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Telecommunications Market Segmentation

Analysis and Forecasting

Presented by:

Michael Raimondi

Executive Vice President

A THOMSON Company

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A THOMSON Company

Who is WEFA?

n The original economic forecasting firm started at the request of

business leaders who wanted objective, independent forecasts

for business planning and analysis.

n Founded in 1963 by Lawrence R. Klein, winner of the 1980Nobel Prize in Economics.

n WEFA stays at the forefront of economic and market analysis

and forecasting.

n WEFA uses its expertise to help clients understand the effects

of global, national, and local economic conditions on their

business by product line and market segment.

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Market Planning Applications

Objective

n WEFA develops and provides detailed marketing data and

forecasts to support tactical and strategic business decision-

making for telecommunications services businesses.Marketing Focus

n By Line of Business -- Products and Services

n By Market Segment -- Business or Consumer Groups

n By Geographic Area -- Standard and Client Defined Areasn By Business Location or Household

n Analyze Segment Size, Growth, and Future Potential

n Identify Opportunities and Risks and Target Direct Marketing

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Market Planning Needs

n How big is each market segment defined by industry, by

business size class, by consumer group, by geographic

location, and by product usage?

n What does this indicate about our market share for eachsegment and geographic area?

n What are the underlying growth prospects for each segment?

n How can I take advantage of the best market opportunities,

protect our vested-interest segments, and avoid some of the

risks in the market?

n What do the size and growth estimates imply about the best

sales prospects for our products?

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WEFAs Analytical Process

WEFAs Integrated Approach to

Market Segment Analysis and Forecasting

The Insight of Market Research.

The Scope of Database Integration.

The Precision of Quantitative Analysis.

The Foresight of Econometric Forecasting.

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A Solid Network of Models

WEFAs Comprehensive International/US/Industry/Regional

WEFAs Business Demographic Modeling System

WEFAs Household Demographic Modeling System

Public Use Databases

Integrated Data

Solutions

Client Databases

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Database Integration

n The Input-Output tables provide the initial distribution across

all 4-digit SIC code industries.

n The detailed data on employment by occupation and

information technology spending by industry identify usagecharacteristics by industry by service.

n The government and association data provides top-line

benchmarks and state-level guidelines.

n The statistical relationships and quantitative methods lend

consistency and rigor to the intermediate and final results for

all products, industries, and states.

n Allocations are made to all counties and ZIP codes.

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Numerous Data Sources

n Federal Communications Commission

n US Telephone Association

n Cellular Telecommunications Industry Association

n MultiMedia Telecommunications Association

n Survey of Communications Services

n Input-Output Tables of the US Economy

n Economic Census and County Business Patterns

n Current Population and Consumer Expenditure Surveys

n Industry-Occupation Matrix

n Clients Customer and Primary Data for Custom Solutions

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Segment Sizing

The Business Market

n Employment

n Establishments

n Output

n Occupation Distributions

n By 4-digit SIC

n By State, MSA, County,

and ZIP Code

The Residential Market

n Population

n Households

n Income

n Occupation Distributions

n By Age/Income Cohort

n By State, MSA, County,

and ZIP Code

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Telecom Coverage

Services

n Total Spending

n Local Service Spending

n Long Distance Service

Spending

n Cellular Service Spending

n Toll Free Spending

n Data Communicationsn Voice Communications

n ATM, Frame Relay, DSL, IP

Products

n Access Lines

u Switched

uHigh Capacity

n Stations

uTelephone

uOther (e.g. modems, fax

machines)

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Expected Revenue Growth in the U.S.(Compound Annual Rates, 2000-2005)

Voice Data

2.9%

17.4%

Voice vs. Data Transmission

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Total Telecom Spending

Top/Bottom 5 Industries Based on Expected Growth(Millions of Dollars, Compound Annual Rates 2000-2005)

Total Spending %Growth

2000 2005 00-05

Health Services 10,724 17,082 9.8%

Transportation By Air 2,593 4,082 9.5%

Business Services 17,274 26,450 8.9%

Government 19,157 29,131 8.7%

Motion Pictures 685 1,026 8.4%

Coal Mining 71 84 3.3%Retail, Apparel 783 915 3.2%

Mfg, Leather Products 39 44 2.4%

Farming, Livestock 422 458 1.6%

Farming, Crops 481 516 1.4%

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Voice Telecom Spending

Top/Bottom 5 States Based on Expected Growth(Millions of Dollars, Compound Annual Rates 2000-2005)

