Discussing the report, lead-author Dr. Vanston states, "Wireless, cable telephony, and VoIP continue to erode the traditional voice market and destroy the value of traditional ILEC assets such as copper cable and circuit switches. We forecast that by 2010, ILEC narrowband access lines will have fallen to 71 million down from a peak of 187 million in 2000. (See Chart 1,
.) By 2010, about 75% of U.S. households will have broadband service, and about 12% of households will subscribe to very high-speed broadband (at least 24 Mb/s). (See Chart 2,
.)

He continues, "Since we last updated the report in 2003, a major change in perception has occurred in the industry. Before, our forecasts of distribution fiber, very high-speed broadband, VoIP, IP video, and HDTV video were regarded as specultative. Now, it's a question of how fast. That's what this report addresses."

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

Key Findings from "Transforming the Local Exchange Network:
Third Edition":

---Technology change, competition, and the growth of broadband have accelerated their impacts on the local exchange network.
By 2010, ILEC narrowband access lines will have fallen to 71 million down from a peak of 187 million in 2000. (See Chart 1,
.)

---The local exchange telecommunications industry is transitioning from a narrowband network of circuit switches and copper cables to a broadband network of packet switches and fiber optics. This transition will largely be complete between 2015 and 2020, but probably not much before.

---Increasing bandwidth is now mandatory for ILECs, but the best way to do it depends on a number of factors and the ultimate winner is still unclear to the dispassionate observer. By 2010, about 75% of U.S. households will have broadband service, and about 12% of households will subscribe to very high-speed broadband (at least
24 Mb/s). (See Chart 2,
.)

---Depreciation lives that fully take into account technology change and competition are still generally consistent with those used by ILECs for financial reporting and those previously recommended by TFI. They imply that property tax valuations may be too high in some jurisdictions.

This report will be of interest to:

* Incumbent Local exchange carriers
* Competitive LECs
* Cable TV companies
* Internet service providers
* Telecom equipment manufacturers
* Regulatory personnel
* Depreciation professionals
* Property tax professionals.

A table of contents and a link to 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 and Mr. Hodges would also be glad to be interviewed and quoted for articles relating to the subject matter.

Lead-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. The September 21, 1998 issue of "The Wall Street Journal" featured an in-depth interview entitled "Consultant's Call: Lawrence Vanston Makes Some Pretty Bold Predictions for the Future of Telecommunications. He Has Been Right Before." Notably, the predictions therein have likewise come true. His full bio is available at .

Co-author Ray L. Hodges brings over 30 years of telecom expertise and experience to his work at TFI, including 25 years with GTE Telephone Operations. Mr. Hodges' views and the results of his research have been cited by such publications as "Telephony," "America's Network," "Lightwave," "Wired,"
"Inter@ctive Week," and "Wireless Systems Design." His full bio can be found at .

For 27 years, TFI has helped organizations plan for the future by offering outstanding technology forecasting, strategic planning, trend analysis, and strategic market research services and publications 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."