Welcome

1. Welcome Mazen Jabri Territory Manager, Gulf Service Provider Line of Business Cisco Service Provider Vision

2. Roadmaps for Success: New WorldBusiness Modelsfor Service Providers Muscat -May 29th, 2001

3. DisruptiveTechnology Deregulation Capital IP Drivers of Telecom Market Telecom Market

4. Internet Circa 1994 1997 2000 Access Method Dial-up T1 DSL/Cable Intelligence to the Internet Application • Mass e-mail • MyYahoo • Video on demand Fiber

5. Intelligence to the Internet Convergence to HTTP Complexity and Scale Personalization

6. Wireless Internet • Internet—anytime, anywhere • Internet to the masses • 500 million subscribers ww today • 2 billion expected in 2003 • Emerging markets • Europe, India, China • PC substitute • Conquering the digital divide • Less financially affluent • Less technically affluent

7. Content IP BB Access The “3” Layer Model

8. Content Delivery Networks Optimize Internet Experience by Connecting Users and Customized Content Delivery Switching Caching • Network/server knowledge • Forwarding of content to caches • Redirecting users to content • Forwarding based on http information • Hardware assisted switching • “Integrated” caching and delivery • Local content insertion • High performance serving

9. IP Service Enabling Enable Networks to Offer Managed Value-Added IP Services at Wire-speed Hardware Software • Decoupling services from switching • Custom silicon • Service • Switching • Service creation • Provisioning • Management and monitoring • Billing and accounting Control

10. Optical Networking Revolutionize the Transmission Infrastructure for Internet Scale Bandwidth IP Optimized Multiservices • Wavelength proliferation • From 2.5G to10G to 40G • Dramatic improvements • Controlling optics with IP • Eliminating multiplexing layers • Storage • Metro/Ethernet • Long and ultra long haul • Legacy traffic

11. 3G and IP Wireless Deliver the Internet Anytime, Anywhere Capacity IP Services New Applications Data Rate of Wireless • From overlay to pure packet based networks • Converged data/voice • Customized internet • M-commerce • Location-based services • Remote access Years

12. SP Industry Disruption:Waves of Opportunity B2BeMarketplaces eCRM Click-to-Talk Portals/Online Services HostedApplications IndustryDisruption IP Telephony WebConferencing eCommerce UnifiedMessaging OnlineCommunities WirelessWeb Access Video-on-Demand

13. Communications Content Information Entertainment Commerce Community Efficiency/ Productivity Universal Access Mobility, Flexibility Personalization Self-Provisioning Customer Needsin the Internet Economy

14. Which Businesses, Customers, Industries do you Serve? Manu-facturing ConsumerPackagedGoods Health Care Government Retail Education Insurance Oil & Gas LargeEnterprises Small-MediumBusinesses Securities Utilities Service ProviderBusinesses Transport-ation Banking Other ServiceProviders Entertain-ment ISPs Consumers NSPs LocalInformation Enterprisesas SPs Teenagers HomeAutomation

15. Falling Prices: U.S. Interstate Long Distance (Voice) U.S. Interstate Long Distance Price per Minute 80-02CAGR -6.4 Continued deregulation Increased competition: CLEC and RBOC penetration of LD Lower access costs Lower network operating costs 95-02CAGR -12.3 Source: FCC; Dataquest; IDC Packetized Voice Services (January 1998)

16. Making Money Up the Stack:End User Activity Drives Revenue End User/Customer Value-AddSolutions (conceptual) Use ofContent &Apps Traffic, Revenues ContentDistribution Hosting Solutions Value Add NetworkServices Access Transport ServiceProvider Closeness to Customer Delivery

17. New World SP Solutions:Engines for Growth Worldwide Service Revenues$ Billions 1999-2004 CAGR (%) 315 32.4 37.7 233 Content and ApplicationsSolutions 78 47 21.9 82 Data Communications Services 31 Sources: IDC; Dataquest; Forrester; Morgan Stanley Dean Witter; Internet Research Group; Veronis, Suhler & Associates; Cisco analysisNote: Wireline voice transport grows at 7.6% from 564 B (1999) to 815 B (2004) and wireless voice transport grows at 13.8% from 225 B (1999) to 430 B (2004)

