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Metro Wireless

Metro Wireless. Mark Morell February 3, 2004. What’s Driving Wireless Today?. The Wireless Lifestyle has become mainstream Call the person, not the place Traffic is shifting to the Wireless Network Fixed Voice migration in the home and office

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Metro Wireless

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  1. Metro Wireless Mark Morell February 3, 2004

  2. What’s Driving Wireless Today? • The Wireless Lifestyle has become mainstream • Call the person, not the place • Traffic is shifting to the Wireless Network • Fixed Voice migration in the home and office • Wireless as first infrastructure in developing markets • Data traffic is a growing profit driver • Already dominates fixed networks, emerging in Wireless Users are driving services to Wireless

  3. Traditional Market Growth Metrics July ’03 - 1,256 2,007 1,149 2002 2004E 2006E Source: IMS Q1/03 309 1998 2002 2006E Source: EMC Q1/03 Nortel Estimate Subscriber Growth continues to drive Revenue

  4. Wireless Today and in Five Years 19% of U.S. Voice Traffic is Wireless …growing to 50% Wireless is 34% of GlobalTelecoms Service Revenue …growing to 50% 50% 19% Packet 4% 1998 2002E 2008E 1998 2002E 2008E Source: FCC / CTIA / Nortel estimates ITU, 2003

  5. Forrester – December 11, 2003 Company Reports, financial analyst Company Reports, financial analyst Company Reports, financial analyst The US Wireless Players

  6. Data Bolsters Revenue Steady Global Data Growth Revenues increasing % of Revenue increasing Traffic increasing

  7. 2G 3G 2.5G 2.4 Mbps SMS < 1 sec < 1 sec < 1sec E-Mail 4.2 sec 1 sec < 1 sec Web Page 30 sec 6.7 sec < 1 sec Picture 23 min 19 sec 2.1 sec Audio Song 42 min 19.5 min 1 min UMTS GSM EDGE GSM GPRS CDMA 1xEV-DO CDMA IS95 CDMA 1xRTT GSM TDMA IS136 CDMA 1xEV-DV 5 hr 1 hr 2 min Music Video 3G Standards 384kbps 118 hr 26 hr 1 hr Movie Source : Reed Hundt, McKinsey and Co Peak Data Rate 307kbps 170 kbps 3G Evolutionary steps timed to meet market demands for high speed data and increased voice capacity 2001 2002 2003 2000 2004 Wireless Networks Evolution

  8. GTRAN DotSurfer 6000 GTRAN DotSurfer 6200 LG KH-5000 LG SV-110 LG KV-1100 SK Teletech IM-6100 Assorted Devices Sharp SH2101V (FOMA) Fujitsu F2611 (FOMA) Panasonic P2402 (FOMA) Many different styles Not just typical handsets Motorola A835 Motorola A920 NEC e808 NEC e808Y Nokia 7600 Source: 3GToday.com

  9. GPRS Summary • 16.7M active GPRS subs. globally at end of 2Q03 • 37% increase from 1Q03 • 4.5M added in 2Q03 • 8.9M active GPRS subs in WE at end of 2Q03 • 4.7M active GPRS subs in AP at end of 2Q03 • 2.0M active GPRS subs in NA at end of 2Q03 • >200 GPRS networks worldwide have been commercially launched • Another 33 GPRS networks are in deployment and another 26 are planned • >156 GPRS terminals made by more than 38 manufacturers available • 47M GPRS devices were produced in 2002 and 95.7M expected in 2003 • GPRS growth driven by better terminals, improved coverage and content • 3M Vodafone Live! subscribers by Oct. 2003, just one year after launch • Over 1M subscribers outside Japan on i-mode over GPRS as of Sep. 2003 • RIM had 711K subs as of Aug 2003 and is targeting 1M by 5/04 (growth driven by RIM on GPRS in Europe and NA) Sources: EMC Data Metrics Sep. 2003, GSM Association

  10. 90% increase in data ARPU year-over-year Data ARPU Progress – T-Mobile NA Customers (M) Data ARPU $US Data ARPU/Postpaid Subs. SMS Customers (M) 1.1B billable SMS messages in 3Q03 3Q03 data ARPU: 2.7% of postpaid ARPU RIM Subscribers (K) Paid Downloads (M) Subscribers (K) # Downloads (M) Over 75% buy downloads using wireless handset International roaming capabilities Source: T-Mobile USA

