Windstream Communications

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What the New FCC (and other regulators) Can Do
To Get it Right MARC - Traverse City,
MI Jeff Gardner - President and CEO June 16,
2009
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Windstream is . . .
A heavily regulated ILEC competing against
lightly regulated communications and
entertainment providers rural focused.
Business Overview As of March 31, 2009
Rural Markets Geographically Diverse Serving 16
States

• Access Lines 3M
• Long-distance customers 2M
• High-speed Internet customers 1M
• Digital TV (via DISH) customers 295K
• Since 2002, WIN has lost roughly 25 of its voice
  customers (and WIN leads the industry with the
  lowest rate of access line erosion!)

Not heavily reliant on FUSF

• Less than 2.50 per line monthly

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Serving rural consumers . . .
Competitive Environment
Low Density
Access Lines per Square Mile
(1)

• 60 of lines have cable voice competition
• 75-80 of lines have broadband competition
• 100 of lines have wireless competition

• Following the upcoming CTL/EQ and FTR/VZ
  transactions, WIN will have the fewest access
  lines per square mile of mid-size group

Notes (1) Windstream access lines excludes
CATV and CLEC lines Source Public filings and
investor presentations
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Our business objectives are aligned with
policymakers objectives . . .
Video Penetration of Total Access Lines
HSI Penetration of Total Access Lines
Year-over-Year Change in Access Lines
Internet speed availability ( of addressable
lines)
Data as of 3/31/09
Source Public filings and Analyst Reports
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But regulation and market realitiesare in
conflict . . .

• Then Monopoly era social compact -- exclusivity
  benefit vs. COLR burden reliance on implicit
  subsidies.
• Now Fierce competition for higher profit
  customers between multiple facilities-based
  providers using various technologies. Inadequate
  support in high-cost areas for mid-sized ILECs.
• Current regulatory regime is not sustainable.
  Reform urgently needed to reflect modern market
  realities, such as
• Technology neutral regulatory parity
• Sufficient, sustainable, and explicit universal
  service/inter-carrier compensation

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