The Evolution of Triple Play VOIP IMS FMC

The Evolution of Triple Play: VOIP, IMS, FMC, Wi. MAX, IPTV Triple Play Symposium 2006 Dallas, Boston, Paris Rick Thompson Senior Analyst, Heavy Reading

Heavy Reading Research • Heavy Reading has published numerous research reports, analyzing the current state of the technology & expected market development for topics including IPTV, VOIP, IMS, FMC, Carrier Ethernet, IP DSLAMs, ROADMs, Pseudowires, Advanced. TCA, Next-Gen SONET, etc. • Heavy Reading next-gen broadband/IPTV research 2005 and 2006: • • IP DSLAMs: A Heavy Reading Competitive Analysis (8/05) • MSAPs: A Heavy Reading Competitive Analysis (10/05) • IP Video and the New Broadband Edge (12/05) • DSL Gateways: Beyond the Router (2/06) • Multimedia Whole-Home Networking: Solving the IPTV Distribution Dilemma (4/06) • • IPTV and the Future of Telecom Video Network Architectures (6/05) The Future of Internet TV: Emerging “Over-the-Top” Internet Video Services (planned Summer 2006) Heavy Reading conducted interviews with hundreds of technology suppliers, service providers & investors with a direct interest in telecomrelated topics.

Beyond Triple Play: Flexibility Is the Killer APP Entertainment Productivity/Reference On-Line Gaming Security Communications Voice (Vo. IP) Downloads Real-Time Play Multiplayer Hosting Anti-Virus Firewall SPAM URL Filtering Personal Video Streaming Music Home Monitoring Email Streaming Audio Info Services Radio Concerts Financial, News, Travel Video Distributed Printing Tiered VPN Fax Services Instant Messaging IP/PC TV Video on Demand Pay Per View Digital Video Recording Images, Video, Data Online Collaboration Info Services Dynamic Bandwidth Upgrades Wireless Backhaul Sports, Games, Hobbies Photos, Etc. Personal Storage Video Telephony

Incumbent Dilemmas, 2005 • British Telecom Retail revenues down 2. 5% • Retail profits down 10% • • Deutsche Telecom Domestic revenues down 1. 6% • Broadband/fixed revenues down 3. 6% • • France Telecom Domestic residential revenues down 1. 2% • Domestic enterprise revenues down 5. 4% • • KPN Fixed network revenues down 4% • Business revenues down 9% •

Major Themes • • • VOIP will be the dominant wireline telephony technology within five years– situation is less certain on the wireless side IMS has won near-universal support among service providers, and is driving RFPs for NGNs Wi. Fi, Wi. Max and IP could disrupt the mobile telephony cartel, with major long-term consequences Multimegabit broadband networks will spread rapidly in the next five years, with telcos moving increasingly to FTTx after 2008 This transition is being driven by the need to provider highquality video content, including HDTV and online gaming This in turn is having a major impact on home technologies, where the market is wide open to innovation

By 2007, VOIP Will Dominate Source: Heavy Reading Survey of Service Provider Attitudes to VOIP, August 2005. Base: 125 Service Providers

Mainstream VOIP Is a Reality Service provider VOIP deployment plans • VOIP versus Internet voice • Source: The Future of VOIP: A Heavy Reading Service Provider Study, September 2005

There Are Still Technical Barriers

IMS Research Findings • The 2006 -2007 time period will be the most important period in FMC, IMS and NGN technology and service development. • For service providers, IMS's main appeal is its ability to provide more applications faster and at lower cost. • Fixed/mobile convergence is an important secondary motivator. • Although IMS is seen primarily as a mechanism for deploying revenue -generating applications, there is little agreement about which applications should be deployed first, and this lack of consensus may delay carrier implementations. • IMS is a complex specification, and there are gaps in the standards, especially around policy control and service creation. • There are strong parallels and linkages between IMS and two other emerging industry standardization movements: service delivery platforms and Advanced. TCA.

When IMS? Source: Heavy Reading Fall 2005 Survey of Service Provider Technology Deployment Plans

Why IMS? • Layered architecture Separates transport, control and applications • “We can buy best of breed at every layer!” • • Access-agnostic Simpler convergence of fixed and mobile networks • “Services no longer tied to access network technology!” • • IP applications With Qo. S, security, charging • “A means to fight IP applications leakage to the Internet!” • • New kinds of applications Blended together • “Higher ARPU, lower churn!” • • More applications, much more quickly, at much lower cost But controlled, supplied and billed by service provider • “No need to rely on a few killer apps!” •

Apps and Services Drive IMS Source: Heavy Reading 2006 Survey of Service Provider Plans for IMS. Base: 93 Service Providers

Service Providers Buy The FMC Vision Source: Heavy Reading Survey of Service Provider Attitudes to Fixed-Mobile Convergence, November 2004. Base: 109 Service Providers

Expect FMC to Transform the Industry Source: Heavy Reading Survey of Service Provider Attitudes to Fixed-Mobile Convergence, November 2004. Base: 109 Service Providers

FMC Is A Higher Priority For European Service Providers

Obstacles To FMC Progress Source: Heavy Reading Fall 2005 Survey of Service Provider Technology Deployment Plans

Wi. MAX Deployment Plans • • • Network operators are overwhelmingly positive about the impact Wi. Max will have on networks Wi. Max enthusiasm cuts across all types of carriers and across all geographic regions The next 12 to 18 months will be critical in determining carrier investment in Wi. Max More than 80 percent of survey respondents expect to see Wi. Max deployments by the end of 2007 Network operators are surprisingly open to deploying Wi. Max using unlicensed spectrum, but interest in pre-standard Wi. Max products is slight Carriers expect to use Wi. Max to bolster delivery of voice, data, and even triple-play services, but there’s less interest in Wi. Max for wireless backhaul

Wi. MAX Product Maturity

Wi. MAX Deployment Plans

Mobile or Fixed Wi. MAX?

Mobile Wi. MAX • • • The first Mobile Wi. Max services will launch in Korea in mid 2006, using Samsung equipment; U. S. service launches will follow, possibly as soon as 2007 Stealth chipset startups are attempting to leapfrog the market and go directly to Mobile Wi. Max; names in the frame include Beecem, Si. Wave, Cygnus, Runcom Adaptix claims to have already demonstrated system-level mobility based on scaleable OFDMA A market for 802. 16 e line cards and software will emerge alongside demand for smart antenna software suites, as major fabs and OEMs catch on to Mobile Wi. Max's potential Initial services will offer handoff performance suitable for data, but unsuitable for VOIP services

IPTV: Telecom Meets Entertainment • TV delivery is moving from HFC-based broadcast to IP-based multicast/unicast Telcos: IPTV, Telco Video (different names, same thing) • MSOs: SDV initiatives; NGNA (many IPTV-like concepts) • • “Internet TV” is organically evolving in parallel • • • Google, Yahoo, Apple, You. Tube, MLB. com, major broadcast channels, etc. Technology platforms: Brightcove, Narrowstep, the. Platform, Veoh, etc. Network technologies: DPI, Policy Control, granular Qo. S Video search engines, P 2 P video file sharing, etc. Competitive or complimentary to IPTV? Regardless of the model, multimedia content is driving telecom Wireline • Wireless •

Technology Shifts Impacting Market Evolution • Compression & format: MPEG 2 MPEG 4; SD HD • • Access network: 1. 5 -3 Mbit/s 20 -30+ Mbit/s; ATM Ethernet/IP • • More channels, lower bit rates Combination x. DSL/FTTx Aggregation network: ATM Gig. E/10 Gig. E, IP multicast, QOS • Right amount of aggregation layer intelligence? IP edge: High density/capacity, Ethernet-centric, per-service QOS, unicast/multicast scale, integrated B-RAS, high-availability edge • Transport network: static/legacy reconfigurable/multiservice • Services evolve: Broadcast TV VOD PVR/n. PVR integrated & interactive services • Mobile & IMS? • Internet TV? •

Phase III: 2008 – 2010 Service Differentiation Subscriber Scale IPTV Inflection Points Phase II: 2006 – 2007 Quality of Experience Phase I: 2004 - 2005 Technical Viability Focus on initial network & service layer infrastructure. Modest, controlled service rollouts. Basic service offerings. Basic Broadcast TV (IP Multicast) Initial, Limited VOD Focus on service assurance and Qo. E for existing services and continue adding new services: enhanced channel package, additional HD content, additional VOD content, subscription VOD, time-shifting. PVR, n. PVR MPEG-4 HD Focus on scaling number of IPTV subscribers and introducing “integrated services. ” Also includes potential IMS Integration. Portfolio Expansion: More HD, VOD, PVR Multicast to Unicast Service Mix Integrated Services IPTV Market Evolution Integrated Communication, Information, Entertainment