  11. Global Summary Asia • There were 64.6M 1xRTT subscribers at end of Sep. 2003 representing 37% of CDMA subscriber base of 174.1M • 23.4M active data 1xRTT subscribers globally end of 2Q03 with growth of 27% from 1Q03 • 21.0M active data subs. in AP • 1.6M active data subs. in NA • Almost 1M active data subs. in CALA • 63 CDMA2000 1X commercial networks launched • 14 CDMA2000 1X networks are scheduled to be deployed in the next 12 months • More than 422 devices are available with color displays, cameras, and GPS capabilities 1xRTT Summary • Korea and Japan most advanced 1xRTT markets • More than 25M 1xRTT subs (~56% of mobile subscribers) in Korea • KDDI Japan has now surpassed 11M 1xRTT subscribers (11/03) • At the end of Sept., China Unicom announced a deal to purchase 1M 1x color display handsets • Korea and Japan success attributed to: • Low-cost terminals • National coverage • Multi-media content NA Top 7 1xRTT Operators • Sprint PCSs Vision subscribers were 2.7M in 3Q03, up 29% from 2Q03 • Vision subscribers made up>40% of gross adds in 3Q03 • Data ARPU now >$2 • Verizon is experiencing increased demand for its data services • Test messaging usage was >400M text messages/month and >1B for 3Q03, up 24% from 2Q03 • BREW-based downloadable ringtones, games, and exclusive content grew to 4M downloads/month, up 47% • Picture messaging grew to 2M picture messages/month in 3Q03, in less than 3 months after launch * All of these subscribers are not necessarily users of 1xRTT data services Sources: CDG 12/01/03, EMC, Company reports

  12. EV-DO Status • 8 commercial networks launched by end of 3Q03 • APBW (Taiwan) • Brasil Telecom (Brazil) • KT Freetel (Korea) • Monet Mobile Networks (USA) • PT Wireless (Indonesia) • SK Telecom (Korea) • Verizon Wireless (USA) • Vesper (Brazil) • 4 commercial networks to be launched in next 12 months • KDDI (Japan) launched on November 28, 2003 • TELECSA (Ecuador) • >45 EV-DO devices shipping or announced for 1H04 • 1x EV-DO has reached about 3M subscribers in S. Korea by Oct 2003 • SK Telecom’s 1xEV-DO subscribers exceeded 2.5M by end of 3Q03 • 1X EV-DO “killer apps” in S. Korea are video on demand services accounting for over 50% of total downloads • Other hot applications are ringtone and character downloads, karaoke, and TV broadcasting • 2003 results in Korea expected to lay the groundwork for future revenue generation from these services worldwide Sources: CDG, company websites

  13. EV-DO Data Uptake – SK Telecom Data ARPU by Handset Type (Sep 2003) Total Data ARPU 46,501 ARPU (Won) Total 44,486 44,150 43,788 43,767 ARPU (Won) Data Data 6,604 5,657 5,569 5,325 3,934 Data ARPU %: 5% 13% 28% 34% Data ARPU %: 9% 12% 12% 13% 15% • >2.5M EV-DO customers by end of 3Q03 • >1.2M June customers by end of 3Q03 Won per packet EV-DO Tariffs by Application EV-DO Contents Usage Karoake 5% Other 4% Games 8% Jukebox 11% Video-On-Demand (VOD ) 56% Picture/ Sound 16%

  14. Where Does WLAN Fit? Technology Comparison

  15. Global Hotspot Tracking: # of hotspots in-service Public WLAN Global Status Units (K) Source: Pyramid NA: • T-Mobile announced deal with Texaco to install several hundred drive-up hotspots • Verizon launches a competitive data service in Washington and San Francisco, CDMA 1x EV-DO for PC card and PDA access at $79/month with $150 PC card. • Intel’s dual band PC card (802.11b/a) is delayed to 4Q03 • RIM announced it is developing a Blackberry that can roam between WiFi and cellular networks CALA: • Iusacell Mexico is planning service launch in 1Q04 Europe: • BT Openzone announced reseller relationships with Vodafone and Orange, and Orange offers trails immediately • SFR France announced Paris railway hotspot award to Alcatel • Wind Italy certified Novatel’s Merlin PC card Asia: • Globe Philippines launches PWLAN, mostly in shopping malls and hotels • KT now over 8K hotspots, world’s largest • launching an integrated PWLAN and EV-DO service. • NTT DoCoMo has introduced a dual-mode 3G/WiFi handset • Global: analyst Disruptive Analysis predicts 25M cellular/WLAN multimode devices by 2006, starting in 2004 • Slowdown seen in volume of market events (new services, consolidations, etc.) in 3Q, compared to the first half of the year