18. Example Roadmap ofNew World SP Solutions BasicSolutionsData Storage, eFax,eMail, Messaging,IP Telephony AdvancedSolutionsHosted Apps,Unified Comms,Portal Services Content andApplicationSolutions Basic DataTransport,Access,Web Hosting AdvancedDataIP VPNs, Extranets,Managed Security,Wireless Access DataCommunica-tions Svces Solutions Value-Add (Wireline)Basic VoiceLocalLong Distance AdvancedVoiceCall Waiting,Caller ID, * 69,Conferencing WirelessVoiceLocal,Long Distance,Call Waiting, etc. VoiceCommunica-tions Svces Time

19. WirelinePhone WirelessPhone PC/Desktop TV Pager/PDA Access Device (Traditional vs. New Usage) Value Chains 1. Broadcast Content New New New Old New Video 2. Web Applications New New Old New New Data 3. Web Content New New Old New New 4. IP Telephony New New New New New 5. Wireless Voice --- Old --- --- New Voice --- --- --- --- Old 6. Wireline Voice Converging and De-layeringService Provider Value Chains

20. Web Content Delivery Value Chain:Who Pays Whom? • Disney • Time Warner • Universal Studios • Warner Brothers • Paramount • New Line Cinema • Viacom • CNN • NBC • Newscorp • ZDnet • CBS Market Watch • CNet • ESPN • iVillage = revenue flow ContentProvider • Akamai • Adero • Mirror Image Internet • Digital Island/ Sandpiper • Real Networks • Yahoo! BroadcastServices • Edgix (satellite) • IBeam Broadcasting (satellite) • AudioSoft • Digital River • Infinet • Intertainer • MP3.com • ProWebCast ContentProvider ContentProvider CDSP NSP/T1 ISP T2/3 ISP(local access) WirelessISP (or) ILEC/CLEC EndUser CDSP: Content Delivery SP(Akamai, Digital Island/Sandpiper)

21. Transactions vs. TransmissionMoving to New Revenue Models • Usage-based Billing (SMS) • Functional Services • Software App Services • Content Delivery Services • Advertising • Revenue-Sharing MeteredBilling

22. Usage-based Billing • On the model of existingOn demand services • Charge for each usage of short messaging services, message translation services, web- or email-to-fax services, find-me services, etc.

23. Functional Services • Service Subscription Fees • Charge for availability of network-delivered services (monthly charge) • Consumer example: home security service that calls police, neighbors, find-me services for each parent • Business example: company calendaring service, charge by corporate user by month

24. Software Application Services • Usage-based Billing to Businesses • Provide hosted business applications (eSFA, eHR, eCRM) to enterprise/SMB; Charge business for each application usage (by the drink) • Usage-based Billing to ASPs/ISVs • Provide AIP (Application Infrastructure Provider) hosting/ data center services for ASP/ISV; Charge ASP/ISV for each application usage

25. Content Delivery Services • Usage-based Billing for Content Delivery • For delivery of rich media content, charge by item of delivered content • Consumer example: Charge by the item for music- or video-on-demand • Business example: Charge by the seat for web-based distance learning/ company training sessions

26. Advertising • Advertising Revenues from Businesses and Other Organizations • Subsidize web and voice portal/ search and content delivery services • Subsidize business and residential user Internet access, IP telephony, eventually IP video • Results in free to the user Internet access, free IP telephony, free IP video

27. Revenue-Sharing:ASP Example • Revenue-Sharing With Software Vendors/ ASPs • SP provides AIP services for hostinge-business applications for free/ at below market rates • ISV/ASP does all customer support and service functions as well as software development and application integration • SP shares in ISV/ASP revenues -- charge per usage, per seat, per project

28. Revenue-Sharing:Content Delivery Example • Revenue-Sharing With Content and Media Creation Companies • Provide free/ low cost content production, hosting, distribution, transport services in exchange for cut of content creation fees • Example: free production, hosting, and transport of digital films for playing directly in digital projection theaters in exchange for a cut of theater ticket sales and/or artist royalties

29. Revenue Sharing:e-Commerce Example • Share of e-Commerce Transactions for an Enterprise/SMB or a B2B Marketplace Operator • Develop web site/ integrate packaged application (or done by partner), provide hosting, access, transport for free/ less than market rates • In exchange for cut of revenues from products/services sold via web site or in the B2B eMarketplace

