Sprint International Wholesale Market Challenges

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Sprint InternationalWholesale Market Challenges

• AHCIET Conference
• April 21-23, 2004

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Agenda
Agenda

• Communications Changes in Technology and
  Service
• Sprint Vision Evolving with Change
• The Significance of Voice
• Opportunities for the Americas
• The New Landscape Wireless and IP
• Sprint Roadmap for the New Landscape

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Major challenges affecting Communications
Technology
Key Trends in Communication

• Seamless and ubiquitous customer experience
• Creating an integrated network view
• Minimizing network overlays
• Next Generation Operations Support System
• High speed wireless wireline data
• Entertainment multimedia services support
• VoIP
• Wireless device enhancements

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Major challenges affecting Communications
Services
Key Trends in Communications

• Distance no longer cost/price determinant
• Location-insensitive
• Increased mobility
• Irrelevance of size
• Increased value of Brand
• Increased value of Niches
• Global reach local provision
• Rise of dumb networks, intelligent end-users
• Voice - just another application

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Sprint ingredients in meeting these Challenges
Key Trends in Technology

• Sprint technology toolkit uniquely positioned in
  the marketplace
• Integrated products will be key to
  differentiation
• Wireless, local access, global transport
  connectivity services are the building blocks
• Continuing to drive efficiencies through an
  integrated network
• Keeping Sprint on the leading edge of
• - Technology
• - Innovation
• - Integrated services for our customers

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Based upon recent Gartner Magic Quadrant of U.S.
Providers
Sprint Ranked as Leader

• Sprint is safe haven in an industry rife with
  bankruptcies and shuttered operations.
• Assessment based on
• Completeness of Vision
• Ability to Execute
• Business Strategy
• Product Portfolio
• Technology
• Service Support
• Corporate Viability

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The Communications Landscape is Changing
Responding to the Changing Landscape

• Voice and Data are converging
• Mobility increasing in importance
• Most carriers provide some services, but not all
• Customers today need integrated solutions

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The only Carrier that carries all the pieces!
Sprint Stands Alone
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The Significance of Voice and how it is purchased
Wireless Voice The New Frontier

• Two-thirds of U.S. workforce now use mobile
  phones for work.
• Wireless voice data represent 25 of corporate
  telecom expenditures and 37 of the 90 billion
  U.S. wireless services market in 2003.
• Voice accounts for 98 of total U.S. wireless
  carrier services revenues.
• Voice will continue to dominate in wireless
  services for many years, despite all the hype
  about data.
• The challenge Corporate mobile purchasing
  remains decentralized.

Source Yankee Group, February 2004
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Voice Traffic to South America outpaces Europe
and Asia
Latin America Opportunities
Source Telegeography 2003. Growth figures
include PSTN traffic only VoIP is excluded.
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South America included in Top 10 Countries for
US Offshoring
Latin America Opportunities
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Speaking Globally
Latin America Opportunities

• Moving Beyond the Boom and Bust of the Nineties
  
• Global telecom industry to see 9 CAGR through
  2006
• Enterprise services, mobile services and
  broadband will outpace other telecom sectors
• Global mobile subscribers surpassed 1.35B by end
  of 2003 compared to 1.2B for fixed telephony
• In telecom equipment, Mexico is among top three
  export market for U.S.
• Trade Negotiations in the Americas emphasize
  telecom services
• Set ground rules for access to telecommunications
  services
• Provide for value-added services
• Encourage open markets
• Stress importance of telecommunication standards
• Examples
• NAFTA
• DOHA Development Agenda
• Free-Trade Area of the Americas
• Central America Free Trade Agreement

Source Telecom Industry Association (TIA)
forecast, Supercomm 2003.
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the pieces are strewn across several networks
Current State of the Network
Shared Interconnected Optical, Many Overlays,
Independent Service Platforms
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Sprints Future Roadmap Voice over Packet
Services
Network for the Future

