GPON Customer Presentation

FTTH Market, Strategies and Portfolio Update

Wireline MarketingOctober 2009

All Rights Reserved © Alcatel-Lucent 2009

Agenda

€

ECO

Alcatel Lucent GPON Portfolio

Eco-sustainability in access networks

Next generation access

FTTx market


Service evolution overview

Communication Services

Entertainment Services

Wider-EconomyServices

IP Telephony

Free Nat’l Calls

Free Int’l Calls

CommercialFMC

RichVoice

TVVideophony

IPTV

VoD

User Shared-TV

Web 2.0On TV

TV on PC

Webon TV

TerminalVideophony

TrafficInformation

HomeSurveilance

HomeMonitoring E-Health

RemoteElderly

Care

E-Administration

IntegratedFMC

Widespread

Growing

Emerging

Enabling Services

Catch-UpTV

E-Education

InteractiveTV Content

Envisaged

Home Tech SupportUp to 1000/1000 HSI

QoS GuaranteeHome Network Mg’t Up to 100/100 HSI

Up to 50/20 HSI Wireless

DVR

All HD

HD

AdvancedEPG

ExclusiveContent

3D-TV Apps on TV(Open STB APIs)

NPVR

LAN Router

Child Protection

Source: Yankee Group 2009


Sources: FTTH Council; Operators; Alcatel-Lucent

More bandwidth downstream, but also upstream

Today’s downstream is tomorrow’s upstream

Next Generation 3D TV

HDTV VOD

Video Uploads/Downloads

Large File Sharing

Premises Web Hosting

Multi Player Gaming, Interactive Distance LearningNetwork PVRFile Sharing/Home Video Sharing/Streaming

Telecommuting

Video Conferencing, Premises SurveillanceWeb Surfing

FTTPVDSLADSL 2+

CableADSL

20 15 10 5 5 10 15 20 25

Generates new ARPU &

Differentiates Service Offering

Generates new ARPU &

Differentiates Service Offering

Tier 1 operator in Europe:

“One of the main learning from fiber trial is that customer shows strong interest for upload capacity (picture upload, home working, …)”

Tier 1 operator in Europe:

“One of the main learning from fiber trial is that customer shows strong interest for upload capacity (picture upload, home working, …)”


ADSL~12 Mbps

VDSL~50 Mbps

VDSL~50 Mbps

VDSL~100 Mbps

P2P/AE100 Mbps+

GPON100 Mbps+

Strategy

Solving the bandwidth equation with FTT€Alcatel-Lucent’s strategy: “Fiber to the most economical point”

Drivers: up-front CAPEX, competition, and time-to-market


-20%

0%

20%

40%

60%

80%

100%

10% 100% 1000%

FTTx HP Growth [%] 2007-2008

FTTx

HP

[%]

China

South Korea

J apanBelgium

Switzerland

Hong Kong

US

GermanyFrance

NL

Finland

Portugal

Austria

Italy

Sweden

Denmark

Norway

PolandUK

Spain

Croatia

Czech

Slovakia

Lithuania

Ireland

Estonia

Romania

Latvia

Russia

Mature

Fiber Nations On the MoveFTTx has passed the Point-of-No-Return

Today more than 40M BB users are connected via fiber

Moving Leapfrog

15M HH TAD

FTTH

FTTB

FTTN VDSL2

TBD

Source: Alcate-Lucent analysis of industry blend: iDATE, Ovum, Point Topic


Source: public announcements

CountriesAustralia

BelgiumChina

DenmarkFrance

GermanyHong Kong

IcelandIreland

ItalyJapanKorea

New ZealandNorway

SingaporeSpain

SwedenSwitzerland

The NetherlandsUK

USA and Canada

Cable

CableCable

IncumbentAlternative Munis/util.

