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Verizon Labs in Waltham, MA Verizon Laboratories Technology Update: Transforming Communications © Copyright 2006, Verizon Labs in Waltham, MA Verizon Laboratories Technology Update: Transforming Communications © Copyright 2006, Verizon. All rights reserved.

Agenda 10: 00 Welcome & Introductions Mark Marchand Director – Media Relations 10: 10 Agenda 10: 00 Welcome & Introductions Mark Marchand Director – Media Relations 10: 10 Transforming Communications Bill Garrett Director – Broadband Services 11: 30 Video Lab; Systems & Integration Testing Alex Laparidis Director – Video & Transport Testing 12: 00 Fi. OS TV – Product Overview Joseph Ambeault Director – Interactive Services, PLM 1: 30 House Lab Joanne La. Course Director – User-Centered Design 3: 00 Close © Copyright 2005, Verizon. All rights reserved. 2

Verizon Labs Profile Responsibilities • Led by Mark Wegleitner, Verizon CTO • Drive Verizon’s Verizon Labs Profile Responsibilities • Led by Mark Wegleitner, Verizon CTO • Drive Verizon’s architecture vision • Verizon’s centralized R&D group • Guide the application of technology • 500 technical staff • • Skills across the technology spectrum Introduce platforms and products for all customers (consumer, business, wholesale) • ISO-9002 compliant testing group • Champion usability and accessibility for customers with disabilities • 1200+ Patents • Prove that it all works together through comprehensive testing • Main centers in Waltham, MA and Washington Metro region © Copyright 2005, Verizon. All rights reserved. 3

Transforming the Network Premises Delivering and managing voice, video and data over the customer’s Transforming the Network Premises Delivering and managing voice, video and data over the customer’s home network Access Network Metro Backbone Network Providing “Any to Any” access (e. g. , FTTP, DSL, Ethernet) to home or business National Backbone Network A single integrated backbone network for converged voice, video and data Benefits for Verizon shareholders – New revenue – Higher operational efficiency Benefits for customers – Higher bandwidths – Enhanced video and interactive services © Copyright 2005, Verizon. All rights reserved. 4

FTTP: The Residential Future Premises Access Network Metro Backbone Network National Backbone Network Local FTTP: The Residential Future Premises Access Network Metro Backbone Network National Backbone Network Local Content Provider Video Hub Office Session Border Controller IP VOD Server Verizon Online Servers Voice Application Server Internet Application Edge Router Broadband Premises Gateway FTTP Video Distribution Router Service Edge Router Peering Router Optical Line Terminal Video Aggregation Switch Softswitch Media Gateway PSTN © Copyright 2005, Verizon. All rights reserved. Super Headend (SHE) 5

FTTP Advantages The key is dedicated wavelengths Broadcast Video Voice, Data, IP TV 1550 FTTP Advantages The key is dedicated wavelengths Broadcast Video Voice, Data, IP TV 1550 nm 1310 nm 1490 nm 870 MHz system 155 Mbps (1. 2 Gbps with GPON) 622 Mbps (2. 4 Gbps with GPON) IP Data / Internet Video Public Switched Telephone Network Fiber Amplifier Optical Network Terminal 1 x 32 Optical Splitter IP/SS 7 signaling Optical Coupler Optical Line Terminal Softswitch VOIP © Copyright 2005, Verizon. All rights reserved. 6

In-Premise Architecture • Reduces installation time and number of new wires • Supports delivery In-Premise Architecture • Reduces installation time and number of new wires • Supports delivery of real-time IP traffic (e. g. Video on Demand, new services) Voice Optical Network Terminal CAT 3/ RJ 11 Data Verizon Broadband Home Gateway Wireline Network NIM CAT 5/RJ 45 Fiber Optic Cable Mo. CA Network Interface Module Coax Verizon Set Top Box © Copyright 2005, Verizon. All rights reserved. Video 7

FTTP Implementation Premises passed 3 M at end of 2005 6 M by end FTTP Implementation Premises passed 3 M at end of 2005 6 M by end of 2006 Small Businesses ONT Overlay Build ONT ONT Greenfield Build Splitter Hub ONT Circuit Switch Splitter Hub ONT ONT ONT OLT © Copyright 2005, Verizon. All rights reserved. 8

Consumer Bandwidth Demand will soon outstrip current FTTC, FTTN or cable capacity … while Consumer Bandwidth Demand will soon outstrip current FTTC, FTTN or cable capacity … while FTTP has room for growth 100 HD Video Streams (includes HD DVR) Growth Potential 75 Total Downstream Demand (Mbps) Video Games Music 3 HD streams 50 Voice Basic IP Data HD stream 2 SD streams High-quality audio 25 0 SD stream E-mail IM, Web Downloads File Sharing Yesterday Videoconferencing E-mail IM Web Fast Downloads File Sharing Today © Copyright 2005, Verizon. All rights reserved. SD stream Multichannel audio HD videoconferencing and mail IM Web Instant downloads File sharing Tomorrow 9

Verizon Fi. OS TV Features Videoconference Multi-player Games Premier Interactive Program Guide (IPG) Entertainment Verizon Fi. OS TV Features Videoconference Multi-player Games Premier Interactive Program Guide (IPG) Entertainment on Demand STB DVR + Multiroom IP VOD Interactive Apps Niche Channels Time-shift TV HD Tier All Digital Core + Theme Tiers HDTV Niche Channels Analog Basic © Copyright 2005, Verizon. All rights reserved. 10

How Fi. OS TV Works National programming is transmitted to our satellite farms, also How Fi. OS TV Works National programming is transmitted to our satellite farms, also known as Super Headends (SHE). In each market, a Video Hub Office (VHO) adds local channels, commercials and video-on-demand programs to the national programming. SHE Video Serving Office (VSO) receive this feed, process the video signal, and relay it to. . . Internet. . . Splitters that transmit content to up to 32 homes or MDUs with. . . an ONT (optical network terminal) attached to the outside of each customer’s home or MDU. Artwork by Donne Masaki (Verizon) © Copyright 2005, Verizon. All rights reserved. 11

Video Lab Satellite Feed Video Serving Office Video Hub Office © Copyright 2005, Verizon. Video Lab Satellite Feed Video Serving Office Video Hub Office © Copyright 2005, Verizon. All rights reserved. Super Headend 12

House Lab Usability testing guides product development Customers want the 4 C’s: Content - House Lab Usability testing guides product development Customers want the 4 C’s: Content - Tons of it, easily found Convenience - People want a “lean-back” TV experience Community - A sense of community among Fi. OS TV customers Convergence - IP and off-air TV converged seamlessly for all devices © Copyright 2005, Verizon. All rights reserved. 13