Global Telecommunications Primer

MORGAN STANLEY DEAN WITTER

Equity Research June 1999 Global Telecommunications

A Guide to the Information Superhighway

The Global Telecommunications Team 118 MORGAN STANLEY DEAN WITTER

Telecommunications Service Providers: A Guide

The major difference among carriers is whether they are The incumbents can be further divided between local ex- wireless or wireline operators. Some carriers specialize in change carriers and long distance carriers. Incumbent local one service, but many wireline companies overlap in that exchange carriers (ILECs) held (and, in some cases, still they have units or subsidiaries that operate in the wireless hold) the dominant position in the local calling market. In market. These companies are grouped in the wireline cate- most markets, this dominant position is being eroded by the gory, since that still forms the primary component of their entrance of competitors. Like the dominant local players, business. The wireless companies can be further divided the incumbent long distance carriers once (and often still do) between those providing mobile telephony and those offer- held a dominant or monopolistic position. Long distance ing paging services. Some wireless providers offer both carriers, regardless of whether they are incumbents or not, mobile telephony and paging. are considered to be interexchange carriers (IXCs). Unless they simply resell another IXC’s lines, interexchange carri- We have put telecommunications service providers into one ers own the switching and transmission equipment (fiber of seven categories, and in some cases more than one cate- optic cables, microwave towers, multiplexing equipment, gory. Throughout the world, the names of the categories and switches) that carry long distance calls. In many mar- may differ, but the fundamental qualities of those inhabiting kets, the state-run monopoly in the local market is the same that realm of the telecom market are the same. The seven state-run monopoly in the long distance market. Both local categories are: incumbent local exchange carrier, incumbent and long distance incumbents are being threatened by what long distance carrier, competitive local exchange carrier, we have termed alternative carriers. long haul fiber provider, competitive international carrier, wireless phone carrier, and paging services companies. Alternative carriers are the new entrants to the telecom markets. Through deregulation, or the breakup of monopoly Incumbent carriers are those that have been in the market players, potential profit opportunities have been opened up. for a long period of time. Typically, they were monopoly New entrants have seized upon this opportunity and are en- licensed and often run by the state. This is changing as tering the global telecom markets. The rapidity with which these state-owned incumbents are privatized and regulators they are entering varies across regions, depending on the loosen their monopolistic hold. regulatory status of the market. Alternative carriers have

Figure 1 Telecommunications Service Provider Classification

Telecommunications Service Providers

Incumbent Service Providers Alternative Service Providers Wireless Service Providers

Cellular Local Carrier Long-Distance Competitive Local Long-Haul Fiber Competitive Paging (ILEC) Carrier (IXC) Carrier (CLEC) Provider International Carrier Service Provider Provider

Source: Morgan Stanley Dean Witter Equity Research

This memorandum is based on information available to the public. No representation is made that it is accurate or complete. This memorandum is not an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. Please refer to the notes at the end of this report. MORGAN STANLEY DEAN WITTER 119

typically entered the telecom markets in one of three areas: own lines. Fiber providers may simply lay fiber optic lines local, long distance, or international long distance. and sell them to interexchange carriers, they may lay lines and resell service from IXCs, or they may lay lines and offer Competitive local exchange carriers (CLECs) are new en- their own service over these lines. The huge growth in data trants in the local market, directly challenging the incum- traffic has caused an explosion in the long haul fiber pro- bent local provider. They mount a challenge typically vider market, as competitors rush to meet demand expecta- through one of three strategies. First, a local competitor tions. may simply resell the incumbent’s service. Resale typically results in slim margins. In addition, the reseller is depend- The third type of alternative carrier is the competitive inter- ent on the incumbent. Second, a local competitor may in- national carrier. These competitors challenge the traditional stall some of its own equipment, giving it slightly higher international long distance companies (which are usually the margins and a bit more independence from the incumbent. largest of the incumbent domestic long distance carriers). Third, a local competitor may build out its own facilities. Typically, competitive international carriers run lines be- This strategy requires a great deal of capital expenditures, tween countries or continents. Like the long haul fiber pro- but offers the greatest margins and independence from the viders, competitive international carriers may simply sell the incumbent carrier. fiber they have installed, or they may offer telephone service over their lines. When offering service, they typically Another type of alternative carrier is the long haul fiber pro- make their profit from the tariff differentials between coun- vider in the long distance market. Fiber providers challenge tries. the incumbent long distance providers by constructing their

Table 1 Asian Telecom Carrier Breakout

Incumbent Carrier Alternative Carrier Wireless Carrier Competitive Local Long Compeitive Long-Haul International Market Distance Local Fiber Carrier Mobile (ILEC) (IXC) (CLEC) Provider (CIC) Telephony Paging

Advanced Info Service XX China Telecom (HK) X Chunghwa Telecom X X X Hongkong Telecom X X X Indosat X MTNL X Phil. Long Distance Tel. X X PT Telkom X X Singapore Telecom X X X X SK Telecom XX SmarTone Mobile Comm. X Technology Resource Ind. X X X X TelecomAsia X Telecom Corp. of New Zealand X X X X Telekom Malaysia X X X Telstra X X X Thai Telephone & Telecom. X Total Access Comm. X VSNL X

Source: Morgan Stanley Dean Witter Equity Research

Table 2 Japanese Telecom Carrier Breakout

Astel X DDI XX Digital Tuka X IDC X IDO X ITJ (now merged with Japan Telecom) X Japan Telecom X J-Phone X KDD (International) X Local Regional NCCs (TTNet) X NTT X NTT (Domestic) X NTT DoCoMo XX Regional players X Teleway (now merged with KDD) X Tuka X

Source: Morgan Stanley Dean Witter Equity Research

Table 3 European Telecom Carrier Breakout

Incumbent Carrier Alternative Carrier Wireless Carrier Competitive Local Long Competitive Long-Haul International Market Distance Local Fiber Carrier Mobile (ILEC) (IXC) (CLEC) Provider (CIC) Telephony Paging

British Telecom X X X X Cable & Wireless Communications X X X Cable & Wireless (see main subsidiaries) - Optus (Australia) X X X X - One2One X - see also CWC (above) - see also Hongkong Telecom (Asia) COLT Telecom X X Deutsche Telekom X X X X Energis XX Equant (NB: price in US$) X Europolitan X France Telecom X X X KPN X X X X Mannesmann X X X MATAV X X X X Netcom X Netcom Systems X NTL XXX Orange XX OTE X X X X Portugal Telecom X X X X Rostelecom X Samara Svyazinform X XX Securicor X SPT XX XX Swisscom X X Telecel X Telecom Italia X X Telecom Italia Mobile X Telefonica XX XX Telekommunikacja Polska X X X X TeleWest X X Uralsiazinform X XX Vimpelcom X Vodafone XX Source: Morgan Stanley Dean Witter Equity Research