  16. Internet Nortel “One-Bill” Solution with Seamless Mobile IP BirdStep Mobile IP client HLR MSC CDMA CS SS7 Customers access WLAN network via Mobile IP client software to CDMA operator Mobile IP Home Agent for WLAN and CDMA 2000 1X/DOMetro Cell BSC/RNC FA PDSN Terminals Data Center AAA Server(Bridgewater or Metasolv) Shasta BSN Nortel WLAN 2250 Security Switch Nortel WLAN 2201 Mobile Adaptor WLAN Data Center Nortel WLAN 2220 Access Point • Single sign-on • Single bill • Single authentication WLAN AAA Server / Radius Proxy Mobile IP allows seamless handoff between CDMA 1X/DO & WLAN

  17. Internet Nortel “One-Bill” AAA-based Solution HLR MSC CDMA CS SS7 WLAN provider and CDMA operator have a billing/roaming relationship that allows access to the CDMA AAA user authentication and RADIUS billing records 1X/DOMetro Cell BSC/RNC PDSN Terminals AAA Server(Bridgewater or Metasolv) Data Center Shasta BSN Nortel WLAN 2250 Security Switch Nortel WLAN 2201 Mobile Adaptor WLAN Data Center Nortel WLAN 2220 Access Point • Single bill • Single authentication WLAN AAA Server / Radius Proxy AAA partners (Bridgewater and MetaSolv) integrates CDMA 1X/DO with WLAN authentication and billing

  18. Wireless Mesh Networks • Key characteristics • Auto-discovery of nodes and routes • Auto-configuration of network components • Mesh topology • Wireless interconnection • Advantages • Rapid network deployment • Reduced infrastructure costs • Reduced engineering and operational costs • Increased network reliability

  19. An innovative public WLAN access solution • Reduces installation and commissioning costs by more than 75% • Self-configuring, self-healing • No RF engineering required • Outdoor packaging and low power consumption permits installation almost anywhere • Reduces operating expenses by more than 70% • Eliminates requirements for wired backhaul connection to every AP • Basic router connection to backbone network, Packet Gateway manages mobility, roaming, and security • Provides differentiated WLAN access in large areas • Mobility within the CAN • Broadband access and transit remove network bottlenecks Internet at large AAA, DHCP, RADIUS Optivity NMS Border Gateway (NAT, Firewall, etc.) NOSS Enterprise / ISP Backbone Network Wireless Gateway 7250 Wireless Gateway 7250 Enterprise / ISP / MetroDistribution Network Layer 3 Switch Layer 3 Switch Wireless AP 7220 Community Area Network

  20. NAP Example – Downtown Core (Toronto) Service Area ~ 1.5 km x 1.4 km requiring 133 Wireless APs and 5 NAPs • Situation • Dense urban area covering financial, shopping, entertainment and government centers • Today: Spotty hotspot coverage • With Nortel Networks PWLAN: High capacity (200 Mbps), low cost data service throughout area • Benefits • Lower OpEx – eliminate 133 T1’s; replace with 5 T3’s • Add in-building coverage to adjacent enterprises • Simplify deployment – fewer connections to make and maintain Wireless AP

  21. Internal Trial at Carling Additionally, 10 WARPs to be deployed inside

  22. 802.16e 802.20 802.16a/d Data Access Landscape GPRS, Mobile Circuit Switch 1xRTT, EDGE UMTS 1xEV-DO Mobile 802.11 a/b/g Nomadic DSL Fixed Cable Modem 10 Mbps 100 Mbps 100 kbps 1 Mbps Speed IEEE is leading the wireless next generation OFDM standards

