Next Generation Services - Deployed

1. Next Generation Services- Deployed Richard Pruss Principal Engineer NSSTG - System & Technology Architecture

2. Next Generation NetworksAlready deployed “The future is already here - it is just unevenly distributed.” • William Gibson, science-fiction author

3. Agenda • New Access Media • OTT & SP reactions to OTT • Free • One baby picture - ISG • The non-dialog

4. Policy Landscape a year ago(today we have more standard…)

5. But then out of the blue lots of new access networks got build on ISG

6. Broadhop SME Off-net Apps CRS-1 ISG SCE Internet Metro-Ethernet WiSM 7600 Open/Walled Garden On-net Apps Residential Business Mobile/Fixed Indoor/ Outdoor ServiceMesh – More than Wireless AP’s

7. Municipal Applications Internet Public Agency ISG ISG for Wireless Mesh User Authentication Wholesale VRFs Captive portal for PWLAN billing and targeted advertising WMM to DSCP QoS Mapping User Directory WPA2 & AES encryption for greater security WPA2 & AES encryption for greater security AAA queries departmental user directories User Directory Police Dept VLAN Fire Dept VLAN Non-Broadcast SSID=PublicSafety Security = WPA2 PWLAN VLAN Parking VLAN Inspection VLAN Broadcast SSID = Public Security = Open Non-Broadcast SSID = City Applications Security = WEP 802.1x and Dyn VLAN Assignment

8. Wireless AP on Light Pole – Adelaide CBD Access Point

9. BS Extending Cisco ServiceMesh ArchitectureTo Hybrid WIMesh and WIMAX Networks Customer Access Aggregation IntelligentEdge Multiservice Core Internet • DSL • Cable • ETTx • WiMAX Gov’t/Municipal CiscoWCS Off-Net Apps SME Cisco 3200 Indoor Business ASN Cisco ISR CiscoAironet Cisco WiSM Cisco CRS-1 Cisco ISG Cisco SCE Outdoor Internet Residential Cisco 7600 Metro Ethernet SA/Linksys CiscoAironet 1500 Walled Garden On-Net Apps ContentEngine IPS/IDS Controller

10. Agenda • New Access Media • OTT & SP reactions to OTT • Free • One baby picture - ISG • The non-dialog

11. Drivers of Collaboration Access to OTT Services and Applications drives penetration of Consumer Broadband Guaranteed Delivery of time Sensitive Applications like Voice and Video. Precision Advertising Drivers of Competition OTT Communications Providers like Vonage, Skype, GoogleTalk… represent Service Substitution and Pricing threats to Traditional Voice. OTT Content Providers like Disney and CinemaNow are looking for opportunities to use The Internet as a means to disintermediate video distribution businesses. Over-The-Top Providers: Value-adding Partners, Disintermediators, or Both? Source: Cisco IBSG, December 2006

12. OTT Linear TV, using P2P TechnologyJoost (from the creators of Skype/Kazaa) • Free of charge to Users, Ad sponsored. • Content from: Nat Geo, Viacom, JumpTV, CBS, WCSN, ... • Advertising partners include CocaCola, HP, Intel, Microsoft, Nike, Nokia, Vodafone, P&G, Nestle, Unilever, ... • Streaming at 700Kbit/sec download, 0,32GB/hour & 220Kbit/sec upload, 0,105GB/hour) • 100.000 Channels planned. • Rich Search, Navigation... Chat, Rate • P2P runs at deficit (download > upload), Joost will make up for the missing capacity with distributed data centres.

13. OTT Channel ExtensionsBBC, Linear TV and VoD • BBC is now a Global ISP • They PEER rather than PAY for Internet Access (~500 Peers in UK, NL, DE, US...) • BBC iPlayer is based on P2P • Seven day TV catch-up and BBC archive are distributed using P2P Technology. • BBC Simulcast requires Multicast • Only ISP’s who provide Multicast Peering to BBC are eligible for Internet Simulcast. • Significant Traffic Surge • +3GB/User/Month => 400+M£ cost for ISP’s (OFcom)

14. OTT Video on DemandXbox Video Download Service (~5GB per HD Movie...) One HD Movie ~ Avg Monthly Internet Usage

15. OTT’s moving to Connected ExperiencesAcross Devices, Networks, Locations

16. OTT Video, User GeneratedYouTube hits 100M video’s per day (June06)

17. OTT VoIP100+ Million Users, 27,5 B Minutes (2006), 77M$/Quarter (04-2007)

18. Interconnection with OTT Providers Example : Apple • Most Content Providers Buy Internet Access/TRANSIT for All their Traffic. • May also Buy CDN capabilities (ex. from Akamai) to scale and get content closer to Eyeball Networks … or move to P2P • Ex. Apple iTunes uses Akamai • Large scale, Network Savvy Content Providers • PEER with Tier2, Eyeball ISP’s (Public & Private) • May also build their own IP Backbones (Back-end interconnect of distributed datacenters) • Bypass Tier1 ISP’s as much as they can. • Mostly Outbound Traffic • Peering Policy : No Peering … Open Example : Google, Yahoo