Table 4 Latin American Telecom Carrier Breakout

CANTV X X X X CTC X X X X Embratel X Iusacell XX T. C. Sul X X T. N. Leste X X Tel. del Peru X X X X Tele Cel. Sul X Tele Centro Oeste X Tele Leste Cel. X Tele Nordeste Cel. X Tele Norte Cel. X Tele Sudeste Cel. X Telecom Argentina X X X X Telefónica de Argentina X X X X Telemig Cel. X Telesp X X Telesp Cel. X Telmex XX XX Tricom X X X X

Source: Morgan Stanley Dean Witter Equity Research

Table 5 North American Telecom Carrier Breakout

AirTouch X Aliant Communications X Alltel X X Ameritech Corporation X X Arch Communications X AT&T X X BCT.Telus X Bell Atlantic X X Bell Canada X Bellsouth X X Call-Net Enterprises X CellNet Data Systems* X Century Telephone X Citizens Utility X Clearnet Communications X Electric Lightwave X Frontier Corp. X Global Crossing X GST Telecommunications X ICG Communications X IDT Corporation X Intermedia X IXC Communications X MCI Worldcom X McLeod USA X Metrocall X MetroNet Communications X Nextel X Pacific Gateway Exchange X Paging Network X Powertel X Primus X Qwest Communications X Rogers Cantel X RSL Communications X SBC Communications X X Sprint Corporation X Sprint PCS X US West X X Viatel, Inc. X Winstar Communications X

Source: Morgan Stanley Dean Witter Equity Research

Glossary of Terms

Access: Point at which entry is gained into a circuit or a Alphanumeric: A message or other type of readout con- network interconnection; may be switched or dedicated. taining both letters (“alphas”) and numbers (“numerics”). In cellular, “alphanumeric memory dial” is a special type of Access Charge: Fee paid by long distance carriers to local dial-from-memory option that displays both the name of the telephone companies for use of local facilities; amount paid individual and that individual’s phone number on the cellu- by telephone subscribers to obtain access to local networks. lar phone handset.

Access Line: Circuit between a subscriber and a switching Alternate Access Carriers: Local exchange carriers in center. direct competition with the regional Bell operating companies (RBOCs). Normally found only in the larger metro- Active: Using electricity for generation or regeneration of politan areas. signals. See “passive.” Alternative Operator Services: Operator services pro- ADSL (Asymmetric Digital Subscriber Line): A member vided by an authorized company other than a local exchange of the digital subscriber line family of copper loop enhanc- carrier, regional Bell operating company, or AT&T. ing technologies (see “DSL”), ADSL is asymmetric, meaning that it provides faster transmission rates downstream AM (Amplitude Modulation): The simplest carrier than upstream. It is therefore well suited to fast Internet modulation technique, where the radio frequency carrier’s access, where requests for Web pages and e-mail sent gen- amplitude envelope is modulated. erally require less bandwidth than the receipt of multimedia and Web pages. ADSL is not well suited for business appli- AMPS: Advanced mobile phone system. The current ana- cations that require symmetric communication, such as log cellular FM system in North America. It uses 30 KHz videoconferencing and two-way file transfer. channels, and signaling is done superaudio.

Adjacent Channel Interference: Refers to interference Analog: The traditional method of modulating radio signals caused by the energy from a transmitting channel spilling so that they can carry information. Analog signals are over into an adjacent channel. measured by their frequency, or, the number of times per second that an electromagnetic wave swings back and forth Advanced Intelligent Network (AIN): An advanced ar- in a complete cycle. The higher the speed/frequency, the chitecture for a telephone network. Its foundations are built more cycles of waves are completed in a period of time. on the evolution of computer-based switches and Signaling This speed is measured in hertz (Hz). System 7. ARPU (Average Revenue Per User): A primary element Airtime: Actual time spent talking on a cellular telephone. of valuation and analysis of wireless companies. It reflects Most carriers bill customers based on how many minutes of the average amount of revenue generated by each sub- airtime they use each month. scriber.

Alert: Constant 10 KHz signaling tone sent on the reverse Asynchronous Transmission: Mode of data communica- voice channel (by the mobile), in an analog conversation, tions transmission in which time intervals between trans- while the mobile phone is ringing. mitted characters may be of unequal length.

All-optical networks: Networks that are entirely optical, ATM (Asynchronous Transfer Mode): A high-bandwidth and therefore avoid the cost and time delays inherent in packet switching and multiplexing technique. Each cell in a converting optical signals to electric signals and vice versa. stream is presented to the network on a “start-stop” basis

(asynchronously), rather than having a circuit or a regular Cable Modem: Offers high-speed, broadband access serv- time slot reserved for the stream. ice over hybrid coaxial cable, providing up to 27Mbps of bandwidth. Attenuation: Weakening of the radio frequency signal due to being partially blocked or absorbed. CAP (Competitive Access Provider): A company, other than a local exchange carrier, regional Bell operating com- ATU-C: ADSL terminal unit central office. Terminal pany, or AT&T, that provides its customers with an alterna- nearer the central office or remote network node. tive to the local telephone company for local transport of private line, special access, and interstate transport of ATU-R: ADSL terminal unit remote. ADSL terminal switched access telecommunications services. CAPs ini- nearer to the subscriber. tially built out their own facilities, requiring a great deal of Automatic Call Distributor (ACD): Device that handles capital expenditures. With the Telecommunications Act of heavy incoming call volume. 1996, competitive carriers were offered more options — building out their own facilities (what CAPs did) and re- Backbone: Network of broadband connections between selling local service. Today, competitive carriers in the lo- switches. cal market are broadly termed CLECs (competitive local exchange carriers). Back-haul: Routing of a call that appears to take an illogi- cal path through a communications network. Call Detail Record (CDR): Computer record containing data unique to a specific call. Bandwidth: A measure of data sent through a connection. Call Forwarding: A feature allowing the subscriber to Base Station: A multi-circuit transceiver located at the forward a call to another telephone number. center of a cell whose primary purpose is to handle all incoming and outgoing calls within the cell. Call Processing: The complete process of routing, origi- nating, and terminating cellular telephone calls, along with Bell Operating Company: The local (or regional) tele- the necessary billing and statistical collection processes. phone company that owns and operates lines to customer locations and central office switches. BOCs have connec- Call Setup: The call processing events that occur during tions to other companies, Tandem (Class 4 Toll) offices, and the time a call is being established, but not yet connected. may connect directly to interexchange carriers like MCI WorldCom, AT&T, and Sprint. Call Waiting: A feature that alerts the subscriber if another call comes in during a current conversation. The user can Beta Test: A secondary product test performed by a se- answer the call waiting, but cannot connect all parties (con- lected set of “early support” end-user(s) or customer(s) (un- necting all parties is considered a conference call). der special contract) prior to the general availability of that product. Capacity: The highest possible reliable transmission speed that can be carried on a channel, a circuit, or piece of Block Calls: Prevent calls from being completed to the equipment. requested destination. Carrier: The operating frequency of a wireless system. Bottleneck: A system capacity constraint that may reduce traffic during peak load conditions. Carrier Pre-selection: a standard regulatory mechanism for allowing consumers access to a selected long distance op- Broadband: Transmission facility having a bandwidth erator’s services through nomination. greater than 20 KHz; capable of high-speed data transmission. Carrierless Amplitude Modulation/Phase Modulation. A technology that can be used in ADSL. Current standards put emphasis on discrete multitone (DMT) technology.