Cable

ePON / GPONePON / GPON P2P / AEP2P / AE

N/A or TBDN/A or TBD

Public announcements in top BB countries

FTTNFTTN FTTAmplifierfor HFC

FTTAmplifierfor HFC

Cable

Cable

70% top national carriers with GPON

50% countries with at least two operators with

GPON

GPON in volumes initially in the USA

Major operators have defined their FTTx strategy


Source: Infonetics / Analyse Alcatel-Lucent3,4% 4,7% 6,5% 9,5% 13,6%

CAGR 2004-2008

PON in North America and EMAI showing strong size and highest growth

FTTx is translating into numbers, PON and VDSL drives FTTx

As % of fixed BB

subscribers

50% 100% 150%

PON in Asia

PON outside

AsiaVDSL

P2P0

10

20

30

40

50

CY2004 CY2005 CY2006 CY2007 CY2008

FTTx S

ub

s W

W (

M)


Fiber to the most economical point FTT€ Comes in different flavors

CO VDSL2 & FTTH

FTTH/B

FTTH

FTTN VDSL2

AT&TAT&T

Greenfield FTTH

Factors:

Competition

CAPEX/OPEX

Existing infrastructure

Regulation

Incentives

Demand

Greenfield vs. brownfield


High regional variances – different financial profile

Market Driven Policy DrivenRisk Driven

FFP

CO CO

Sharing Dark Fiber in the

Building

Fiber Flexibility Point Building

Fiber Nation = mosaic of Technology-agnostic sharing options

Joined re-use of ducts or dark fibre

Private

CO CO

Ducts / fiber

Private

WholesalerWholesaler

Local community as IP Wholesaler

CO

SPxSP2SP1

Building

owners

PublicPrivate


Fiber is a “big” marketing event

AT&T’s “Ice

Cream” truck

Fios Hummer

Reality Contests

Fios Lounges

Fiber “Tupperware” Parties & neighborhood sales

AT&T’s Experience Stores

You just got to have it!


FTTx comes with profound usage changesHigher BB speeds lead to increased usage, in general

Average broadband speed (Mbps)

tim

e s

pent

onlin

e (

h/w

eek)

“When we upgraded our customers from 2Mbps to up to 8Mbps we saw an average increase in usage of 15% per customer” - Neil Laycock (CEO PlusNet)

Countries included: Finland, Norway, UK, Gernany, Spain, Belgium, Denmark, Switzerland, Netherlands, Austria, Ireland, Mexico

More capacity.... …leads to more usage

Source: Nielsen/Netrating Netview homes data only, June 2006


0%

10%

20%

30%

40%

50%

60%

Cable modem DSL Mobil Breband Optical fibre

I do not like it at all

Its below average

Its average

Its above average

I like it very much

78% of FTTH users are very satisfied

Source: FTTH Council Europe & Ovum, 2009

All Rights Reserved © Alcatel-Lucent 200914 | Presentation Title | Month 2008

0%

10%

20%

30%

40%

50%

60%

70%

Cable modem DSL Mobil Breband Optical fibre Not sure

Less than 30 minutes

30 minutes to 1 hour

1 hour to 2 hours

2 hours to 3 hours

More than 3 hours

FTTH users Spend More Time Online

Source: FTTH Council Europe & Ovum, 2009


Alcatel-Lucent’s leadership in GPON

GPON World-wide Port Shipments (OLT+ONT)

304K

520K

721K

Huawei

Siemens

E///

ECI

Alcatel-Lucent

240K

68K

Huawei

Motorola

E///

Calix

Alcatel-Lucent

Alcatel-Lucent present in all major GPON deployments worldwide – 80+ projects in total:

• #1 FTTx supplier in the US:• AT&T, Verizon

• Leading the largest GPON deployments in Europe:

• France Telecom, SFR, Portugal Telecom…• Developing a strong presence in APAC:

• Hanaro, Singtel, TNZ, China Telecom, China, Mobile…

• Leading supplier of GPON to utility companies and municipalities around the world:

• Utilities include NRGi Fibernet, Jönköping Energi, Bristol Virginia Utilities. Municipalities include Arvidsjaur, Tidaholm Sweden, Lincoln Country US, Asturias Spain…

• Developing references for point-to-point (P2P) fibre solutions:

• KPN (Netherlands), Sydfyns Intranet (Denmark) EWZ (and Switzerland)...

• Winner of prestigious IEC InfoVision Award for GPON ONT (BBWF Paris, Sept. 9/09)

Alcatel-Lucent, a leading supplier of GPON solutions worldwide

Source: Dell’Oro, August 2009

Alcatel-Lucent 37%

Huawei12%

Motorola27%

Ericsson4%

Calix16%

Alcatel-Lucent shipped 37% of cumulative GPON ports up to

2Q09


Alcatel-Lucent – the GPON leader

Operator Vendor 2nd Vendor Deployment model StatusGPON FTTU 3M HP per year, target

18M HP in 2010

GPON FTTU Mass roll-out

GPON FTTU Roll-out started, 15K HC

Dasan FTTB/VDSL and FTTU Nation wide

None GPON/FTTU Massive roll-out

None GPON/FTTU Massive deployment

Tellabs GPON/FTTU Started 2008

None GPON/FTTU Started 2009

GPON/FTTU Since 2008, target 1M HC

GPON/FTTU Massive roll-out


Agenda

€

ECO




FTTx market


• GPON standards based optical broadband - part of the ISAM family with shared technology, management

• 2.5 Gb/s downstream and 1.2 Gb/s upstream over a single fiber.

• GPON encapsulation mode (GEM) for most efficient transfer of IP/Ethernet service traffic

• Up to 64 subscribers per PON (a single fiber), 4 PONs per line card

• Variety of ONT options to match the needs of residential or business customers Optical Line

Terminal

I-Series ONT

O-Series ONT

B-Series ONT

FTTB ONT

7342 ISAM FTTU – Solution in BriefThe Industry Leading GPON platform

€


The Most Comprehensive ONT family available

Residential Business FTTB

Indoor

Outdoor

2xGigE2xFE, 2xPOTS, RF

4xGigE, 2xPOTS, optional RF

2xFE, 4xPOTS, RF

1xGigE, 8xPOTS,

2xE1, RF

24xVDSL2 (30a/17a)

12xGigE, 24xPOTS, RF

2xGigE, 8xPOTS,

RF1xFE, 2xPOTS, RF

4xGigE, 4xE1s

4xGigE

8xVDSL2 (30a/17a)8xFE, RF

7342 ISAM FTTU Optical Network Terminations – Portfolio

€


7342 ISAM FTTU Next-gen family of GPON SFU ONTs

New enclosure

–Indoor and outdoor versions– Smart industrial design– Small size– Wall-mounting capable (w/o separate mounting bracket)

Lower power consumption

– Up to 30% lower

RSSI enabled

–For remote optical power metering

New System-On-Chip

– GE at wirespeed– Multicast across all ports– HW ready for advanced L2 and L3 features

Key Features

€


Towards true multivendor PON infrastructure

3rd party

partnersPlug’n’play interop

ONT portfolio

2009-20102009-2010

Alcatel-Lucent portfolio extension

OMCI Interoperability

Implementer’s Guide - Version 1

full OMCI available to partners

<2009<2009

Expanding Alcatel-Lucent ONT portfolio

for all FTTx deployments

•Home•Building•Business•Cellsite

2010-20112010-2011

Alcatel-Lucent ONT portfolio

Plug’n’ play interop based on

standardized OMCIparticipation in OISG

€


Robust & field proven by more than 80 customers Tested and verified by more than 80 GPON customers Designed for the field: Only industrial temp components All in-house ALU technology, end-to-end (ONT, OLT, TPSDA)

ONT: Widest Portfolio, >20 ONTs for All Customers: Residential Customer: New data only ONT with 4 GE links Business Customers: Up to 4GE, 4E1s, POTS Multi-dwelling units: VDSL2/GE with Virtual ONT concept

OLT: Highest Capacity & Best Scalability Highest switch capacity on the market: 250Gbps per NT Highest uplink capacity: 22 Gbps per NT Unbeaten scalability: Most T-CONTs, GEMports and multicast streams

Most Resilient and Secure Full load-sharing and NT redundancy Extensive GPON specific 802.1ag fault isolation and RSSI (OLT and ONT) Control plane protection (IGMP)

Unrivaled Service Support Full voice support: Class-5/SIP/H248 & widest SIP interop Business& legacy: Circuit Emulation, Mobile Backhaul, MEF E-Line Network synchronization: BITS, IEEE1588

1122334455

Alcatel-Lucent ISAM FTTU: Key Differentiators€


5520 AMS Access Management System: Most scalable & widely deployed management system ww

Realistic equipment views

Realistic equipment views

Intuitive drill downIntuitive drill down

Activity states windowActivity states windowContext-related alarmContext-related alarm