19. GoogleNetA PortalNet or a Parallel Internet BackBone GoogleNet (Faster, Cheaper, More Reliable) • Google has been buying Fiber on a Worldwide basis • Google builds it’s own worldwide IP Backbone. • Google peers locally, often on a Settlement Free Basis, with Eyeball Carriers. • Google can send any amount of traffic into the Internet without paying anyone, they are Nobody’s Customer. • Google distributes it’s DataCenters to be virtually ONnet to Eyeball networks. Google is now only a few Hops away from Any User on the Internet. • Tier2 ISP’s invest in massive Local Loop upgrades to support IPTV. • Google drives Net Neutrality so that whatever Traffic they send, can’t be impaired. • Google can now addresses Service Substitution (GoogleTV, GoogleTalk…) DataCenters can be colocated at Peering Points 10G N*10G 40G 100G N*100G Some 300 Exchanges Worldwide IX IX IX IX IX IPTV Local Loop Upgrades Google-WIFI / Users

20. OTT Impact on Service ProvidersThree main Areas of Concern • Out-of-control Traffic Growth • Average User’s Traffic is increasing at 50-100+% per Year • Usage Substitution • Time people spend on the Internet (e.g., User Generated Video) reduces time spend watching TV • Advertising spend shifts with usage • Service Substitution • Time shifting is one of the most important consumer behavioral trends related to entertainment and is “OTT-friendly” • Explosion of Online content sources (iTunes, Xbox, Amazon, CinemaNow, MovieLink, Vongo…) Source: Cisco IBSG, December 2006

21. OTT leads to Out-of-control Traffic growth European example 2005 Average €/Mbit/sec

22. Traffic distribution among Res. BB Users10,000-fold variation Avg = 10GB/Mo 50% 20% 90% Users are under the Avg 5% 1% 1% => 225+ GB/Month 5% => 60+ GB/Month 20% => 7,5+ GB/Month 50% => 1+ GB/Month 1 TB/Mo Source : http://www.iepg.org/march2005/kjc-iepg200503.pdf

23. Traffic Growth outpaces Cost Declines… IP Transit Price Declines Versus Traffic Growth in Select Cities 2005-2006 Source: TeleGeography, 2006

24. 4 Possible Actions towards OTT Players • Ignore/Monitor • Ignore the thousands of irrelevant OTT services. • Deploy Traffic Analysis & Monitoring capabilities. • Defend • Block OTT. • Quota, Traffic Management, Fair Use Policies… • Re-Assess Free Peering. • Reserve some network capacity for own use. (Private-IP) • Triple Play = Default Service. • Collaborate • From Co-marketing to Integration of Services. • Optimised Delivery, Qos, CDN, Multicast, Traffic Mgt exemption… • Improved Access to TV & Mobile. • Precision Advertising. • Become/Imitate • Deploy Services beyond your own footprint, ex. VoIP over any broadband. • Develop an On-line video strategy.

25. Agenda • New Access Media • OTT reactions • Free • One baby picture - ISG • The non-dialog

26. ILIAD CY 2006 Figures • Financial performance • Revenues up 31.2% at € 950.3 million • Group EBITDA up 47.8% at € 331.6 million • EBITDA margin at 34.9% • Net Income up 79.9% at € 123.9 million • Operating performance • Leading alternative ADSL operator with over 2.8 million subscribers • Unbundling ratio > 75% • Gross Margin per ULL Subscriber > 20€

27. FREE: The Leading Alternative DSL Operator in a Consolidating Market

28. ILIAD 1H2007 Figures • Financial performance • Revenues up 30.7% at € 574.1 million • Group EBITDA up 36.6% at € 205.6 million • EBITDA margin at 35.8% • Net Income up 34.6% at € 78.9 million

29. Iliad 1H2007 Operating Performance http://www.lightreading.com/document.asp?doc_id=133564&print=true September 2007

30. FREE Triple Play Offer Up to 2005

31. FREEBOX: #1 Home Multi-Media Gateway

32. 2005 Keys innovations

33. Creating a new TV Experience

34. Compelling Traditional TV Experience

35. Beyong Traditional TV for Viewers

36. FREE Triple Play Offer 2006

37. Key Development in 2006

38. Freebox HD (High Definition)

39. FREE Triple Play Offer 2007

40. Key Development in 2007

41. Key Development in 2007 • Main channels in MPEG-4 for increased coverage • DSLSafe for increased Quality of Experience • Fax Service • Content Deal for S-VOD with Disney • FTTH Offer Launch • 100 Mbit/s / 50 Mbit/s • Unlimited VoIP in 49 countries • 2 HD-TV Capable box (HAG and fully-fledged STB)

42. 2006 Results

43. CY06 : Record ADSL Net Adds

44. Efficient Marketing through Innovation

45. CY06 : Broadband Revenue and ARPU Growth

46. Driving the VOD Concept in France

47. FREE ADSL Subscriber Base

48. Cutting Edge Technology at € 29.99

49. What is coming in 2007

50. FTTH Roadmap