Technology Futures Inc.
Ms. Carrie Vanston,
Media Relations Director
(323) 436-0314

Ms. Debra Robison,
Publications Sales
(800) TEK-FUTR, (512) 258-8898

New Market Research Report

Technology Forecasts for Local Exchange Switching Equipment

AUSTIN, Texas, April 2000 --Technology Futures, Inc., an internationally-recognized leader in telecom forecasting, announces the publication of a new report entitled Technology Forecasts for Local Exchange Switching Equipment, authored by Ray L. Hodges (Senior Consultant, TFI) and Lawrence K. Vanston, Ph.D. (President, TFI). This research was sponsored by the Telecommunications Technology Forecasting Group (TTFG), a consortium of telephone companies comprised of Bell Atlantic, Bell Canada, BellSouth Telecommunications, Cincinnati Bell, GTE, Southwestern Bell, Sprint-LTD, and U S WEST Communications.

This report addresses issues relating to the current trend of ATM/IP packet switching and its impact on the embedded digital circuit switches of incumbent local exchange carriers (ILECs). It provides an update and comparisons to earlier forecasts conducted by Technology Futures, which were remarkably accurate in identifying the technology substitutions and predicting the pace of change in switching equipment. The report also includes a technology description and assessment of optical switching.

According to Mr. Hodges, "In the past, we have upgraded circuit switches to provide better services and features for voice traffic and to accommodate some low-speed data. In the future, the circuit switches must be replaced by packet switches, which are optimized for high-speed data." Mr. Hodges continues, "ATM/IP switches are optimized for data and, when data dominates, they will become cost effective for all forms of traffic. Voice traffic will increasingly be disguised as data and transported over the packet network. The direction is clear, but the time of the transition is more difficult to determine and is the main subject of this report."

Dr. Vanston adds, "One of the most significant findings of this study is that the earlier studies remain on track. Even the forecasts for ATM, which were made long before standards and commercial products were available, still appear to be valid."

Key Findings: This comprehensive report:

An expanded table of contents and a list of exhibits follow this press release.

Mr. Hodges brings 30 years of telecom expertise and experience to his work at TFI, including 25 years with GTE Telephone Operations. His interests are focused on emerging wireless technologies and markets and their impacts on the public telecom network. Mr. Hodges' views and the results of his research are regularly cited by such prestigious publications Telephony, America's Network, Lightwave, Wired, Inter@ctive Week, and Wireless Systems Design.

Lawrence K. Vanston, Ph.D., is a recognized authority in the use of technology forecasting in the telecom industry. Dr. Vanston was interviewed on his views of telecom trends by the Wall Street Journal for a full-page article entitled "Consultant's Call: Lawrence Vanston Makes Some Pretty Bold Predictions for the Future of Telecommunications. He Has Been Right Before."

Technology Futures 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.

PRESS CONTACT -- Please contact Ms. Carrie Vanston by telephone at (323) 436-0314 or by e-mail at with any questions and/or to arrange an interview with Dr. Vanston, Mr. Hodges, 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 The report is also available to purchase online using a credit card at The 84-page report is priced at $495 in North America and $510 elsewhere. Thank you for your attention.

Thank you for your attention.

# # # New Market Research Report Technology Forecasts for Local Exchange Switching Equipment

Table of Contents

Chapter One

Chapter Two
Switching Technology
ATM and IP Switching
Chapter Three
LEC Transition Strategies
Transition Alternatives
Chapter Four
Forecasts for Digital Switching and ATM/IP
The Evolution of Circuit Switching
Forecasts for the Adoption of Digital Switching
Comparisons to Previous Forecasts
Forecasts of Modular Upgrades to Digital Switches
Categories of Switch Modules
Distribution of Investment
Historical Evolution of Switch Modules
Recent Updates to Existing Digital Switch Architectures
Composite Lives for Digital Switches
Forecast of Processor/Memory Upgrades
Forecast of Switch Fabric Upgrades
Forecast of Trunk Interface Upgrades
Forecast of DLC Interface Upgrades
Forecast of Baseband Line Interface Upgrades

Chapter Five
The Adoption of Packet Switching
Forecast for ATM/IP Switching Adoption
ATM Implementation Alternatives

Appendix A
Substitution Analysis and the Fisher-Pry Model
Forecasting with Fisher-Pry
Extensions of Fisher-Pry
Projecting the Market Share of the Old Technology
Projecting the Number of Units
Relationship to Product Life Cycles
Forecasting Depreciation Lives
Company Forecasts

Appendix B
Forecasting with Multiple Substitution

Appendix C
Multiple Substitution Analysis for Digital Switching

List of Exhibits
2.1   Growth in Data Traffic
3.1   5ESS Evolves with 7R/E Packet Driver
3.2   Nortel's View of the ATM/IP Future
3.3   Lucent's View of the ATM/IP Future
4.1   Switching Technology Shares
4.2   Switching Technology Shares--Percentage of Access Lines
4.3   Multiple Substitution Analysis of Switching Technologies
4.4   Comparison to 1989, 1994, and 1997 SPC Switching Forecasts
4.5   Comparison to 1989, 1994, 1997, and 2000 Digital Switching Forecasts
4.6   Generic Switching Architecture
4.7   Nortel DMS-100 Architecture
4.8   Lucent 5ESS Architecture
4.9   Digital Switching Investment Distribution--Results from Various Studies
4.10  Evolution of Nortel DMS-100
4.11  Evolution of the Lucent 5ESS
4.12  Nortel S/DMS SuperNode Architecture
4.13  Lucent 5ESS-2000 Architecture
4.14  Digital Switching--Modular Retirement Analysis
4.15  Percentage Survivor Curves for Modular Categories of Digital Switching
4.16  Composite Survivor Curve for Digital Switching
4.17  Survivor Curves for Digital Switch Modules
4.18  Baseband Digital Switch Terminations--Percentage of Access Lines
4.19  Baseband Digital Switch Terminations--Digital and Analog Percentage of Access Lines
5.1   Adoption of ATM Switching--Percentage of Equivalent Access Lines
5.2   ATM Switching--Percentage of Equivalent Access Lines
5.3A  Early Scenario--ATM Equivalent Access Lines by Implementation Alternative
5.3B  Late Scenario (Direct Transition)--ATM Equivalent Access Lines by Implementation Alternative
5.3C  Late Scenario (Primary Fabric Transition)--ATM Equivalent Access Lines by Implementation Alternative
5.4A  Early Scenario Non-ATM Switching Survivor Curves--Percentage of Equivalent Access Lines
5.4B  Late Scenario (Direct Transition) Non-ATM Switching Survivor Curves--Percentage of Equivalent Access Lines
5.4C  Late Scenario (Primary Fabric Transition) Non-ATM Switching Survivor Curves--Percentage of Equivalent Access Lines
5.5  ATM Implementation Projections--Percentage of ATM Equivalent Access Lines
5.6   Switching Technology Shares--Late ATM Scenarios

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