The Evolving Broadband Home – Coming Challenges for Service Providers

1. The Evolving Broadband Home – Coming Challenges for Service Providers Sandy Teger and Dave Waks Co-Founders Broadband Home Central

2. About Us: Professionally • Sandy • 18+ years with AT&T; multimedia strategy director • Dave • Founder and R&D director, Prodigy Services Company • Together as System Dynamics Inc. • Specialists in residential broadband • Consult for companies affected by residential broadband • Projects included strategy, business economics, competitive analysis • Operate BroadbandHomeCentral.com as industry resource • Research and write Report on the Broadband Home • Free monthly Internet newsletter • 71 active readers in Spain – more than 50% service providers

3. About Us: Personally

4. Broadband Is Transforming the Home • Broadband access is the foundationfor much of what’s changing in home technologies • Broadband access and PC networking are growing • Everything is going digital • The consumer electronics industry has a huge investment in driving sales of networked appliances • The worlds of the PC, home entertainment and telephones are starting to overlap and merge • People are spending their time and money on buying and using “this stuff” because it’s compelling • Keeping up will be a challenge to broadband service providers

5. “Broadband Home” • Broadband access and in-home distribution network • Any kind of access • Any kind of network • Multiple broadband devices • PCs and emerging appliances • High speed • Megabits: Millions of bits per second • To the home, in the home and from the home • “Always on” connection • Continuous connection • From the home to the outside world, and to the home from the outside

6. Broadband Access DSL Cable Modem Wireless Fiber Satellite Powerline The Emerging Broadband Home ISP Services Home Gateway

7. The Promise of Broadband Digital radio and TV everywhere in the home Big jukeboxes of music, movies, TV and games Voice and video conferencing Share photos and videos with friends and family Telemedicine Control VCRs, AC, lights from anywhere Work from home as easily as in the office Untethered access

8. Broadband Tools and Toys for Work and Play • Foundation • Broadband modem • Structured wiring • Home gateway • Ethernet switches • Wi-Fi • HomePlug • Connected Devices • Multiple PCs – server, desktops, notebooks • Digital camera and camcorder • MP3 player and networked digital audio player • Two PVRs • Several IP phones • Media Applications • Photo and video software • Audio software • Music on demand and Internet radio • Shutterfly

9. Our Broadband Home Movie Sandy and Dave’s Broadband Home

10. Applications Creating Broadband Usage

11. Top Trends • Networked Consumer Electronics • TVs, stereos, digital cameras, digital video recorders, game consoles, PDAs, etc. being built to connect and communicate • Wireless Networking • 802.11g is “over the bar” for home entertainment • QoS still an issue for broadcast video • Home Gateways • From simple (cable/DSL router) on up (advanced set-top boxes, Microsoft “Media Center Edition”, Pioneer “Digital Library”) • Increasing Consumer Expectations • Faster, better, cheaper • Cut across gender, age and class

12. Everything Is Going Digital 1992 2002 2012 Audio Players Video Players Still Cameras Camcorders Satellite TV Cable TV Broadcast TV Telephone New CE

13. Broadband Access Increasing Demands on Broadband Access • New connected consumer devices and services demand more from the broadband access foundation Applications, content and services Gateways and client devices Home Networking

14. Home “bandwidth budget” growing • “Bandwidth budget” is total pipe size needed to accommodate all the information being sent around the home • Includes bits from all the things that people want to interconnect • Just like any budget, it keeps expanding! • People want to connect more devices • Not just PCs, but digital camcorders, MP3 players, PVRs, games,.. • Each device is getting richer information • Digital cameras going from 4 to 6 to 8 megapixels • TV going from standard definition to high definition • Computer files going from data to incorporate video, special effects • Consumer interest in entertainment will keep driving bandwidth to and within the home

15. Challenges – Bandwidth and Symmetry • Most broadband access designed for Web browsing • Relatively low speed both ways • Highly asymmetric, biased downstream • Many new applications symmetric, some require high speed • Telephony • Video conferencing • Exchanging pictures and videos • Optical fiber is good fit for new applications • Very high speed – typically at least 100 Mbps/home • Symmetric

16. Challenges – The “Triple Play” • North American cable operators will all offer “full bundle”: • Video: broadcast and VOD • Data: high-speed Internet access • Voice: primary service, largely packet-switched (PacketCable™) • New optical fiber providers add even more • FastWeb: Videoconferencing • Will be challenge to incumbents • Lost customers are hard to win back • Hard to respond quickly with competitive video services

17. Summary • Broadband will be taken for granted - like electricity • Will extend to all media and consumer electronics—becoming integrated into consumers’ lives • The specifics will vary by country and culture • Customer expectations will drive bandwidth and symmetry • Incumbents will face growing pressure from competitors, customers and communities to meet these expectations • “Coming events cast their shadows before.” Thomas Campbell

18. For More Information: www.BroadbandHomeCentral.com dave @ bb-home.com sandy @ bb-home.com www.BroadbandGurus.com 18 Beaver Ridge Road, Morris Plains, NJ 07950-1901 (973) 644-4739 Fax (973) 538-6003