CDMA (Code Division Multiple Access): In a CDMA Clear Channel: Channel in which the full bandwidth (e.g., system, each voice circuit is labeled with a unique code and 64 Kbps) is used for transmission; no portion of the channel transmitted on a single channel simultaneously with many is set aside for control, framing, or signaling. other coded voice circuits. This allows for greater bandwidth Click Tone: A particular progress tone injected onto the forward voice channel (mobile unit receive, base station CDPD (Cellular Digital Packet Data): Sending digital transmit) to indicate to the subscriber that the call has not data over the existing advanced mobile phone system by been abandoned by the system. transmitting dense packets on vacant analog channels. Coaxial Cable: Cable capable of carrying much higher Cell: The radio frequency coverage area in the cellular bandwidth than copper wire due to its fabrication with one system resulting from operation of a single multiple-channel or more pairs in a single sheath. set of base station frequencies. Co-carrier Status: A relationship between a CLEC and an Cell Splitting: A means of increasing the capacity of a incumbent LEC that gives each entity the same access to the cellular system by subdividing or splitting cells into two or other’s network and provides access and services on an more smaller cells. equal basis.

Central Office (CO): The switching office that connects Cochannel Interference: The interference caused between the mobile telephone switching office (MTSO) to the public two cells transmitting on the same frequency within a net- switched telephone network (PSTN). work.

Centrex: A service that offers features similar to those of a Coder: Transforms analog signals into digital signals. private branch exchange (PBX), except the equipment is located at the carrier’s premises and not at the premises of Collocation: The ability of a CAP to connect its network to the customer. the LEC’s central offices.

Centrex Resale: A means for competitive carriers to enter Common Carrier: Government-regulated, private com- the local market, reselling the centrex switching service that pany that furnishes the public with telecommunications the incumbent would typically provide. services and facilities (e.g., telephone or telegraph company). CGSA (Cellular Geographic Service Area): The actual area in which a cellular company provides cellular service. Competitive Access Provider: See CAP.

Channel: A unique radio frequency that is used for com- Competitive Checklist: Fourteen points laid out by the munication between subscriber unit and cell site base sta- Federal Communications Commission that the regional Bell tion. operating companies (RBOCs) must comply with before they are allowed to sell long distance services. The “Com- Circuit Switching: Method of communications where an petitive Checklist” is designed to ensure that the RBOCs electrical connection between calling and called stations is have opened their networks to competition. established on demand for exclusive use of the circuit until the connection is released. Connection-Oriented Service: The transport of packets of information from one network node to a destination node CLEC (Competitive Local Exchange Carrier): A com- following an established network connection. petitive access provider (see CAP) that also provides switched local telecommunications services. (Also see Connectionless Service: The transport of a single LEC) datagram or packet of information from one network node to a destination node or multiple nodes without establishing a network connection.

Constructive Interference: Interference that occurs when Dial-Up Line: Communications circuit that is established waves occupying the same space combine to form a single by a switched circuit connection. stronger wave. Digital: A method of storing, processing, and transmitting Contention: The process whereby multiple users make information through the use of distinct electronic or optical requests for transmission bandwidth across a transmission pulses that represent binary digits (0 and 1). link but the pool of bandwidth is less than the aggregate amount of bandwidth the users could request. Digital Modulation: A method of encoding information for transmission that we expect will eventually replace ana- Control Channel: A unique channel used by each base log transmission. station dedicated to the transmission of digital control information from the base station to the mobile unit. Digital Transmission System: Information is transmitted in a series of pulses, and the signal can be regenerated. Copper Twisted Pair: A standard phone line made up of two copper wires wrapped around each other. Direct Sequence: A pseudorandom code is added to the data signal that increases the modulation rate and signal Correlator: The receiver component that demodulates a bandwidth. spread spectrum signal; a device that measures the similarity of an incoming signal and a stored reference code. Divestiture (AT&T): On January 8, 1982, AT&T signed a consent decree with the U.S. Department of Justice. It Coupler: A component used to combine or split an optical stipulated that as of January 1, 1984, AT&T would divest signal. itself of its 22 telephone operating companies, which were then formed into seven regional holding companies of Cross-Correlation: A measure of the similarity of two roughly equal size. different signals. DMT (Discrete Multitone): A version of multi-carrier Cross-Talk: Interference of one phone call with another. modulation that allows allocation of payload data bits and transmitter power among more than one subchannel, de- Customer Premises Equipment (CPE): All telecommuni- pending on loss and interference among each subchannel. A cation devised (except pay phones) and wiring that are at the candidate technology for ADSL. user’s location. Downstream Transmission: The transmission coming into Decoder: Transforms digital signals into analog signals. a consumer’s residence or business. Often used with cable Dedicated Access: Connection between a customer’s modems and DSLs to describe the data rate that can be premises and a long distance carrier. achieved by the line coming into the home or office.

Dedicated Lines: Telecommunications lines dedicated to Drop: Portion of an outside telephone plant that extends or reserved for use by particular customers along predeter- from the telephone distribution cable to the subscriber’s mined routes (in contrast to telecommunications lines within premises. the LEC’s public network). Drop Out: A momentary loss of the carrier and sound, or a Destructive interference: Interference that occurs when buildup of background noise when the transmitter is in a waves occupying the same space combine to form a single certain location in the room. weaker wave. Drop Wire: Last part of the loop connecting distribution Dialing Parity: Customers’ ability to access their telecom cable to the customer premises. vendor without having to dial extra digits.

DSL (Digital Subscriber Line): A family of technologies Equal Access: Concept made into law by the 1984 Modi- that provides high-bandwidth transmission over standard fied Final Judgment (MFJ) that all long distance carriers twisted copper wires (regular telephone lines). must have the same access to local facilities as AT&T has.

DS0 (Digital Signal 0): A single voice-grade 64 Kbps cir- Erlang: A dimensionless quantity used in the measurement cuit. of traffic in the cellular system.

DS1 (Digital Signal 1): 1.544 Mbps with a payload of ESMR (Enhanced Specialized Mobile Radio): Digital 1.536 Mbps bi-directional. mobile telephone services offered to the public over channels previously used only for analog two-way dispatch. DS2 (Digital Signal 2): 6.312 Mbps, which can transport four DS1s asynchronously. Ethernet: A proprietary bus network developed by Xerox, Digital Equipment Corporation, and Intel that provides fast DSP: Digital signal processing. transmission speeds.

DTMF (Dual Tone Multi Frequency): Commonly known ETSI (European Telecommunications Standards Insti- as “touch-tones,” this in-bank signaling is made up of two tute): The mission of ETSI is “to produce the technical tones (out of a group of 8) and is used to translate dialed standards that are necessary to achieve a large unified Euro- digits. pean telecommunications market.”