Voice Spending %Growth

2000 2005 00-05

Utah 1,030 1,598 9.2%

Idaho 685 967 7.1%

South Dakota 337 470 6.8%

Colorado 2,736 3,788 6.7%

Arkansas 901 1,218 6.2%

Pennsylvania 4,238 4,416 0.8%West Virginia 479 498 0.8%

New York 10,242 10,520 0.5%

New Hampshire 617 633 0.5%

Dist of Columbia 1,010 937 -1.5%

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Voice Telecom Spending

Top/Bottom 5 Industries Based on Expected Growth(Millions of Dollars, Compound Annual Rates 2000-2005)

Voice Spending %Growth

2000 2005 00-05

Health Services 8,300 10,962 5.7%

Business Services 13,524 17,568 5.4%

Transportation By Air 1,935 2,450 4.8%

Amusement, Recreation 1,340 1,653 4.3%

Legal Services 2,907 3,579 4.2%

Mfg, Tobacco Products 44 42 -1.0%Coal Mining 51 48 -1.2%

Mfg, Leather Products 29 26 -1.9%

Farming, Livestock 314 262 -3.6%

Farming, Crops 357 295 -3.8%

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Data Telecom Spending

Top/Bottom 5 States Based on Expected Growth(Millions of Dollars, Compound Annual Rates 2000-2005)

Data Spending %Growth

2000 2005 00-05

Utah 376 925 19.7%

Idaho 187 459 19.6%

New Mexico 243 590 19.5%

Nevada 284 685 19.2%

Arizona 733 1,763 19.2%

Pennsylvania 1,386 2,923 16.1%Dist of Columbia 259 545 16.0%

West Virginia 162 337 15.7%

Connecticut 388 791 15.3%

Delaware 83 168 15.2%

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A THOMSON Company

Data Telecom Spending

Top/Bottom 5 Industries Based on Expected Growth(Millions of Dollars, Compound Annual Rates 2000-2005)

Data Spending %Growth

2000 2005 00-05

Health Services 2,424 6,120 20.3%

Transportation By Air 658 1,632 19.9%

Government 5,409 13,261 19.6%

Business Services 3,750 8,882 18.8%

Amusement, Recreation 388 915 18.7%

Mfg, Tobacco Products 17 31 12.9%Farming, Livestock 109 196 12.5%

Farming, Crops 124 221 12.3%

Coal Mining 20 35 12.2%

Mfg, Leather Products 10 17 11.9%

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Total Telecom Spending

Top/Bottom 5 Countries(Millions of Dollars, Compound Annual Rates 2000-2005)

Total Spending %Growth

2000 2005 00-05

Japan 35,725 54,212 8.7%

United Kingdom 16,174 21,737 6.1%

Germany 15,756 21,970 6.9%

China 13,982 24,888 12.2%

Italy 11,159 16,869 8.6%

Portugal 992 1,625 10.4%Denmark 909 1,304 7.5%

New Zealand 830 1,301 9.4%

Hungry 765 1,294 11.1%

Malaysia 650 947 7.8%

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Voice Telecom Spending

Top/Bottom 5 Countries(Millions of Dollars, Compound Annual Rates 2000-2005)

Voice Spending %Growth

2000 2005 00-05

Japan 26,253 33,320 4.9%

United Kingdom 12,120 13,641 2.4%

China 11,975 17,603 8.0%

Germany 11,958 14,066 3.3%

Italy 8,646 11,035 5.0%

Portugal 793 1,054 5.9%Denmark 697 874 4.6%

Hungry 632 914 7.7%

New Zealand 631 714 2.5%

Malaysia 533 702 5.7%

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Benefits

n More finely segment markets by industry, consumer segment,

geographic area, application, and location.

n More accurately measure penetration into each segment on a

total revenue or a revenue per employee basis.n More carefully target key new markets, while still protecting

vested-interest business segment and accounts.

n More effectively allocate sales and marketing resources.

n

More equitably set sales targets and measure performance.n More precisely forecast sales nationally, regionally, and locally

by market segment.

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Results

Watch Sales GrowDetailed Market SegmentData and Forecasts

Better information

Better decisions

Better allocations

Better performance

Even in a fast-pacedmarket, you can do better. 1999 2000 2001

$6.0B

$4.9B

$4.2B

Extra

$150M

Extra

$300M

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A THOMSON Company