Your Service Edge?

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Your Service Edge?
Broadband Voice Opportunities and Provisioning
The Bundled Services Requirement Steven
Shaw Director, Market Development
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Presentation Outline

• Opportunity for Broadband Voice
• MMDS Direct Connect the small business/
  residence
• MTU/MDU Opportunity LMDS hybrid solutions to
  reach the small business/residential
• The Requirement for Bundled Telephony Services
• Provisioning An operators view
• Connecting the pipe
• Managing the end points

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Opportunity Overview
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The Small Business Opportunity
Yesterday
Today
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Broadband marketplace
Market
Broadband demand

• Worldwide demand is growing rapidly
• Consumer broadband cable and DSL lead pack
• High speed internet access is addictive

Source Forrester - Consumer Broadband Hits
Hypergrowht in 2001 (10/6/00)
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Voice over BroadbandA MMDS focused solution
Subscriber
Jetstream CPX-1000
PSTN
ATM DS3/OC3
Class 5 Switch
ATM MMDS
Regional Packet Access Network
ATM T1/DS3/OC3
ISP Facilities
Internet
IAD
Cell Site
Regional Switching Center
Capture SMB Residential
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Broadband voiceAn in-building -focused solution
Business customers (Tenants)
IAD
LMDS, U-NII, DEMS, 38 GHz
PSTN
Analog voice
JetstreamCPX-1000
IAD
ATM DS3/OC3
Class 5 Switch
Regional Packet Access Network
T1
Voice PBX
Internet
ISP Facilities
Building Basement
n x T1 or DS3
Regional Switching Center
Mini- DSLAM
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MTU/MDU Total Available Market Voice Data
Services 10.7 Billion
Service Revenue Segment BroadbandVoice BroadbandData
CommercialMTU 6.8 Billion 2.8 Billion
ResidentialMDU 472 Million 381 Million
Hotel/Hospitality 0 275 Million
Total 7.272 Billion 3.406 Billion
Source Jetstream Communications estimate Note
TAM Includes fraction of MTUs with 6-10 tenants,
all MTUs gt10 tenants and all MDUs gt50 households
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Commercial MTUA Large SMB Market Segment

• 36 of U.S. Small Businesses Reside in a
  Multi-Tenant Unit Building
• 750,000 commercial MTU buildings in U.S.
• housing 2.8 million SMB tenants

MTU Building
Business customers (Tenants)
IAD
Analog voice
IAD
T1
CPX-1000
Voice PBX
Regional Switching Center
Building Basement
ATM DS3/OC3
Class 5 Switch
N x T1 or DS3
Packet Access Network
ISP Facilities
Mini- DSLAM
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Commercial MTU Segment

• While 2.8M businesses reside in 750,000 MTU
  buildings.
• 1.5M businesses in 150,000 buildings may justify
  an on-site capital investment
• The other 1.3M are better off being served by
  direct/MMDS solution
• Therefore About 20 of SBs can be targeted with
  an MTU solution

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MTU The Church of DSL(The Place Where All of
DSLs Sins are Forgiven!)

• DSL is the Preferred in-building technology
• Avoid the RBOC Bureaucracy
• No more CO collocation expenses loop
  qualification uncertainties and provisioning
  delays
• Short, in-building copper lengths allow for
  full-speed DSL
• 2.3 MBPS SDSL, Full speed ADSL, 6 MBPS VDSL
• DSL Provides longer reach/distance than LAN
  technologies
• 4000 feet distance reaches almost 100 of
  tenants in all-sized buildings
• Ethernet maxes out at 300 feet on a cable,
  requiring more switches
• Most buildings have Cat-1 or lower grade wires in
  place
• DSL runs over Cat-1, 3, 5 or Cat Junk
• Ethernet requires Cat 3 or Cat 5

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Residential Multi-Dwelling Unit (MDU) Market
Segment

• 20 of U.S. households live in MDU
• 2.75M MDU Buildings in US comprise 20.5M
  households
• 75 renter-occupied, 25 owner-occupied
• 27.5 of all MDUs reside in CA and NY
• Highest in Northeast CA
• Strong new construction growth in TX, FLA, CA and
  GA
• Only 5 served today by a single MDU
  service provider

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Residential MDU Communications Service
Expenditures

• Telephony 12B (30/month local, 20 LD)
• Cable 6.4B (38/month 71 penetration)
• Internet 1.6B (21/month32 penetration)

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Residential MDU All About Focus2.2 of
buildings46 of MDU households
of Rental Units on Property of Properties of Total Properties of Apartments of Total Apartments
2 1,558,700 56.58 3,093,200 15.03
3 366,030 12.2 1,025,900 4.98
4 341,350 12.39 1,436,800 6.98
5-9 281,500 10.22 1,897,700 9.22
10-19 107,170 3.9 1,462,540 7.12
20-29 38,000 1.38 916,750 4.45
30-39 18,166 0.66 604,240 2.94
40-49 14,431 0.52 702,790 3.41
50-99 26,694 0.97 2,009,400 9.76
100-199 19,804 0.72 2,952,300 14.34
200-299 7,775 0.28 1,948,400 9.47
300-399 2,966 0.11 1,058,800 5.14
400-499 1,307 0.05 605,130 2.94
500-749 723 0.03 431,360 2.10
750 307 0.01 437,670 2.13
Total 2,754,923 100.00 20,584,980 100.00
2-4 Unit Buildings 2,236,080 81.17 5,555,900 26.99
50 Unit Buildings 59,576 2.16 9,443,060 45.87
Focus 46
Source Natl Multihousing Council and The Yankee
Group
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The Opportunity for Broadband Voice
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• Free Internet is simply the cost of customer
  acquisition. In our model, if we can just sell
  tenants on our voice services and continue to
  give away free broadband Internet, we can still
  make a profit.
• Sean Doherty
• President of Urban Media
• Inter_at_ctive Week, May 22, 2000