Dual Mode: Personal communication service (see PCS) Execute Source: An order sent to the mobile on the For- telephone compatible with both analog and digital cellular ward Voice Channel telling mobile to change channels. phone systems. Execute Target: An order sent to the cell that a mobile is Dual Tone Multifrequency (DTMF): Type of signaling being handed off to, informing the cell of a pending arrival that combines two distinct frequencies for each indicated of a mobile. digit. Fade: A drop in the received signal strength as a result of DWDM (Dense Wavelength Division Multiplexing): A the transmission’s interactions with the transmission envi- high-speed version of wavelength division multiplexing. ronment. (See WDM). FCC (Federal Communications Commission): The gov- ECH: Echo canceler with hybrid. Used in DSL and HDSL ernment agency responsible for regulating telecommunica- systems. tions in the United States; located in Washington, D.C.

EDFA (Erbium Doped Fiber Amplifier): EDFAs are used FDMA (Frequency Division Multiple Access): Systems for amplifying optical signals in long-haul optical networks. that transmit one voice circuit per channel. Each conversa- Unlike electro-optic repeaters, which convert light to elec- tion gets its own, unique radio channel. tricity, amplify the signal, and then reconvert it to light, EDFAs amplify the light signal itself. EDFAs have advan- Fiber Mile: The number of route miles installed (excluding tages that make them critical components of optical net- pending installations) along a telecommunications path works: they are fast, very simple, and are not frequency- multiplied by the number of fibers along that path. dependent, meaning that networks may be upgraded by in- stalling new wavelength division multiplexing (WDM) Fiber Optics: Means of providing a high-speed transmis- equipment without changing fiber or amplifiers between sion, using light to send images through a flexible bundle of nodes. glass fibers.

Electronic Serial Number (ESN): A 32-bit code that is unique to each mobile unit. Used to validate mobile.

Flat Network: Architecture in which every switch is con- Front-End: The first stage of filtering in a receiver. The nected to every other switch, enhancing routing options as first circuit stage following the antenna input to the receiver. well as survivability. FTTC (Fiber to the Curb): Provision of fiber optic cables FM (Frequency Modulation): Modulation of the radio to the street cabinet, from where copper lines are already frequency based on the frequency of signals (vs. the ampli- connected to buildings. A cheaper alternative to FTTH. tude). FTTH (Fiber to the Home): Deployment of direct fiber Follow-Me Roaming: The ability of the cellular system to optic connections to consumers’ homes, allowing for wide automatically forward calls to a roaming mobile that has left bandwidth connections. FTTH faces technical hurdles (am- its primary service area. plification of signals in the upstream direction), but the most significant factor holding it back is the cost of laying fiber Forced Disconnect: A call processing function that forces optic cables. As such, FTTH is not expected to be the only termination of a call, usually not at the mobile subscriber’s wideband access solution, but will be deployed selectively request. and will co-exist with DSL access solutions over copper pairs. FTTO (fiber to the office) is more prevalent, as large Forward Control Channel (FOCC): A control channel office buildings contain enough users and demand for serv- used for the base station-to-subscriber direction, also known ices to justify the cost of laying fiber. as the control channel downlink. Full Duplex: Refers to a communications system that uses Forward Voice Channel (FVC): A voice channel used in two separate transmit and receive paths to allow simultane- the base station-to-subscriber direction, also known as the ous conversation in two directions. voice channel downlink. GEO (Geosynchronous Earth Orbit satellite): Satellites Four-Wire Line: A two-way transmission circuit using that orbit the earth’s equator at about 22,300 miles above two pairs of conductors, to allow full duplex (simultaneous) earth. In a geosynchronous orbit, the satellite travels at the conversation without multiplexing. same speed as the earth’s rate of spin, so geostationary sat- Frame Relay: Form of packet switching that employs sta- ellites remain at a fixed position in relation to a point on tistical multiplexing over a shared network, intended for use earth. Geosynchronous systems include Inmarsat and Om- between intelligent end-points and implemented over high- niTRACS. quality transmission facilities that connect programmable Grade-of-Service: A measure of what percentage of calls switches. placed through an exchange fail to be completed due to Free Space Loss: The loss of a signal’s power as a result of congestion of that exchange. the signal spreading out as it travels through space. GSM (Global System for Mobiles): The most mature Frequency Hopping: The transmitter hops to one of many digital wireless standard, usually referred to as the “Euro- channels. The receiver knows the sequence of the fre- pean” digital standard. quency hopper and follows each hop. Half-Rate: A variant on GSM; doubles capacity by more Frequency Reuse: The ability to use the same frequencies efficient coding using speech compression. repeatedly within a single system, made possible by the ba- Handoff (inter-cell): The process by which wireless sub- sic design approach for cellular. scribers traveling throughout the system coverage area are Frequency Shift Keying (FSK): The form of frequency switched from cell to cell (and different channels) with bet- modulation that used two separate audio frequencies to ter coverage for that particular area when poor-quality con- transmit binary ones and zeros. versation is detected.

Handoff (intra-cell): The process by which cellular sub- former monopolists are now facing significant competition scribers traveling throughout the system coverage area are from long distance carriers, competitive carriers, cable com- switched from cell sector-to-sector (and different channels) panies, and others that would like to break into the local with better coverage for that particular area when poor- market. quality conversation is detected. Image Rejection: A measure of the ability of the receiver Hands-Free: A feature included with most of today’s car to reject radio frequency signals present on the image fre- phones. It permits the driver to use his cellular car phone quency of the receiver. Image rejection is one of the pur- without lifting or holding the handset to his ear. poses of front-end filtering in a supernet receiver.

Hard-Handoff: A handoff that occurs when the subscriber Incumbent Carriers: Both local and long distance carriers is already using the TPC (three-party-conference) card, and that dominate their respective markets. These carriers are the TPC card cannot be used to aid in a smooth handoff. now facing significant competition from alternative carriers.

Handshaking: A set of signals that coordinate the transfer Infrastructure: All parts of the cellular system, excluding of data from one device to another. the subscriber. Includes the MTSO, base stations, cell sites, and all links among them. Harmonic Filter: Used in the base-station and subscriber transmitter circuits to remove unwanted harmonics from Interface: A common boundary between two or more sys- being transmitted and radiated by the antenna. tems, integrated circuits, or pieces of equipment that ensures a proper connection between them. HDSL: High data rate DSL service that symmetrically de- livers 1.544 Mbps over two sets of copper twisted pair, Integrated Services Digital Network (ISDN): Switched which is the same rate as a T-1 type connection. network providing end-to-end digital connectivity for the simultaneous transmission of voice, data, video, imaging, Hybrid: A circuit used in telephony to convert two-wire to and fax over several multiplexed communications channels. four-wire operation and vice-versa. InterLATA Calls: Calls that pass from one local access IDEN technology (Integrated Digital Enhanced Net- and transport area (LATA) to another. work): Technology developed by Motorola for use by ESMR operators. Intermodulation: Also referred to as “IM.” The mixing of two or more signals, producing sums, differences, and har- Idle Channel: A channel that is assigned for use by a base monic multiples. station but is not currently in service (being used). IP Address: The Internet protocol address, which is a 32- IEC (Independent Exchange Carrier): A local carrier bit address assigned to an Internet host. that was never part of the AT&T monopoly. IECs often serve smaller, less populated markets than the Baby Bells. IP (Internet Protocol): A standard that keeps track of net- When serving this function, the independents are sometimes work addresses for different nodes, routes outgoing mes- referred to as rural local exchange carriers (RLECs). sages, and recognizes incoming messages.