30. New Services and Solutions:Content and Applications Business Solutions Consumer Solutions HostedApplicationSolutions • Personalproductivity applications • Online gaming • E-business applications(internal-facing andexternal-facing) Content &MediaSolutions • Content delivery: distance learning, advertising, co. websites • Content delivery:music-/video-on-demand Communica-tionsSolutions • Managed email • Short Messaging • Web conferencing • Unified communications • Managed email • Instant Messaging • Web conferencing • Unified communications Portal/MediationSolutions • Web portal • Voice portal • Online businesscommunities • Web portal • Voice portal • Online personalinterest communities • Home automationsolutions (security,energy, appliances) • Data storage & mgmt. • Business processoutsourcing

31. Challenges in eBusiness Transformation • How should we organize for eBusiness? • How can we change the “Old World” culture? • What should we do with our legacy systems? • Which eBusiness solutions should we do first? How can we identify them? • What can we do to become a “cool” place to work in? How can we attract and retain talent? • How can we increase the value of our company through eBusiness? 31

32. eCommerce/eMarketplaces IP VoiceServices AIP/ASPSolutions IP Videoon Demand eMail Mgmt.Services Data Storageand Mgmt. OutsourcedContactCenters Portals OnlineCommunities UnifiedMessaging eFax Mgmt.Services Chat/ CollaborationSolutions Home SecuritySystems Solutions Prioritizing Solutions Opportunities:Some Examples High EconomicOpportunity(revenuegrowth,margins) Low Low High Ability to Execute(based on competitive assets)

33. Internet Economy Business Models Ecosystem Partnerships World-class Technology Cisco as Strategic Partner

34. Cisco’s Role: Helping SP Build Profitable Revenue Streams Cisco asStrategic Partner: Help SP ChooseOpportunities and Build the Infrastructureto Create ProfitableRevenue Streams At the Crossroads:Which Opportunities?How to Build? ChallengesandOpportunitiesin theNew InternetEconomy

35. JumpStart, CPN • Partner programs(OSS, CHAI, etc.) • Ent. Sales/ PAM • WW Channels • CA-SP, PSO • IBSG-SP • VariousBusinessModelingefforts(cable,hosting,STEM) • IBSG-SP • SP Sales • SP Field Ops • BDMs • IBSG-SP • SPLOB(MSCs) SP Business Models:Roles and Responsibilities 1-2 DayWorkshops 4-12 WeekEngagements EBCs StrategyConsulting &BusinessPlanning DeploymentandGo-to-Market EvangelizeandEducate DetailedFinancialModeling

36. SP as an e-Enterprise ... Running my ‘e-SP’ 1 SP as a company whose mode of operating is deeply altered by Internet technology... eCare eCom SP as a provider of eBusiness services to its customers ... WO SCM 3 Running my Network: “Zero Touch” Providing eBusiness Services to my Customers 2 eOSS eBSS Service Providers can benefit from three key opportunities in eBusiness. … to increase productivity and agility, reduce operating costs, and improve customer loyalty … to reduce network operating expenses, time-to-market, etc. e-SP … to generate new flow of high-margin revenue

37. Service Provider as an Enterprise: “Transforming into an e-SP” 1 Examples eBusiness Solutions Web-based employee automation: directory, expenses, purchases, training registration, e-learning, executive intelligence systems (EIS) Workforce Optimization Web-enabled catalogue, pricing simulation tools, lead times, service configuration, on-line ordering, bill payment, CRM, click-to-talk e-Commerce Web-based customer care, service order status, service level agreement information, custom bill presentment, equipment and service inventory, trouble ticketing, automated advisory services, etc. e-Care Supply Chain Management Customer premises equipment supplier integration, field force, maintenance and subcontractors, etc.

38. Service Provider as Network Operator: “Zero Touch Dream” 2 Examples eBusiness Solutions • Flow-through provisioning system: • Address validation check • Feature availability check • Customer service record • Service planning • Service configuration • Service provisioning • Billing • ... Automated Service Provisioning Automated Network Management • Custom management of the network: • Network configuration • Element management and testing • Service fault and performance analysis • Security management • Service provisioning lead times • Trouble ticket • ...

39. Service Provider as Provider of Services: “e-Business for my Customers” 3 Examples E-Business Solutions E-Business Value Added Services for Large Enterprises Consulting and systems integration of e-Business for large enterprises, development of partner ecosystem Basic: Web Sites, IT Services (backup / storage), email, simple Desktop Apps (e.g. Calendars). Complex: e-Business Applications (e-Commerce, e-Care, Workforce Optimization, Supply Chain Management) Application Service Provider (Basic and Complex Hosting) for SME Vertical Industry Specialization Vertical market focused portals(COIN) and applications Media Play E-Learning, e-Training, e-University, e-TV

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