The Next Step In IP Telephony: Hosted PBX Services

1. The Next Step In IP Telephony: Hosted PBX Services Scott Wharton, Vice President of Marketing

2. Agenda • IP telephony roadmap • Hosted PBX services • Market/technology trends • Value proposition • Case studies • Market projections • Summary

3. Bad Quality International Arbitrage Hosted Voice: e.g. Hosted PBX, Voice VPN, IP Centrex, Prepaid, UM, etc. IP Telephony Roadmap Value 1995 1997 1999 2001 2003

4. DesktopCollaboration Self ServiceManagement Core PBX Functions in Network Messaging EnhancedServices Corporate VoiceNetworking Hosted Voice Example: Hosted PBX • PBX Functions in the network • E.g., Connectivity, Call Forwarding, Conferencing, Voice Mail, Music on Hold, etc. • Self Service Management • Custom branded web portals (user, enterprise, reseller, carrier) • Corporate voice networking • Location-to-location calling • Messaging • Unified voice and fax messaging • Enhanced Services • Auto-attendant, IVR, conferencing, call centers, mobility, follow-me, one-number • Desktop Collaboration • Web conferencing, instant messaging and presence, document sharing, desktop video

5. Network Layout Application Server MGCP Softswitch SIP Class 5Switch MediaGateway NetworkGateway Data Network PSTN DSL, T1, Ethernet, 802.11x Broadband Access SmallBusiness Medium Business LargeBusiness LAN LAN Router LAN Switch Line Gateway PBX or Key System IP Phones

6. Paradigm Shift

7. Today WWW Help! The Communications Challenge 1990’s

8. Market Trends: What’s Changed? • Outsourcing more common • Same model as web hosting and email • Companies under increasing pressure to outsource non-core functions (telecoms) • Increasing technological complexity • Increasing telecommuting and mobile worker population • Require expensive remote support and communication services from company • Companies subsidizing these costs • Labor costs rising relative to equipment costs • High cost of IT staffing • Skilled employees hard to find and retain for non-core operations

9. Technology Shifts • Ubiquitous CAT 5 wiring and IP technology • Technology obsolescence accelerating • PBXs lifecycle more like the PC market • IP PBXs blazing the trail • VoIP now considered mainstream • Hosted voice services now available • Meet and surpass CPE features • End of product lifecycle for Class 5 switches

10. Hosted PBX Value: Enterprise • Combine benefits of Centrex with PBX • features + management control with capital savings • Improved total cost of ownership • Converged access • Open, lower cost capex • On-net Voice VPN calling • Move technology risk to carrier • Not locked into technology, move gear between sites • Improved service assurance • Carrier-grade performance, survivability & risk management • Increased employee productivity • Speed projects & reduce travel with collaboration • Tele-worker/mobile support, find-me/follow-me • Web-based self-service

11. The Case for IP over Legacy Legacy IP • TDM Voice • No end-user control • Proprietary and closed • Multiple networks • Expensive MACs • IP Voice • Web-enabled control • Open & standards-based • Converged network • Cheaper MACs

12. End User Benefit Comparison Network IP Tel. 24x7 support Maintenance costs Mixed tech Multi-location Capital cost Ongoing upgrades Scalability Simplicity Survivability Total cost of ownership IP PBX Distribution channel Equal MACs, CTI, Convergence

13. 100 User IP and Convergence Total Cost of Ownership An Analysis of Three Alternatives $250,000 $237,283 Traditional PBX $219,229 IP - Enabled (New) $200,000 IP - PBX $150,000 Solution Cost $135,001 $126,399 $105,724 $109,434 $100,000 Network IP Telephony $82,480 $85,220 $50,000 $60,192 $-0 Year 3 Year 1 Year 2 Hosted PBX Beats IP PBX Solution Cost Source: Phillips-Infotech Oct. 2001

14. Case Studies

15. Background Large chemical company 13,000 employees 150 locations in 60 countries Building IT competency as competitive advantage Bundled voice/data package from service provider Problems Addressed Hybrid network, primarily comprised of 42 PBXs Multiple voicemail systems High cost of LD traffic Only top 4 locations networked Sporadic use of unsecured IM Key Selling Points Uniform services for all employees Enterprise networking; click-to-dial anyone in company Personal mobility services Secure instant messaging Single internal phone list Case Study: Large Enterprise

16. Background World-renowned university Serves 35,000 students, faculty, administration, etc. University recently merged telecom & data departments Chose hosted voice platform after full competitive evaluation vs. IP PBX Three year Centrex migration Problems Addressed Must be profit center by 2005; Plan to sell service to local companies, other universities Dissatisfied with current Centrex offering Key Selling Points Convergence of voice/data Open platform, not proprietary Able to meet scalability needs E.g., Solaris vs. Windows Ease of partitioning system & managing different sets of services between user groups Comprehensive service set from a single platform E.g., voice, messaging, IM Case Study: University Campus

17. Background Major city government 15,000 employees 68 locations Problems Addressed Mixed use of PBX, Key Systems, and Centrex Proprietary phones not interchangeable between systems Some people without voicemail Limited features available across departments Key Selling Points Integration of voice/data Self-management Enterprise-wide dialing plan Disaster recovery for voice Openness of platform and variety of access alternatives, now and in the future Case Study: Government

18. Market Projections

19. IP Voice & Legacy Projections • Share between Hosted and PBX is up for grabs again Enterprise Line Shipments (000’s) Source: Gartner Dataquest, Gartner Consulting

20. Summary • Enhanced IP telephony services are next step in market • Market and technology shifts favor outsourcing • Hosted PBX offers enterprises better services with cost savings • Solutions commercially deployed and available today For more information: Scott Wharton +1-240-364 5107 swharton@broadsoft.comwww.broadsoft.com