  23. IEEE 802.16 WMANs Wireless Metropolitan Area Networks (Chaired by NIST) Task Groups (TGs): 802.16a (completed 1Q03) New addition of MAC and PHY for 2-11 GHz, both licensed and unlicensed This complements the original 802.16 (10 – 66 GHz) standard completed previously 802.16c (Chairs: Ensemble Communications, Nokia) Developing a series of three conformance standards in support of the 10-66 GHz air interface specified in IEEE Standard 802.16 802.16d (Chair: WiLan Inc) Ratifying set of 802.16a system profiles to reduce scope of standard to specific, interoperable, subsets. Contributions for 256OFDM will be developed and brought in by WiMAX forum for ratification by 802.16d. Targeting to add “hooks” to 802.16d for forward compatibility to 802.16e standard 802.16e (Chairs: InterDigital, WiLan Inc) Mobile Wireless MAN PAR approved December 2002. Likely to proceed with deliberate speed Likely to be based on OFDM, potentially with MIMO Potential Applications: Point-Multipoint backhaul, including Hotspot backhaul Residential and SOHO DSL-like service Nortel Networks participates in 802.16 One 802.16a chipset on the market today Products expected to reach market in 2004

  24. WiMAX Forum • Seen as analogous to Wi-Fi Alliance in WLAN space: • Being pushed hard by Intel and Fujitsu • Strong push to focus on base profile of 256 OFDM w/o many options • Promote interoperability, certify conformance – I.e. interoperability certification • Marketing, branding, build industry momentum • WiMAX membership includes Intel, Fujitsu & several others: • New members include Motorola and Atheros • 802.16 history is a hodgepodge of point to multipoint solutions for 2 to 66 MHz: • The multitude of options result from an attempt to address several markets (with regulations specifics) and failure to reach a compromise • No mandatory configuration makes interop difficult • WiMAX aims to define a set of system profiles that: • Reduce scope of implementations • Target specific market segments • Guarantee interop • Allow higher volumes and a more competitive market • Are ratified by IEEE 802.16d

  25. IEEE 802.20 MBWA Mobile Broadband Wireless Access PAR was chaired by Flarion PAR and separation from 802.16 driven by Mark Klerer (ex-Nortel, now Flarion) Current leadership associated with Qualcomm, Lucent and NTT-DoCoMo Goal is to develop low latency packet data “cellular-like” service Technology direction unclear Potential Threat to CDMA and UMTS? Target Bandwidth:1.5MHz and 5 MHz Target Spectrum: PCS allocation Snapshot from May 2003 and November IEEE 802.20 meeting Working methods/processes - 3 new correspondence groups created: channel/traffic model system requirements evaluation criteria Requests for more time to create this standard Some recognition of (Nortel’s view of) need for differentiation from 3G To be useful, 802.20 must provide greater value than 3G standards New leadership is not seen as favorable to Flarion technology Nortel Networks participates in 802.20 Too soon to tell whether 802.20 will amount to much May be preempted by 802.16e

  26. Security IPT Prioritized list of Security work • OS Hardening, including documenting the ports and services used on the element • OS hardening work completed for some NEs and EMSs. Work required to document ports and services. • Data encryption. Methods include encrypting the protocol (SSH, SSL, SNMPv3) and/or encrypting the entire path (IPSec). Pros and Cons to both, and we believe both are required in some areas of the solution. • Very few NEs have implemented encryption. Large amount of work/resources required. • Strong Passwords, centralized control • MFT Framework implementing a Radius based solution in FWK 3.3 (delivers with PWI V5 – CuR 2005). A good starting point, but large amount of work/resources required to implement on the NEs, and integrate with all OAM applications. Work can be phased into multiple releases. • Secure Logs/Audit logs, support for security trouble shooting by maintaining an audit trail of user activities. • Framework in place, but requires implementation on all NEs. Work can be phased into multiple releases

  27. Security CTIA stated Priorities • OS Hardening is considered fundamental - Customers want documentation of valid services and ports, and want all unused services and ports disabled and closed • Authentication with strong passwords and centralized administration • Encryption of credentials – don’t send passwords in clear text • Authorization – multiple levels of user access depending on role • Integrity of Data – ensure data received is the data sent • Session Logging – generate audit trails to enforce user accountability • Encryption of data – Prevent theft of data, fraudulent spoofing • Don’t store session logs in clear text – again to enforce accountability

  28. In Closing….. • 3G has arrived… • WLAN integration starting to take place with WWAN • Continued Development of Standards Continuing • Only Time will Tell on which standards are accepted by the Market • Many standards have come and gone in the past • Make no mistake – wireless access is a must!

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