IF (Intermediate Frequency): Refers to the resulting sig- IntraLATA: IntraLATA calls, also known as short haul nal in a supernet receiver after the incoming carrier is mixed calls, are local calls that originate and terminate within the with the oscillator. same local access and transport area (LATA).

ILEC (Incumbent Local Exchange Carrier): ILECs gen- Isolator: A component used to prevent light signals from erally at one time or another were franchised as a monopoly traveling in a second, unwanted direction. service provider. In most areas of the world, the incumbent carriers still dominate the local market. In the U.S., these

ISP (Internet Service Provider): A company that provides LEC (Local Exchange Carrier): Local exchange carriers Internet access to customers. are typically the first and final link between customers and the party that is called. Also see CLEC and ILEC. IXC (Interexchange Carrier): A long distance service provider. The term “interexchange carrier” derives from Local Loop: Communications lines/services between the local markets being divided into sub-groups, termed local telephone subscriber and the phone company switching exchanges. Calls between local exchanges are interex- center. change calls and are carried by interexchange carriers. Mbps: 1 million bytes per second. J-TACS (Japan Total Access Communication System): Narrowband analog cellular FM system used in Japan. Megahertz (Mhz): 1 million cycles per second.

Kilobit (Kbs): One thousand bits of information. MEO: Medium earth orbit satellite. These satellites fall in the range between LEOs and GEOs. LAN (Local Area Network): A narrow range data network using packet switching and multiple access technology. Message Telephone System (MTS): Generic name for switched long distance service offered by all long distance Last Mile: A telecommunications network’s final connec- carriers. tion to customers. It is still most often a copper line carrying an analog signal. This final signal is not a large problem MFJ (Modified Final Judgment): See “Equal Access.” for voice communications, but the explosion in data com- Microwave Radio: A means of transmitting signals. It is munications (faxes, e-mail, Web surfing, etc.) has made this used to send long distance signals through the air between last mile bottleneck a major issue in the telecommunications microwave towers. Before 1976, these microwave signals industry. were only analog. In 1976, this service was upgraded so LATAs: The geographically defined local access and that digital signals could be transmitted as well. transport areas in which LECs are authorized to provide MOIC (Micro-Optic Integrated Component): Integrates local exchange services. two or more individual single-function components. Late Target Channel Keyup: A condition when the target MTSO: Mobile telephone switching office. cell does not receive the execute target order in time for the arriving mobile, caused by link delays between the mobile Multiplexing: The transmission of two or more signals over telephone switching office and target cell site. a single channel.

LEO (Low Earth Orbit satellite): Satellites that circle the Number Portability: The ability of an end-user to change earth at an altitude of 435–1,000 miles. Iridium and Global- local exchange carriers while retaining the same telephone star are based upon LEO systems. number.

Line Side and Trunk Side: Line side is the circuit from a Off-Net: A customer that is not physically connected to a subscriber’s telephone to an end or central office; trunk side service provider’s network. is circuit termination that connects other central offices and the toll network. On-Net: A customer that is physically connected to a service provider’s network. Little LEO: Relatively small and inexpensive satellites that provide low-cost, low-data rate, two-way digital communi- Optical Amplifier: An amplifier of optical signals. The cations, and location positioning to small handheld termi- most popular optical amplifiers are EDFAs. nals. Out-of-Band Signaling: Use of a separate data link that is not in the voice circuit to transmit call set-up and automatic

number identification (ANI) information from carrier to Portability, 800: Result of a Federal Communications carrier, or from carrier to customer. Commission ruling to provide equal access for 800 users. As of May 1, 1993, subscribers became owners of their 800 Packet Switching: The method used to transmit data on numbers. data networks. Unlike the public switched telephone network, packet-switched networks do not reserve a circuit Post, Telephone, and Telegraph (PTT): International between end points. Instead, they break up messages or administration, usually government controlled, that manages files into many small packets. Each message packet may and operates postal and telecommunications services outside take a different route from origin to destination, traveling the country; typically a monopoly operation. along network circuits that are shared with packets from other messages. Private Line: Point-to-point telephone line for the exclusive use of one party. Passive: without using electricity. Passive components include splitters and isolators. A key goal of the fiber optic Protocol: The conventions used in a network for establish- industry is to increase penetration of passive components, ing communications comparability between terminals, and because they do not require power, are reliable, and are for maintaining the line discipline while they are connected faster than active components because they stay within the to the network. optical realm. RADSL (Rate Adaptive DSL): This high-speed form of PBX (Private Branch Exchange): A switching system data transmission is derived from ADSL technologies and is within an office building that allows calls from outside to be geared toward the residential market, with a few added fea- routed directly to the individual instead of through a central tures. RADSL automatically adjusts line speed based on the number. condition of the line. In areas where there is a large vari- ance in the distance between the central office and the sub- PDM (Packet Division Multiplexing): Different applica- scriber, RADSL helps to provide a more consistent service tions are assigned to different packets within the message for subscribers. frame, instead of different time slots, as with TDM. RBOCS (Regional Bell Operating Companies): Local Personal Communication Services (PCS): Emerging exchange carriers. The seven regional Bell operating com- technologies providing wireless users with a complete panies formed as a result of the breakup of AT&T. Each communications system. Users receive all of the features of RBOC was granted a distinct geographic territory, or local digital wireless telephony, plus enhanced features such as access transport area (LATA), in which they could operate. voice mail, alphanumeric paging, and others. Ameritech, Bell Atlantic, BellSouth, NYNEX, Pacific Tele- sis, Southwestern Bell Communications (SBC), and U.S. Physical Collocation: Occurs when a CAP or CLEC West retained the Bell logo and the right to sell local and places its own network connection equipment inside the toll calling within the LATA. LEC central office. RFI: Radio frequency interference. POTS (Plain Old Telephone Service): Voice telephone service as we know it today. Reciprocal Compensation: An arrangement that provides for equal compensation for CAPs and LECs when termi- Point of Presence (POP): Physical location within a local nating local calls on their respective networks. access and transport area (LATA) at which a long distance carrier’s trunk lines are linked to the local carrier’s network. RLEC (Rural Local Exchange Carriers): These carriers are incumbents in local markets. They were never part of POP: Short for population. Commonly used as a measure the AT&T monopoly system. of the potential market for a cellular or PCS provider. Roaming: Occurs when cellular customers leave their cellular carrier’s home area. This used to result in significantly

higher per-minute rates; however, with the advent of Switched Access Transport Services: Transportation of AT&T’s and now other’s one-rate plans, these roaming switched traffic along dedicated lines between the LEC charges are being eliminated. central offices and long distance carrier’s point of presence.

