Telecommunications Market Segmentation

Analysis and Forecasting

Presented by:

Michael Raimondi
Executive Vice President

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 1980
Nobel 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.

A THOMSON Company
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 Areas
n By Business Location or Household
n Analyze Segment Size, Growth, and Future Potential
n Identify Opportunities and Risks and Target Direct Marketing
A THOMSON Company
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 each
segment 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?

A THOMSON Company
WEFA’s Analytical Process

WEFA’s 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.

A THOMSON Company
A Solid Network of Models

WEFA’s Comprehensive International/US/Industry/Regional

Modeling System
WEFA’s Business Demographic Modeling System

WEFA’s Household Demographic Modeling System

Public Use Databases

Integrated Data
Solutions

Client Databases

A THOMSON Company
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 usage
characteristics 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.

A THOMSON Company
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 Client’s Customer and Primary Data for Custom Solutions

A THOMSON Company
Segment Sizing

The Business Market The Residential Market

n Employment n Population
n Establishments n Households
n Output n Income
n Occupation Distributions n Occupation Distributions
n By 4-digit SIC n By Age/Income Cohort
n By State, MSA, County, n By State, MSA, County,
and ZIP Code and ZIP Code

A THOMSON Company
Telecom Coverage

Services Products
n Total Spending n Access Lines
n Local Service Spending u Switched

n Long Distance Service u High Capacity

Spending n Stations
n Cellular Service Spending u Telephone
n Toll Free Spending u Other (e.g. modems, fax
n Data Communications machines)
n Voice Communications
n ATM, Frame Relay, DSL, IP

A THOMSON Company
Voice vs. Data Transmission

Expected Revenue Growth in the U.S.

(Compound Annual Rates, 2000-2005)

17.4%

2.9%

Voice Data

A THOMSON Company
Total Telecom Spending

Top/Bottom 5 States Based on Expected Growth

(Millions of Dollars, Compound Annual Rates 2000-2005)

Total Spending %Growth

2000 2005 00-05
Utah 1,406 2,523 12.4%
South Dakota 458 754 10.5%
Idaho 873 1,426 10.3%
Colorado 3,617 5,845 10.1%
Arkansas 1,204 1,930 9.9%
Pennsylvania 5,624 7,339 5.5%
West Virginia 641 835 5.4%
New Hampshire 797 1,020 5.1%
New York 13,022 16,511 4.9%
Dist of Columbia 1,269 1,481 3.1%
A THOMSON Company
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%
A THOMSON Company
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%
A THOMSON Company
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%
A THOMSON Company
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%
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%
A THOMSON Company
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%
A THOMSON Company
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%
A THOMSON Company
Data Telecom Spending

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

Data Spending %Growth

2000 2005 00-05
Japan 9,472 20,892 17.1%
United Kingdom 4,054 8,096 14.8%
Germany 3,798 7,904 15.8%
Italy 2,513 5,833 18.3%
France 2,366 4,948 15.9%
New Zealand 199 587 24.1%
Thailand 196 431 17.1%
Turkey 166 520 25.6%
Hungry 134 379 23.2%
Malaysia 117 245 15.9%
A THOMSON Company
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.

A THOMSON Company
Results

Detailed Market Segment Watch Sales Grow

Data and Forecasts
$6.0B
Extra
Better information $300M

Better decisions Extra

$150M $4.9B
Better allocations
Better performance
$4.2B

Even in a fast-paced
1999 2000 2001
market, you can do better.
A THOMSON Company
 Boston § Chicago § Los Angeles
New York § Philadelphia § Washington, DC
Hong Kong § Frankfurt § London § Milan § Paris
Mexico City § Sao Paulo § Pretoria § Ottawa § Toronto

A THOMSON Company