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Company of the Year, Video North America, 2009 Frost & Sullivan’s Global Research Platform Frost & Sullivan is entering its 48th year in business with a global research organization of 1,800 analysts and consultants who monitor more than 300 industries and 250,000 companies. The Company’s research philosophy originates with the CEO’s 360 Degree Perspective,* which in turn serves as the foundation of its TEAM Research** methodology. This unique approach enables us to determine how best-in-class companies worldwide manage growth, innovation and leadership. Based on the findings of this Best Practices research, Frost & Sullivan is proud to present the 2009 North America Company of the Year Award in Video industry to AT&T.

Significance of the Company of the Year Award

Key Industry Challenges Addressed by the Video Company of the Year Award Video delivery is evolving rapidly towards a new paradigm of individualized content. Gone are the days where cable systems provided simple multi-cast content comprised of a few analog channels. Now, even basic video service offerings are characterized by hundreds of channels and a large of amount of on-demand programming, all offered over digital pipes. In addition, video is no longer the purview of cable MSOs. Increasingly, telcos are offering video services over DSL and fiber connections, and many providers are offering video as an adjunct to other service offerings such as VoIP, Internet and wireless services. Of course, all of this evolution has not come without its share of challenges. Chief among them has been the need to effectively plan for infrastructure development and service

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rollout, the need to innovate and deliver that innovation to consumers, and finally, the need to develop effective customer care solutions. In the area of planning infrastructure rollouts, video service providers must pay attention not only to video requirements, but must also recognize that the delivery channel is not just for video anymore. Networks must now also carry services such as voice and Internet, as well as supporting on-demand video. This award seeks to recognize the company that has demonstrated the most forward looking approach to video delivery networks. Innovation covers many things, but for video service providers more than most, it means recognizing that video by itself is not the end all of customer expectations. Video delivery has largely become table stakes in the competitive area of consumer communication services. As the Stratecast report on video on demand (CCS 3- 3: Video on Demand Analysis and Forecast, June, 2009) noted video on demand is likely to become the dominant way in which buys professionals consume video. This award recognizes the extent to which a company applies innovation in the network. Finally, innovation and growth planning aren’t worth much if consumers aren’t able to access service support or if the service packages delivered don’t materially address consumer needs. This award also recognizes the company that has effectively delivered service bundles that consumers want.

Impact of Company of the Year Award on Key Stakeholders The Company of the Year Award is a prestigious recognition of AT&T’s accomplishments in the Video Industry. An unbiased, 3rd party recognition can provide a profound impact in enhancing the brand value and thereby accelerating the AT&T’s growth. As captured in Chart 1 below, by researching, ranking, and recognizing those who deliver excellence and best practices in their respective endeavors, Frost & Sullivan hopes to inspire, influence, and impact three specific constituencies:

• Investors Investors and shareholders always welcome unbiased and impartial third party

recognition. Similarly, prospective investors and shareholders are drawn to companies with a well-established reputation for excellence. Unbiased validation is the best and most credible way to showcase an organization worthy of investment.

• Customers 3rd party industry recognition has been proven to be the most effective way to

assure customers that they are partnering with an organization that is leading in its field.

• Employees This Award represents the creativity and dedication of AT&T’s executive team and

employees. Such public recognition can boost morale and inspire your team to continue its best-in-class pursuit of a strong competitive position for AT&T.

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Chart 1: Best Practices Leverage for Growth Acceleration

Key Benchmarking Criteria for Company of the Year Award For the Company of the Year Award, the following criteria were used to benchmark AT&T’s performance against key competitors:

• Growth Strategy and Implementation • Degree of Innovation in Business Processes, Products and/or Technologies • Leadership in Customer Value and Market Penetration

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Decision Support Matrix and Measurement Criteria To support its evaluation of best practices across multiple business performance categories, Frost & Sullivan employs a customized Decision Support Matrix (DSM). The DSM is an analytical tool that compares companies’ performance relative to each other with an integration of quantitative and qualitative metrics. The DSM features criteria unique to each award category and ranks importance by assigning weights to each criterion. The relative weighting reflects current market conditions and illustrates the associated importance of each criterion according to Frost & Sullivan. Fundamentally, each DSM is distinct for each market and award category. The DSM allows our research and consulting teams to objectively analyze each company's performance on each criterion relative to its top competitors and assign performance ratings on that basis. The DSM follows a 10-point scale that allows for nuances in performance evaluation; ratings guidelines are shown in Chart 2.

Chart 2: Performance-based Ratings for Decision Support Matrix

This exercise encompasses all criteria, leading to a weighted average ranking of each company. Researchers can then easily identify the company with the highest ranking. As a final step, the research team confirms the veracity of the model by ensuring that small changes to the ratings for a specific criterion do not lead to a significant change in the overall relative rankings of the companies.