Service Control Point (SCP): Special computers that Switched Traffic: Telecommunications traffic along the manage call processing; stores and sends instructions to public switched network. The traffic is switched at the local communications network switches to provide specific serv- exchange carrier’s central office. ices. T-1 Line: A copper connection that allows for speeds up to Service Switching Point (SSP): Computerized switches in 1.544 Mbps through the use of multiplexing technology. a local exchange carrier network that distinguish 800 calls from ordinary telephone calls. TDMA (Time Division Multiple Access): A form of multiplexing in which different packets of data are assigned to Signaling System 7 (SS7): Sophisticated network signaling different time slots, allowing for much greater transmission system that uses out-of-band signaling, where signaling in- speeds. formation is sent over a channel separate from the call itself. Telecommunications Act of 1996: The primary focus of Smart-Build: A strategy competitors use to enter the local this legislation is laying out guidelines for opening up com- market. The competitor owns the switching equipment, petition in the local market. which allows it to switch incoming calls and receive fees from long distance carriers, and leases the incumbent’s lines Telecommunications Relay Service (TRS): Provides (which would require a great deal of time and money to hearing-impaired individuals the ability to communicate build). with others via 800 access using a telephone or terminal.

Switched Access: Method to test telecommunications cir- Telco: A telephone company. cuits using electromechanical circuitry. TCP (Transmission Control Protocol): Data application SDH (Sychronous Digital Hierarchy): A set of fiber optic protocol used on the Internet to automatically retransmit communication standards, similar to SONET but established packets that are lost during transmission. by the ITU (International Telecommunication Union). Total Service Resale: A strategy used to enter the local SONET (Synchronous Optical NETwork): A fiber optic market. It is the resale of all of the incumbent’s services. communications standard established by the American Na- The competitive entrant uses none of its own equipment; tional Standards Institute (ANSI) that covers multiple data rather, it relies entirely on the incumbent — typically, one transfer rates from 51.84 Mbps to 13.22 Gbps. It defines a of the RBOCs. The competitor leases the lines that the physical interface, optical line rates known as Optical Car- RBOC already has in place. Since it leases a large number rier (OC) signals, frame format, and an OAM&P (opera- of these lines, it receives a discount from the RBOCs, which tions, administration, maintenance, and provisioning) proto- is passed on to customers. col. Trunk: Group of circuits that carry call traffic in and out of Special Access Services: The lease of private dedicated the switch. telecommunications lines or “circuits” along the network of Trunk Line: Interexchange carrier lines that carry traffic a LEC or a CAP, to which lines or circuits run from the long between their points of presence. distance carrier’s point of presence. Unbundled Access: As laid out in the Telecom Act of Splitter: Used to split an optical signal. 1996, unbundled access allows competitors to purchase only Switch: A sophisticated computer that accepts instructions the pieces of the regional Bell operating companies’ net- from a caller in the form of a telephone number. work services that they need to provide local service.

Universal Service Fund (USF): Organized by the federal will be symmetric and suitable only for shorter distances government to ensure that rates charged to high-cost rural than ADSL (asymmetric digital subscriber line). VDSL, customers are consistent with the rates charged to relatively ADSL, and FTTH will likely coexist with each other and low-cost customers in urban and suburban areas. The USF cable modems as broadband access technologies. is funded primarily by monthly customer fees charged to long distance carriers and local carriers in more urban areas. Virtual Collocation: An alternative to physical collocation The Federal Communications Commission administers the in which the CAPs connect their equipment to the LECs’ fund, distributing funds on a monthly basis based on the facilities from a remote location and request that the LEC cost of providing local service. The FCC has committed to install the necessary electronics in its central office, which is this methodology until 2001. then leased by the LEC to the CAP for charges generally higher than the charges for physical collocation. Universal Service Subsidies: Government-granted subsidies for providing rural service. VPN (Virtual Private Network): A private network deliv- ered over a service provider’s shared infrastructure. Upstream Transmission: The transmission from a consumer’s home or office to the network. Voice Grade Equivalent Circuit: One DS-0. One voice grade equivalent circuit is equal to 64 kilobits of bandwidth. Value-Added Network (VAN): Data transmission network that routes messages according to available paths. Assures WDM (Wavelength Division Multiplexing): The multi- that messages are received as sent; provides user security, plexing of optical signals by transmitting them at different high-speed transmission, and conferencing among terminals. wavelengths over the same fiber. Signals are separated by wavelength at the receiving end. VDSL (Very high rate Digital Subscriber Line): A member of the DSL family of copper loop enhancing technolo- Wide Area Telecommunications Service (WATS): Spe- gies (see “DSL”), VDSL is envisaged as the fastest copper cial direct distance dialing toll service whereby a subscriber transmission technology for the local loop. While VDSL installs a dedicated line arranged for either inward or out- protocols have yet to be standardized, it is likely that VDSL ward calls (not both) between the customer’s premises and a specific geographic area.

