The Economics of Mobility: The Communications Value-System at the Dawn of a New Era

1. The Economics of Mobility Mark Roettgering Senior Director, Corporate Strategy & Analysis T-Mobile USA © 2009 T-Mobile USA, Inc.

4. A broader view shows colliding industries… Fixed broadband network operator TV creation & distribution Search Other CE creation & distribution Software & applications Fixed narrowband network operator Social Networking ePayments Home networking & automation Games Fixed video network operator Music creation & distribution Print creation & distribution Movie creation & distribution Mobile device creation & distribution MNO © 2009 T-Mobile USA, Inc. Slide:

5. U.S. Communications Value Chain Today Product Retail/Service IP Web 2.0 app / service players (000s) © 2009 T-Mobile USA, Inc. Slide:

6. Consumer demand driving high investment $58B Source: T-Mobile estimates Includes wireless “Big 6” 2001-2004 and “Big 4” 2005-2008 “ Big 2” cable – Comcast, Time Warner, “Big” satellite – DirectTV Top 2 RBOCs – AT&T & VZ Total U.S. Communications Capex + Spectrum Spend Leading national players Wireless CapEx Wireless Spectrum $20B $17B $19B $22B $22B $18B $21B $19B $20B $29B $30B $18B 2002 2003 2004 2005 2006 2007 $53B $47B $34B $33B $33B Other CapEx © 2009 T-Mobile USA, Inc. Slide:

10. Industry evolution is certain – direction not fully known Status quo modes of communication and entertainment Status quo applications / services Dedicated devices / use cases New modes of communication / entertainment Rich applications / services Device convergence Fixed-mobile convergence Integration Low competition Asset scarcity Closed networks/devices/OS Significant barriers Open standards Open networks/devices/OS High competition Substitutability / modularity Low barriers Competitiveness / industry structure Consumer needs / service convergence “ Integrators rule” B “ Communications 2.0” C “ Simple services bazaar” D “ No news” A 2008 2013 © 2009 T-Mobile USA, Inc. Slide:

11. Matching consumer needs with system economics will determine direction of emerging communications Status quo modes of communication and entertainment Status quo applications / services Dedicated devices / use cases New modes of communication / entertainment Rich applications / services Device convergence Fixed-mobile convergence Integration Low competition Asset scarcity Closed networks/devices/OS Significant barriers Competitiveness / industry structure Consumer needs / service convergence “ Integrators rule” B “ Communications 2.0” C “ Simple services bazaar” D “ No news” A Open standards Open networks/devices/OS High competition Substitutability / modularity Low barriers 3 rd - party Carriers OEMs “ Closed Access” “ Open Access” “ Closed Development ” “ Open Development” Device Ecosystem B A D C © 2009 T-Mobile USA, Inc. Slide:

13. T-Mobile thanks eComm sponsors for making this conference possible… © 2009 T-Mobile USA, Inc. Slide: