SBC Media Briefing Media Update May 9 2001

SBC Media Briefing Media Update May 9, 2001 Ross Ireland Senior Executive Vice President, Chief Technical Officer Abha Divine Vice President – Corporate Strategy

our strategy meeting our customers where they are

SBC’s Fiber Access Deployment 4 Direct fiber connections bring nearly unlimited bandwidth 4 PON and WDM make deployment efficient and cost effective 4 PON: Fiber to multiple customers without intermediary electronics 4 WDM: Signals as different colors of light on the same fiber

Competitor A’s Fiber Network Silicon Valley San Francisco Bay Competitor A’s Switch Location Competitor A’s Fiber Competitor A’s Switch SBC’s Central Offices SBC’s Wire Center Boundaries

Competitor B’s Fiber Network Silicon Valley San Francisco San Bay Competitor B’s Switch Location Competitor B’s Fiber Competitor A’s Switch Competitor B’s Switch SBC’s Central Offices SBC’s Wire Center Boundaries

SBC’s Fiber Network Silicon Valley San Francisco San Bay Bay SBC’s Central Office SBC’s Loop Fiber Competitor A’s Switch SBC’s Inter-Office Fiber SBC’s Wire Center Boundaries

Fiber to the Neighborhood … Central Office or Remote Terminal Neighborhood Gateways Fiber Copper

… Then to the Home Requires no remote power source Central Office or Remote Terminal Homes and businesses receive virtually unlimited bandwidth Splitters 32 -38 homes or 12 businesses WDM allows multiple homes or businesses to be served by a single fiber connection Splitter is the size of a bubble gum pack

Access 4 SBC’s core data strength 4 High-speed access technologies form the foundation for all advanced services 4 Leased lines 4 ATM, frame relay, gigabit ethernet 4 Optical connections 4 DSL

DSL Deployment Central Offices 0 0 1, 0 03 90 percent of total Pronto target 0 0

DSL Deployment Neighborhood Gateways 0 0 3, 0 0 17, 000 projected by 2003 0 0

DSL Deployment DSL Subscribers 90 05 4, 0 0 SBC is the nation’s largest DSL provider

Project Pronto: The Next Phase 4 Broadband platform for 10 -20 years 4 Enhanced scalability for DSL 4 Fiber for more businesses 4 Enhanced reliability 4“Future-proof” architecture 4 Supports an array of advanced services

SBC’s vision Be the only communications company our customers will ever need

Building Solutions NETWORK ACCESS

Network NETWORK ACCESS 4 SBC’s network is the backbone transport for all voice and data traffic 4 Switched 4 ATM 4 IP 4 Business networks allow workers to share information throughout an enterprise 4 LANs and WANs 4 Virtual private networks 4 Managed services

Mbps SBC IP Backbone Traffic by Product

IP Backbone Cost Curve $1, 950 “ Sweet Spot” $1, 700 $1, 450 $1, 200 $950 SBC DSL customer base EOY 2000 $700 $450 Number of DSL Subscribers (000) 10, 000 8, 000 6, 000 5, 500 5, 000 4, 500 4, 000 3, 500 3, 000 2, 500 2, 000 1, 500 1, 000 500 250 100 $200 50 5 Yr. WA Cost Per Mbps. $2, 200

IP Backbone Buildout

Benefits of Our Approach 4 Efficiently handles IP traffic growth 4 Service level agreements (SLAs) 4 Differentiated products and time frame 4 Satisfies need for native transport

Building Solutions HOSTING NETWORK ACCESS

Hosting HOSTING NETWORK ACCESS 4 Key to enabling customers to capitalize on our network and access 4 Ensures reliable, always-on Internet presence

Hosting: Data Centers HOSTING NETWORK ACCESS 4$50 million facilities in Dallas, Irvine 4 Powered by Cisco equipment 4 Multiple DS 3 Internet connections 4 Redundant power 4 Fire suppression and environmental controls 424 -7 monitoring 4 Infrastructure services

Hosting Services HOSTING NETWORK ACCESS 4 Dedicated 4 Shared 4 Collocation 4 Internet data centers

Hosting Market Growth HOSTING NETWORK ACCESS Managed CAGR 96% Hosted Apps CAGR 41% Collocation CAGR 51% Shared CAGR 23% Source: Forrester, 1999. Yankee Group, 1999. SBC region based on 41% of U. S.

Building Solutions APPLICATIONS HOSTING NETWORK ACCESS

Applications APPLICATIONS HOSTING NETWORK ACCESS 4 Advanced services that add functionality to Web sites and networks 4 A platform for ASP services 4 The fastest, most reliable path from customer to content

Broadband Solutions: The Ideal Platform Hosted Content at SBC IDC Faster, more reliable bandwidth Home or business Fiber or DSL broadband connection End-to-end access through SBC’s network Corporate Network or e-business Network SBC Data/IP Network Internet Content “Best effort” architecture of Internet: speeds can vary

SBC Content Navigator SBC Broadband

SBC Content Navigator SBC Broadband

Applications APPLICATIONS HOSTING NETWORK ACCESS 4 SBC is introducing applications through its subsidiary, Sterling Commerce, one of the world’s leading e-business application providers 4 Sterlingcommerce. net 4 Sterling e. Transaction Manager

Ecommerce Endgame: From Convoluted …

… To Convenient and Cost. Effective

NETWORK ACCESS MANAGEMENT HOSTING INTEGRATION APPLICATIONS CONSULTING Building Solutions

4 These offerings help businesses identify the options that best suit their needs, and making sure that all services work together to maximize benefit and performance 4 Management consulting 4 Process integration 4 Network integration MANAGEMENT HOSTING NETWORK ACCESS INTEGRATION APPLICATIONS CONSULTING Consulting, Integration and Management

HOSTING NETWORK ACCESS INTEGRATION APPLICATIONS CONSULTING SOLUTIONS MANAGEMENT Building Solutions

solutions Products and services combined and customized to meet specific needs of businesses or industries MANAGEMENT HOSTING NETWORK ACCESS INTEGRATION APPLICATIONS CONSULTING The End Result SOLUTIONS

HIPAA 4 Daunting challenge for health care and insurance companies 4 SBC solution combines consulting and integration expertise with networking applications MANAGEMENT HOSTING NETWORK ACCESS INTEGRATION APPLICATIONS CONSULTING Customer Solutions SOLUTIONS

HIPAA ANX 4 Daunting challenge for health care and insurance companies 4 Automotive suppliers need high-speed access to Big three e-commerce network 4 SBC solution combines consulting combines and integration high-speed access expertise with e-commerce networking application and applications integration MANAGEMENT HOSTING NETWORK ACCESS INTEGRATION APPLICATIONS CONSULTING Customer Solutions SOLUTIONS