Morgan Stanley Dean Witter Equity Coverage Universe

Company Ticker Rating Price* Target Price Currency APT Satellite Holdings 1045.HK Neutral 4.00 14.80 Hong Kong Dollar AT&T T.N Neutral 53.25 NA American Dollar AT&T Canada Inc. ATTC.O Outperform 59.88 60.00 American Dollar Advanced Info Service ADVA.BK Neutral 320.00 275.00 Thailand Baht AirTouch ATI.N NAV 108.56 NA American Dollar Aliant Communications ALNT.O Neutral 49.00 NA American Dollar Alltel Corporation AT.N Outperform 72.69 79.00 American Dollar Ameritech Corp. AIT.N Neutral 68.44 NA American Dollar Arch Comms. APGR.O Neutral 2.59 NA American Dollar Asatsu 9747.T Neutral 3,120.00 NA Japanese Yen Asatsu(C) 9747.T Neutral 3,120.00 NA Japanese Yen Asia Satellite Communications 1135.HK Strong Buy 17.55 21.00 Hong Kong Dollar At Home Corporation ATHM.O NAV 103.75 NA American Dollar BCE Inc. BCE.TO Outperform 71.20 86.00 Canadian Dollars Bajaj Auto Ltd. BJAT.BO Outperform 543.10 647.00 Indian Rupee Bell Atlantic BEL.N Strong Buy 55.44 78.00 American Dollar BellSouth Corp. BLS.N Neutral 46.88 NA American Dollar British Telecom BT.L Strong Buy 1,100.90 1,350.00 British Pence CANTV VNT.N Outperform 27.38 33.00 American Dollar CSG Systems International CSGS.O Strong Buy 26.25 50.00 American Dollar Cable & Wireless CW.L Outperform 790.00 1,000.00 British Pence Cable & Wireless Communications CWZ.L Outperform 578.75 800.00 British Pence Cablevision Sys. CVC.A Strong Buy 70.50 NA American Dollar Call-Net Enterprises CN.TO Strong Buy 10.25 18.00 Canadian Dollars CellNet Data Systems CNDS.O Strong Buy 9.50 30.00 American Dollar Century Telephone Enterprises CTL.N Outperform 39.31 51.00 American Dollar China Telecom 0941.HK Neutral 18.35 14.20 Hong Kong Dollar Chubu Electric Power 9502.T Neutral 2,055.00 NA Japanese Yen Chubu Electric Power(C) 9502.T Neutral 2,055.00 NA Japanese Yen Cincinnati Bell CSN.N Outperform 24.06 28.00 American Dollar Citizens Utilit. CZN.N Neutral 10.00 NA American Dollar Clearnet Communications CLNTF.O Strong Buy 12.38 21.00 American Dollar Comcast Corporation CMCSK.O Strong Buy 36.44 NA American Dollar Cox Comm. COX.N Outperform 36.50 NA American Dollar DDI 9433.T Underperform 635,000.00 NA Japanese Yen DDI(C) 9433.T Underperform 635,000.00 NA Japanese Yen Destia Communications Inc. DEST.O Strong Buy 12.50 17.00 American Dollar Digital Telecommunication Corp. DGTL.PS Neutral 2.16 1.60 Philippino Peso Electric Lightwave ELIX.O Neutral 11.75 NA American Dollar Embratel EMT.N Outperform 14.06 NA American Dollar Energis EGS.L Neutral 1,622.80 1,700.00 British Pence Equant SA ENT.N Outperform 88.00 98.00 American Dollar Europolitan EURO.ST Neutral 76.50 82.00 Swedish Krona Fox Entertainment Group FOX.N Strong Buy 27.69 30.00 American Dollar France Telecom FTE.PA Neutral 74.45 NA Euro Fuji Television 4676.T Outperform 642,000.00 756,000.00 Japanese Yen Fuji Television(C) 4676.T Outperform 642,000.00 756,000.00 Japanese Yen GST Telecommunications GSTX.O Outperform 12.19 15.00 American Dollar GTS (Global Telesystems Group) GTSG.O Strong Buy 80.00 120.00 American Dollar Globo Cabo GLCBY.O Neutral 2.75 NA American Dollar Grupo Televisa TV.N Outperform 41.81 53.00 American Dollar Hero Honda HROH.BO Outperform 980.00 750.00 Indian Rupee Hongkong Telecom 0008.HK Neutral 18.50 NA Hong Kong Dollar ICG Communications ICGX.O Strong Buy 20.06 32.00 American Dollar IDT Corp. IDTC.O Outperform 20.38 21.00 American Dollar ITC Delta Com ITCD.O Strong Buy 24.88 36.00 American Dollar Intermedia ICIX.O Outperform 24.75 32.00 American Dollar Iridium World Communications IRID.O Neutral 8.06 NA American Dollar Iusacell CEL.N Outperform 11.25 14.00 American Dollar Japan Telecom 9434.T Neutral 1,710,000.00 NA Japanese Yen Japan Telecom(C) 9434.T Neutral 1,710,000.00 NA Japanese Yen Jones Intercable JOINA.O Neutral 52.88 NA American Dollar KDD 9431.T Neutral 6,950.00 NA Japanese Yen

Morgan Stanley Dean Witter Equity Coverage Universe (continued)

Company Ticker Rating Price* Target Price Currency KDD(C) 9431.T Neutral 6,950.00 NA Japanese Yen KPN KPN.AS Outperform 48.00 55.00 Euro Kansai Electric Power 9503.T Neutral 2,480.00 NA Japanese Yen Kansai Electric Power(C) 9503.T Neutral 2,480.00 NA Japanese Yen LML Ltd. LMLL.BO Neutral 52.40 76.00 Indian Rupee Liberty Media LMGa.N Strong Buy 69.38 75.00 American Dollar Lodgenet Entertainment LNET.O Outperform 12.00 11.00 American Dollar MATAV MTAV.BU Outperform 1,335.00 1,600.00 Hungarian forint MCI WorldCom WCOM.O Outperform 91.31 105.00 American Dollar Mahanagar Tel Nigam MTNL.BO Outperform 202.00 206.00 Indian Rupee Mahindra & Mahindra MAHM.BO Neutral 230.00 240.00 Indian Rupee Mannesmann MMNG.F Strong Buy 140.30 165.00 Euro McLeodUSA Inc. MCLD.O Strong Buy 52.50 65.00 American Dollar MediaOne UMG.N Outperform 71.88 80.00 American Dollar Metrocall MCLL.O Strong Buy 2.97 11.00 American Dollar NTL Inc. NTLI.O Strong Buy 99.00 105.00 American Dollar NTT 9432.T Outperform 1,210,000.00 1,450,000.00 Japanese Yen NTT DoCoMo 9437.T Outperform 6,900,000.00 8,600,000.00 Japanese Yen NTT DoCoMo(C) 9437.T Outperform 6,900,000.00 8,600,000.00 Japanese Yen NTT(C) 9432.T Outperform 1,210,000.00 1,450,000.00 Japanese Yen NetCom NTC.OL Neutral 260.00 NA Norwegian Krone NetCom Systems AB NCOMb.ST Neutral 284.00 NA Swedish Krona News Corp. NWS.N Strong Buy 36.38 40.00 American Dollar Nippon Television 9404.T Neutral 44,600.00 NA Japanese Yen Nippon Television(C) 9404.T Neutral 44,600.00 NA Japanese Yen Orange ORA.L Neutral 887.16 890.00 British Pence Orbital Sciences ORB.N Neutral 22.38 NA American Dollar Osaka Gas 9532.T Outperform 406.00 475.00 Japanese Yen Osaka Gas(C) 9532.T Outperform 406.00 475.00 Japanese Yen PLDT TEL.PS Neutral 1,120.00 1,050.00 Philippino Peso PT Indosat ISAT.JK Neutral 16,825.00 NA Indonesian Rupiah PT Telekomunikasi TLKM.JK Neutral 4,275.00 NA Indonesian Rupiah Pacific Gateway Exchange Inc. PGEX.O Outperform 35.50 NA American Dollar Paging Network PAGE.O Outperform 3.50 15.00 American Dollar Pilipino Telephone Corp. PLTL.PS Underperform 2.60 2.00 Philippino Peso Pixar Inc. PIXR.O Neutral 44.19 NA American Dollar Portugal Telecom PTCO.IN Strong Buy 42.86 51.00 Euro Powertel PTEL.O Strong Buy 24.00 30.00 American Dollar Primus Telecommunications PRTL.O Strong Buy 23.00 27.00 American Dollar Qwest Communications Int'l QWST.O Strong Buy 45.06 55.00 American Dollar RCN Corporation RCNC.O Outperform 47.31 70.00 American Dollar RSL Communications RSLC.O Strong Buy 23.25 38.00 American Dollar Rogers Cantel RCN.N Outperform 18.00 24.00 American Dollar Rogers Communications RG.N Outperform 19.13 28.00 American Dollar Rostelecom RTKM.RTS Underperform 1.20 NA American Dollar SBC Communications Inc. SBC.N Outperform 54.00 66.00 American Dollar SK Telecom 17670.KS Outperform 1,528,000.00 750,000.00 South Korean Won SPT SPTT.PR Neutral 567.50 NA Czech Krona Samara Svyazinform SVIC.RTS Neutral NA American Cents Securicor SCR.L Strong Buy 549.00 762.00 British Pence Singapore Telecom TELE.SI Neutral 2.70 2.85 Singapore Dollar SmarTone 0315.HK Outperform 26.00 29.00 Hong Kong Dollar Sonera SRA1V.HE Outperform 20.25 23.00 Euro Sprint FON Group FON.N Outperform 57.06 60.00 American Dollar Sprint PCS Group PCS.N Neutral 51.38 NA American Dollar Swisscom SCMZn.S Neutral 551.00 NA Swiss Francs T V S-Suzuki TVSS.BO Neutral 496.00 0.00 Indian Rupee TELUS BTS.TO Neutral 35.95 40.00 Canadian Dollars Tata Engineering & Locomotive Company Ltd. TELC.BO Outperform 196.00 260.00 Indian Rupee Technology Resources Industries TRIB.KL NAV 2.63 NA Malaysian Ringgit Tel. de Chile CTC.N Outperform 23.56 32.00 American Dollar Tele Celular Sul TSU.N Outperform 19.19 23.00 American Dollar Tele Centro Oeste TRO.N Neutral 3.56 NA American Dollar

