
Forecasts for Non-Residential Broadband
Forecasts for Non-Residential Broadband by Technology Type
Transition to Very-High-Speed Broadband
ILEC Broadband Connections Summary
Appendix A: Introduction to Technology Market Forecasting
Processes and Patterns of Technology Adoption
Mathematical Models for the Adoption of New Technology
Using Technology Market Adoption Models for Forecasting
Forecasting Quantities of Old and New Technologies
Using Substitution Models to Estimate Additions and Sales
Forecasting Growth Rates
Experience with Forecasting with Substitution Models
Conclusion
Appendix B: Forecast Details
Appendix C: Derivation of Historical Data

List of Exhibits 

Figure 1.1 Forecast Narrowband Access Lines by Carrier Type
Figure 1.2 Forecast ILEC Narrowband Access Lines and Broadband Connections
Figure 1.3 Additional Residential Narrowband Access Lines per Wireline Household
Figure 1.4 Forecast Households Using Only Wireless or Broadband for Voice
Figure 1.5 Forecast CLEC Percentage of Residential & Small Business Access Lines
Figure 1.6 Forecast CLEC Percentage of Other Non-Residential Access Lines
Figure 1.7 Cable Telephony Share of Residential Wireline Access Lines
Figure 1.8 Forecast Residential and Small Business Broadband Connections
Figure 1.9 Forecast Total Broadband Connections by Access Technology
Figure 1.10 Comparison to 2002 Forecast: ILEC Access Lines and Broadband Connections
Figure 2.1 Substitution of Fiber for Metallic Distribution Cable
Figure 2.2 Survivor Curves for Metallic Distribution Cable
Figure 2.3 Substitution of ATM/IP for Local Circuit Switching
Figure 2.4 Forecast Resale/UNE Access Lines, ILEC/UNE Switched and CLEC-Switched
Figure 2.5 Survivor Curves for Digital Switching
Figure 2.6 Substitution of Very-High-Speed Broadband Circuit Equipment for DLC Equipment
Figure 2.7 Survivor Curves for DLC Circuit Equipment
Figure 3.1 Forecast Residential Wireline Narrowband Access Lines by Carrier Type
Figure 3.2 Forecast Additional Residential Access Lines
Figure 3.3 Forecast Households Using Only Wireless or Broadband for Voice
Figure 3.4 Forecast CLEC Residential Access Lines, Percentage of Total Residential Wireline Access Lines
Figure 3.5 Forecast CLEC Residential Access Lines (Millions)
Figure 3.6 Forecast Access Lines Served by Cable Telephony, Percentage of Total Residential Wireline Access Lines
Figure 3.7 Forecast Access Lines Served by Cable Telephony
Figure 3.8 Forecast CLEC Residential Access Lines, Facilities-Based and Resale/UNE
Figure 3.9 Forecast ILEC Provided Residential Access Lines, Retail and Resale/UNE
Figure 4.1 Forecast Broadband Households, Percentage of Households
Figure 4.2 Forecast Broadband Households by Access Technology
Figure 4.3 Forecast Market Shares by Access Technology
Figure 4.4 Forecast of DSL Market Share of Standard Broadband
Figure 4.5 Forecast Fixed Wireless Residential Standard Broadband
Figure 4.6 Broadband Households by Nominal Data Rate
Figure 4.7 Trend in Residential Access Data Rates
Figure 4.8 Forecast Adoption of Standard and Very-High-Speed Broadband
Figure 4.9 Forecast ILEC Residential Broadband Connections
Figure 5.1 Forecast Non-Residential Narrowband Wireline Access Lines by Carrier Type
Figure 5.2 Forecast Non-Residential Wireline Access Lines
Figure 5.3 Forecast Small Business Average Access Lines per Location
Figure 5.4 Percentage of Small Business Peak Access Lines per Location Displaced by Wireless and Broadband
Figure 5.5 Percentage of Other Non-Residential Peak Access Lines per Location Displaced by Wireless and Broadband
Figure 5.6 Forecast Other Non-Residential Average Access Lines per Location
Figure 5.7 Forecast CLEC Market Share of Small Business Access Lines
Figure 5.8 Forecast CLEC Market Share of Other Non-Residential Access Lines
Figure 5.9 Forecast CLEC and ILEC Small Business Access Lines (Millions)
Figure 5.10 Forecast CLEC and ILEC Other Non-Residential Access Lines
Figure 5.11 Forecast Facilities-Based Market Share of CLEC Non-Residential Wireline Access Lines
Figure 5.12 Forecast Non-Residential Access Lines Served by Facilities-Based CLECs
Figure 5.13 Forecast ILEC Provided Non-Residential Narrowband Access Lines
Figure 6.1 Forecast Non-Residential Broadband Connections
Figure 6.2 Forecast Adoption of Small Business Broadband Connections/Locations
Figure 6.3 Forecast Adoption of Other Non-Residential Broadband Connections
Figure 6.4 Forecast Small Business Broadband Connections by Access Technology
Figure 6.5 Forecast Other Non-Residential Broadband Connections by Access Technology
Figure 6.6 Forecast Small Business Broadband Connections by Access Technology, Percentage of Standard Broadband Connections
Figure 6.7 Forecast of DSL Market Share of Standard Broadband, Percentage of Wireline Standard Small Business Connections
Figure 6.8 Forecast Fixed Wireless Broadband to Small Businesses, Percentage of Small Business Locations
Figure 6.9 Forecast Adoption of Very-High-Speed Broadband by Small Businesses
Figure 6.10 Forecast Adoption of Very-High-Speed Broadband by Other Non-Residential Locations
Figure 6.11 Forecast ILEC Small Business Broadband Connections
Figure 6.12 Forecast ILEC Other Non-Residential Broadband Connections