Chart 3: Frost & Sullivan’s 10-Step Process for Identifying Award-Recipients

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Best Practice Award Analysis for AT&T The Decision Support Matrix, shown in Chart 4, illustrates the relative importance of each criterion for the Price Performance Value Leadership Award and the ratings for each company under evaluation. To remain unbiased while also protecting the interests of the other organizations reviewed, we have chosen to refer to the other key players as Competitor 1 and Competitor 2.

Chart 4: Decision Support Matrix for Company of the Year Award

Measurement of 1–10 (1 = lowest; 10 = highest) Award Criteria

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Relative Weight (%) 34% 33% 33% 100%

AT&T 9 9 10 9.32

Competitor 1 10 8 9 8.99

Competitor 2 9 8 9 8.66

Criterion 1: Growth Strategy and Implementation AT&T has planned its video growth strategy around its U-verse service offering. U-verse has been deployed to over 105 markets across 19 states. U-verse video subscribership recently topped 1.8 million of the nearly 20 million homes that U-verse service passes. Clearly, AT&T is executing to a very deliberate growth plan that maximizes the subscribership for the number of homes passed.

Criterion 2: Degree of Innovation into Business Processes AT&T has placed an especial emphasis on innovation. Its U-verse service offering incorporates a hybrid network of fiber and DSL to deliver highly integrated service offerings - AT&T is the only U.S. provider with a 100 % IP-based television services (more than 928,000 worldwide fiber route miles). AT&T’s services all work together; AT&T customers can answer a call with the click of a button through their remote control, browse photos from flickr.com on their TV screen, and schedule television shows through an internet connection or mobile phone. Although other operators and carriers have moved quickly to integrate new service offerings into their portfolio, AT&T has paid attention to the user interface and has delivered services over an IP backbone that work well with its video offerings. For this reason, Frost & Sullivan has rated it most highly for its innovation for this award.

Criterion 3: Leadership in Customer Value and Market Penetration AT&T has devoted considerable attention to both its customer service processes as well as the value proposition it delivers to its customers. AT&T offers a true quad play offering, including voice, video, data and wireless services. Its U-verse service package includes such non traditional services as home monitoring and yellow pages accessible on the TV set. It has an extensive on-demand video library and even offers data services such as e-mail and voice mail over the television screen. This attention to the customer explains its initial high penetration rate (nearly 20%) in those areas where it deploys U verse. And while other market participants have deployed equivalent infrastructure, none have delivered

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the integrated service experience that AT&T has. For this reason Frost & Sullivan rated AT&T most highly in this component of this award.

The CEO 360 Degree PerspectiveTM - Visionary Platform for Growth Strategies The CEO 360 Degree Perspective model provides a clear illustration of the complex business universe in which CEOs and their management teams live today. It represents the foundation of Frost & Sullivan's global research organization and provides the basis on which companies can gain a visionary and strategic understanding of the market. The 360 degree perspective is also a “must-have” requirement for the identification and analysis of best-practice performance by industry leaders. The 360 degree model enables our clients to gain a comprehensive, action-oriented understanding of market evolution and its implications for their companies’ growth strategies. As illustrated in Chart 5 below, the following six-step process outlines how our researchers and consultants embed the 360 degree perspective into their analyses and recommendations:

Chart 5: How the CEO's 360 Degree Perspective Model Direct Our Research?

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Critical Importance of TEAM Research Frost & Sullivan’s TEAM Research methodology represents the analytical rigor of our research process. It offers a 360 degree view of industry challenges, trends, and issues by integrating all 7 of Frost & Sullivan's research methodologies. Our experience has shown over the years that companies too often make important growth decisions based on a narrow understanding of their environment, leading to errors of both omission and commission. Frost & Sullivan contends that successful growth strategies are founded on a thorough understanding of market, technical, economic, financial, customer, best practices, and demographic analyses. In that vein, the letters T, E, A and M reflect our core technical, economic, applied (financial and best practices) and market analyses. The integration of these research disciplines into the TEAM Research methodology provides an evaluation platform for benchmarking industry players and for creating high-potential growth strategies for our clients.

Chart 6: Benchmarking Performance with TEAM Research

About AT&T AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates – AT&T operating companies – are the providers of AT&T services in the United States and around the world. With a powerful array of network resources that includes the nation’s fastest 3G network, AT&T is a leading provider of wireless, Wi-Fi, high speed Internet and voice services. AT&T offers the best wireless coverage worldwide, offering the most wireless phones that work in the most countries. It also offers advanced TV services under the AT&T U-verseSM and AT&T | DIRECTVSM brands. The company’s suite of IP-based business communications services is one of the most advanced in the world. In domestic markets, AT&T’s Yellow Pages and YELLOWPAGES.COM organizations are known for their leadership in directory publishing and advertising sales. In 2009, AT&T again ranked No. 1 in the telecommunications industry on FORTUNE® magazine’s list of the World’s Most Admired Companies.

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About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages almost 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 31 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com.