Morgan Stanley Dean Witter Equity Coverage Universe (continued)

Company Ticker Rating Price* Target Price Currency Tele Centro Sul Part. TCS.N Outperform 53.75 70.00 American Dollar Tele Leste Celular TBE.N Neutral 29.69 NA American Dollar Tele Nordeste Celular TND.N Neutral 29.75 NA American Dollar Tele Norte Celular TCN.N Neutral 28.38 NA American Dollar Tele Sudeste Celular TSD.N Outperform 24.50 33.00 American Dollar TeleWest Communications TWT.L Strong Buy 272.97 350.00 British Pence Telecom Corp. of New Zealand TEL.NZ Outperform 8.40 9.95 New Zealand Dollars Telecom. Argentina TEO.N Outperform 29.56 NA American Dollar TelecomAsia TA.BK Underperform 32.75 15.00 Thailand Baht Telefon. Argentina TAR.N Outperform 33.31 NA American Dollar Telefonica TEF.MC Outperform 47.65 51.00 Euro Telefonica del Peru TDP.N Neutral 14.94 NA American Dollar Telegate TGTG.F Outperform 34.50 40.00 Euro Telekom Malaysia TLMM.KL NAV 12.90 NA Malaysian Ringgit Telekomunikacja Polska S.A (TPSA) TPSAq.L Neutral 6.05 NA American Dollar Telemig Celular Par. TMB.N Neutral 26.06 NA American Dollar Telephone and Data Systems Inc. TDS.A Outperform 67.38 85.00 American Dollar Telesp Celular Part. TCP.N Outperform 22.25 30.00 American Dollar Telesp Part. TSP.N Strong Buy 24.13 34.00 American Dollar Telmex TMX.N Outperform 76.00 94.00 American Dollar Telstra Corporation TLS.AX Neutral 7.63 NA Australian Dollar Thai Telephone & Telecom TTNT.BK Underperform 11.25 3.00 Thailand Baht Time Engineering TENG.KL NAV 0.93 NA Malaysian Ringgit Time Warner TWX.N Strong Buy 67.13 82.00 American Dollar Todd-AO TODDA.O Outperform 10.50 11.00 American Dollar Tokyo Broadcasting System 9401.T Neutral 1,550.00 NA Japanese Yen Tokyo Broadcasting System(C) 9401.T Neutral 1,550.00 NA Japanese Yen Tokyo Electric Power 9501.T Neutral 2,670.00 NA Japanese Yen Tokyo Electric Power(C) 9501.T Neutral 2,670.00 NA Japanese Yen Tokyo Gas 9531.T Outperform 313.00 380.00 Japanese Yen Tokyo Gas(C) 9531.T Outperform 313.00 380.00 Japanese Yen Total Access Communication TACC.SI Underperform 108.59 2.00 Thailand Baht Tricom TDR.N Outperform 10.00 9.00 American Dollar United States Cellular Corporation USM.A Neutral 48.50 NA American Dollar Uralsiazinform URSI.RTS Outperform 0.90 NA American Cents Viacom VIA.N Neutral 40.06 NA American Dollar Viatel Inc. VYTL.O Strong Buy 49.50 57.00 American Dollar Videsh Sanchar Nigam VSNL.BO Neutral 870.00 NA Indian Rupee Vimpelcom VIP.N Neutral 20.94 NA American Dollar Vodafone VOD.L NAV 1,284.22 NA British Pence Walt Disney DIS.N Strong Buy 30.88 39.00 American Dollar Winstar Comm. WCII.O Neutral 56.88 NA American Dollar Zee Telefilms Ltd. ZEE.BO Outperform 1,512.00 2,050.00 Indian Rupee

* Price is as of June 8, 1999.

The information and opinions in this report were prepared by Morgan Stanley & Co. Incorporated (“Morgan Stanley Dean Witter”). Morgan Stanley Dean Witter does not undertake to advise you of changes in its opinion or information. Morgan Stanley Dean Witter and others associated with it may make markets or specialize in, have positions in and effect transactions in securities of companies mentioned and may also perform or seek to perform investment banking services for those companies. Within the last three years, Morgan Stanley & Co. Incorporated, Dean Witter Reynolds Inc. and/or their affiliates managed or co-managed a public offering of the securities of Ameritech Corp., @Home Corporation, Bell Atlantic, Bellsouth, British Telecom, Cable &Wireless, Call-Net Enterprises, Chubu Elec- tric power, Cincinnati Bell, Citizens Utilit, DDI, Electric Lightwave, France Telecom, GST Telecommunications, IDT Corp, Intermedia, Iridium World Communications, Kansai Electric Power, Mannesmann, Metrocall, Metronet Communications, NTL Inc, NetCom Systems AB, Orange, Osaka Gas, Pri- mus Telecommunications, RSL Communications, Rogers Cantel, Swisscom, Telstra Corporation, Tokyo Electric Power, Tokyo Gas, Total Acess Com- munication, Tricom, US West, Viatel Inc, Videsh Sanchar Nigan, Winstar Comm, Aliant, AT&T, Southwestern Bell, Deutsche Telecom, Equant, KPN, OTE, Telecom Italia, Telefonica de Espana, Telecom Argentina, Telefonica de Argentina, PLDT, Telecom New Zeland, Time Warner, VSNL, NTT, Fron- tier, Global Crossing, ICG, McLeod Inc, MediaOne Group, Cable & Wireless Communications, Equant, Airtouch, Clearnet, NexTel, PageMart, Netcom GSM, China Telecom, Piltel, NTT DoCoMo and APT. 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