• Future Network Highlights
• Efficient Infrastructure Utilization
• Designed for New Service Speed to Market
• Provides Network Layer Flexibility
• Simplified Product Integration and Bundling

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Sprints Future Roadmap Voice over Packet
Services
Network for the Future

• Service Architecture
• Service control agnostic of transport technology
• Reuse existing applications and services
• Rapid service creation and introduction
• Write once use everywhere

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Sprint - Next Generation Voice Network
Network for the Future
LD Switch
Local Switch
Local Switch
LD Switch
SS7
SS7
SS7
DCS
DCS
DCS
DCS
TDM
TDM
TDM
TDM

• YESTERDAYS NETWORK APPROACH
• Sprint currently supports separate switches for
  local, long distance and wireless traffic
• Traffic exchanged between switches by means of
  intermachine trunks (IMTs) riding Sprints SONET
  and DCS transport network.

MGC
MGC
BICC/SIP
SS7
SIP
H.248
H.248
ISR
ISR
Packet WAN
TDM
TDM
TERMS ISR integrated Switch Router MG Media
Gateway MGC Media Gateway Controller TDM Time
Division Multiplexing WAN Wide Area Network
MG
IP Access

• NEXT GENERATION APPROACH
• Local, long distance, and wireless tandem
  functionality on a single switch with VoIP
  support
• Backbone trunking based on ISR. Access trunking
  based on Optical Switch/MAN

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Sprint - Next Generation Voice Network
Sprints International Strategy

• Sprints IP backbone includes over 25 overseas
  service nodes, with bilateral services to over
  140 countries
• All VoIP services supported by the NGVN can be
  delivered world-wide, including IP Centrex,
  Enterprise VoIP, and Voice VPN.
• The NGVN media gateways also support
  international PRI variants, allowing Sprint to
  support local calling wherever required

Bi-Lateral Coverage Resale Partner Nodes IP
Network Nodes
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VoIP Penetration of Long-Distance Traffic
IP The Convergence Vehicle

• About 30 of total international LD traffic has a
  VoIP component at present. By 2007, VoIP is
  likely to account for about 85-90 of total
  international LD traffic.
• The forecast assumes total domestic long-distance
  traffic growth of about 6-7 on average, and
  total intl traffic growth at about 10.

Source Frost Sullivan, Dec 2003
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South Americas share of Global Internet
Geography
IP The Convergence Vehicle

• According to Telegeography findings in Global
  Internet Geography 2003
• Some countries are more dependent on the U.S. as
  a central switching hub
• Growth rates vary by region and route.
• Latin America Internet bandwidth increased 65

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South Americas share of Global Internet
Geography
IP The Convergence Vehicle

• According to Telegeography findings in Global
  Internet Geography 2003
• Latin America's Internet backbone grew faster
  than all other world regions except Africa.
• Miami has displaced New York as the leading
  Latin American Internet hub city

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VoIP Drivers in Latin America
VoIP In Latin America

• The need for business efficiencies
• Cheaper international connectivity
• Non-incumbent market entry
• But regulatory threats remain

• Significance VoIP is becoming an increasingly
  attractive voice platform in Latin America.
• Implications The wholesale VoIP market
  continues to grow rapidly
• Outlook However, regulators remain undecided
  about how to regulate VoIP, which may curb the
  expansion plans of some providers.

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Conclusions and future trends

• Continued consolidation resulting from shrinking
  wholesale voice margins
• Services such as voice will become
  indistinguishable from the capacity that carries
  them
• Technological convergence will cause wholesale
  business to be integrated more fully with mobile
  and data voice becomes just another
  application
• Complete service providers who own access to
  local network and to end-users will be the
  ultimate survivors
• 50 of the worlds population has still never
  made a telephone callwholesale voice will enjoy
  several more years of growth in Latin America and
  other emerging markets

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Thank you
Summary Questions