End-to-End IPTV: A Brief Overview Content Owner/Aggregator Video Content Acquisition Residential Subscriber TELECOM OPERATOR National Video Head. End Office Broadband Routing Network Infrastructure Broadband Aggregation Network Infrastructure Broadband Access Network Infrastructure Multimedia Home Network End-to-End Policy Control Vo. IP DSLAM Content Providers Super Head-End Office (SHO) Video Hub Office (VHO) IP STB Video Serving Office (VSO) RG Copper 20 th Century Fox General Electric News Corp. Sony Time Warner Viacom Walt Disney Etc. Broadcast Video Head-End System Edge Router/ B-RAS Core Router an/. or Edge Router/ B-RAS Middleware, CA/DRM PC Fiber OLT/ONU ONT Edge Encoders VOD Server Complex Regional/LH Transport Live and On Demand Content Acquired From Multiple Satellite and Terrestrial Broadcast Programming Sources. Gigabit Ethernet Aggregation Redundant National SHOs Ingest & Distribute IP-based Video Content. Centralized VOD Libraries May Exist. Metro Transport Numerous Regional VHOs Receive National Content from SHOs and Ingest & Distribute Regional Content and IP VOD. Local VSOs Receive & Distribute Content from Upstream. Local Channels and Distributed VOD Also Served From VSO. OLT Various Copperand Fiber-based Access Networks In Place To Deliver IPTV to the Residential Subscriber. ONU SP Controlled Subscriber Premise: ONT/NID, Residential Gateway, IP STB/DVR, PC, Vo. IP, In-Home Distribution Network

IPTV Bandwidth Requirements • Video IPTV with MPEG 2 compression • Standard Definition 3. 5 Mbps • High Definition 19. 3 Mbps • IPTV with MPEG 4 compression • Standard Definition 2. 0 Mbps • High Definition 8. 0 Mbps •

Centralized Architectures? Broadband Access Network Residential Gateway Broadband Aggregation Network Broadband Edge Network Policy Control Server Broadband Aggregation Switches/Routers IP/MPLS Core Voice n Homes B’cast Video Broadband Access Nodes VOD Broadband Edge Router HSI

Distributed Architectures? Broadband Access Network Residential Gateway Broadband Aggregation Network Broadband Aggregation Switches/Routers Broadband Edge Network Policy Control Server IP/MPLS Core Voice B’cast Video n Homes Broadband Access Nodes VOD Broadband Edge Router Regional/Local Video Content HSI

Network Dimensioning Is Critical Broadband Access Broadband Aggregation Residential Gateway Broadband Edge • Centralized Policy Management • Video CAC • Topology Intelligence • Quality Measurement Distributed Policy Enforcement Voice n Homes B’cast Video Gig. E/10 Gig. E Aggregation Switches/Routers Access Nodes VOD Edge Router 2 1 HSI IPTV Vo. IP First Mile: Aggregate bandwidth needed for all services VOD B’cast Regional/Local Video Content Second Mile: Concurrent VOD sessions Non-blocking Multicast TV channels 3 VOD B’cast HSI 4 Third Mile: Max. concurrent Vo. D sessions Fourth Mile: Link bandwidth equals server capacity VOD controller limits total amount of streams

QOE Measurement • Accurate • • measurement of: Overall video service quality Usage per channel and viewer density Vo. D concurrency, channel changes User Quality of Experience Is essential to: § Monitor SLAs and troubleshoot issues § Dimension capacity and tune Vo. D CAC

“IPTV 2”: Sure. West • • Improved integration Emerging standards Next-Gen STBs Improved compression Improved Qo. S Improved security Interactive features

IPTV Work in Progress • Home networking solutions Ability to utilize existing home wiring • Wireless • • Next-Gen STBs • SD, HD, PVR, Gateways Content • Interactive applications •

Multimedia Home Networking Taxonomy Remote Mgmt. User Interface Home Devices TR-069: WAN-side CPE Mgmt WT-111: Remote Mgmt of home devices (TR-069 pass-thru) TR-064: LAN side CPE Mgmt Multimedia CPE UI Technologies: IPTV Browser, EPG, TV/PC Web Browser, Video Search and Navigation Network Connected Multimedia CPE: IP STB, DVR, Home Gateway, Media Bridges, PC/Laptop, Media Server, Gaming Console, Etc. (Other Critical Technologies: MPEG-4 Decoders, DRM S/W) Standard/ Technology IEEE 802. 3 HPNAv 3 Mo. CA Proprietary HPNAv 3 Physical Medium Ethernet Cable (CAT-5, 6) Coaxial Cable (RG 6, RG 59) Twisted Pair Phoneline Access Network WT-135: STB Object model Home. Plug AV Proprietary (UPA) Electrical Powerline IEEE 802. 11 x Air Copper and/or Fiber Infrastructure: ADSL 2 plus, VDSL 2, FTTx (Home Networking WAN Interfaces Integrated into NID and/or ONT)

Thank You! Q&A