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The Strategic Imperative for Broadband Voice

• Vanilla internet service will commoditize in the
  MTU market rapidly
• No exclusive building access rights allowed under
  FCC rulings
• Multiple BLECs per building
• REITs and PMs have growing leverage
• May be able to play multiple BLECs off one
  another
• BLECs will need to diversify their service
  portfolio to win in a competitive market
• And voice is where the money is

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The Case for Broadband Voicein the Commercial MTU

• Triple Your Subscriber Revenues
• Increase EBITDA 4-fold
• Lower your building breakeven point from 8
  tenants to five
• Dramatically accelerate your time to profitability

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The Case for Broadband Voicein the Residential
MDU

• Triple Your Subscriber Revenues
• Increase EBITDA 6-fold
• Data-only residential model very difficult
• A voice revenue stream can become the difference
  between business success and failure

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Option 1 Acquire Local Exchange Voice Switch
Facilities

• PROs Significantly improves service margins
• CONs Requires capex and in-house PSTN expertise
• Traditional workhorse Class 5 circuit switches
  Nortel DMS, Lucent 5E, Siemens EWSD
• Lower cost mini versions Lucent VCDX, Nortel
  DMS10
• New breed of lower cost programmable Class 5s
  Taqua, Network Telco
• Long-term option Soft switches as true Class 5
  replacements
• Requires functionality beyond current Class 4
  tandem / Internet offload applications

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Option 2 Wholesale Voice Services

• Focus on your role in the value chain
• Tenacious sales and marketing owning the
  customer
• Competitive advantage in reduced customer
  acquisition cost via building presence
• Time-to-market advantage in DSL provisioning
• Leverage the expertise of a voice CLEC
• Many have wholesale / CAP heritages
• Many have existing installed base of Class 5s and
  operational competency in major MSAs
• Partner for a win-win

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Industry Perspective
XOptions Bundled Service Offering From XO
Communications
Source Bear Stearns Equity Research, XO
Communications, Oct 2000
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Product Plan of Action

• Develop new premium bundled services offering
• Includes local, LD, internet, web host to start

• Bundled Services Provide
• Change offering from unit cost to bundle service
  price
• Generate more revenue per subscriber
• Entrench customers before competition
• Reduce Churn

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Provisioning
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Why we care about provisioning

• Installation, Configuration, Turn up cause big
  problems, big headaches
• 100,000 subs/year
• 250 days/year to install
• Requirement for 200 techs
• 2 installs per day
• How many technicians do you need to install a
  broadband solution?
• One for telecom/wireless interfaces, demark line
• One for data services, IP configurations
• Self install/config only way to get hyper
  growth
• 46M connections by 2005 ?!?!?!
• Lower revenues/sub, must recoup costs quickly

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Understanding Total Cost of Ownership
For every 1 spent on Jetstream gear Spend 1.68
on mgmt, net ops
Source Ernst Young and Yankee Group studies
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Your Travel Support Systems
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Integration is key for provisioning
Syndesis CoManage CommTech
Data PVC VPI 200, VCI 1012
Data PVC VPI 200, VCI 1012
Data PVC VPI 200, VCI 1012
Data PVC VPI 0, VCI 38
Data PVC VPI 200, VCI 1012
Data PVC VPI 200, VCI 1012
Data PVC VPI 200, VCI 1012
Data PVC VPI 200, VCI 1012
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CPX-1000 Manageability
Must be able to integrate with existing systems
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A Carriers View of Provisioning
Management Systems
Flow-through Provisioning Interfaces
Subscriber request from Web or Customer
Service
NMS
Broadband Network EMS
WLL EMS
JetEMS/JetWay
CPE
Network
(voice data)
CPX-1000
JetIAD
TDM T1 GR-303
Voice Traffic ATM DS3/OC-3
ATM DS3/OC-3
JetIAD
JetIAD
Data Traffic to Internet POP
1 PVC for data connection 1 PVC for all voice
connections
Voice over BB Network
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Mass Subscriber Management

• Bulk Provisioning
• Add or modify thousands of IADs at a time
• Bulk Monitoring
• Monitor all IADs from a single interface
• Bulk Administration
• Control (lock/unlock) selected IAD resources
• Graceful firmware upgrade of thousands of IADs at
  a time

JetVision Server
JetVision Client
Packet Network
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IAD/CPE Management
Single VC for Voice Management

• Voice Traffic
• ATM AAL2
• Separate channel per voice call
• Dynamic bandwidth use

• Management Channel
• Deterministic call control
• Provisioning
• Monitoring
• Software download

DSLAM
Voice Data Management Jetstream Product
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VoBB Provisioning Requirements

• Time to Market is critical to generate revenues
  immediately
• Solutions must scale to meet growing demands
• Platforms (network elements, management systems,
  comm. networks) must be robust, reliable, and
  secure
• Overall lifecycle costs must be controlled
• Systems must integrate cleanly/effectively to
  support todays services, growth for tomorrow

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Summary
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Summary

• MTU is the target SMB market
• LMDS hybrid solutions to reach the small
  business/residential
• In building DSL distribution
• Bundled Telephony Services
• Make subscribers more profitable
• Entrench your customers before competition
• Provisioning An operators view
• More than connect the dots
• Invest in flow through provisioning systems

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Your Service Edge?
Leading the Way in Voice over Broadband