Tree-like network viewTree-like network view

Real-time alarm and status reporting

Real-time alarm and status reporting

Proven access management solution Over 600 systems deployed worldwide More than 80 million lines managed 20 deployments with more than 1 Million lines under management 4 Million lines managed in a single system

Proven access management solution Over 600 systems deployed worldwide More than 80 million lines managed 20 deployments with more than 1 Million lines under management 4 Million lines managed in a single system

€


5520 AMS: New Generation Techology Platform for flexible OSS integration

5529

APC

5529

SDC

TL1GW

Hardware integration

Platform integration

All purposeTL1 interface

SNMP

XML/SOAPLine tests, diagnosis,

Line classification

SNMP, TFTP

XML/SOAPProvisioning,activation,

port inventories…

All purposeTL1 interface

SNMP, TFTP

XML/SOAPStatistics,

performance

XML/SOAPDB Population

Operation Support System

Access Network

XML/SOAPAlarms

5530NA5520

AMS(Core EML)

5529

OAD

5529

IDM

State of the art Web Services (XML/SOAP) - Reduce OSS integration time & cost

€


Facilitate integration of service provisioning OSS to underlying access resources

Hides complexity through resource abstraction

Reduces integration cost and time Support mass provisioning

operations Stable and backwards compatible

5529 APC (Access Provisioning Center)

Advanced interface for intelligent alarm forwarding to network wide alarm management OSS

XML/SOAP interface (MTOSI compliant)

Intelligent alarm forwarding Reduces integration cost and time

5529 OAD (OSS Alarm Dispatcher)

Specialized application for mass collection of inventory data in the

access network.

Centralized database of all NEs Synchronize inventory to OSS systems Powerful GUI navigation Reduces integration cost and time

5529 IDM (Inventory Data Manager)

Intelligent collection and dispatching of network data to performance and QoS applications

Collect mass amount of data Protect NE processing power Reduces integration cost and time

5529 SDC (Statistics and Data Collector)

5529 Portfolio: Market-leading portfolio for provisioning and OSS integration

Unique portfolio of operational toolsFlexible OSS integration - Automate workflows – reduce OPEX

€


5530 NA Network Analyzer (Now applications – Motive Product Unit)

Line and Fiber Diagnostics

• Intelligent wire fault and configuration fault detection based on SELT and DELT

• Proactive detection and localization of optical degradation and failure

• No external test equipment required

Network Analysis

• Network-wide line quality and performance indicators

Dynamic Line Management

• Automatic performance optimization, for maximum stability and bitrate

• Automated DSL transmission profile management (rate, spectrum, ANVN)

Network Analysis

Line DiagnosticsWire FaultDetection

ConfigurationFault Detection

MaximizePerformance

Optimize Stability

Market-leading line/network diagnostics & dynamic line management, >50 customers

Automate helpdesk and provisioning workflows – reduce OPEX

€


Agenda

€

ECO




FTTx market


Our challenge: Cut green house gas emissionICT represents 2% emissions 2007. Not at par with aviation!

Source: Alcatel-Lucent analysis of Smart 2020 data

ICT challenge: x3 increase GtCO2e from 2002 to 2020

0.5 GtCO2e

1.4 GtCO2e PCs, peripheralsand printers

Data centers

Telecom

2% of GHG

2% of GHG

58%

57%

49%

14%14%

18%

37% 25%2002200228%

Telecom Devices

3%Telecom Devices

3%Fixed

Narrow Band 12%

Fixed Narrow Band 5%

Mobile Network

s 12%

Mobile Network

s 13%

Fixed Broadband

4%

Fixed Broadband

1%

2007200720202020

ECO


Three impact areas in fixed access

CO

Network Equipment:

CO equipment, cooling…

Network Equipment:

CO equipment, cooling…

Customer Premises:

ONT, CPE, remotes..

Customer Premises:

ONT, CPE, remotes..

ECO

Outside Plant:Network deployment,

digging, etc

Outside Plant:Network deployment,

digging, etc

GPON positively affects all impacted areas

Customer Premises:

Passively Cooled Remotes,

Eco-efficient ONTs

Customer Premises:

Passively Cooled Remotes,

Eco-efficient ONTs

Outside Plant:Passive network, high-

reliability and immunity of fiber, etc

Outside Plant:Passive network, high-

reliability and immunity of fiber, etc

Network Equipment:

Green GPON, reduced power consumption

Network Equipment:

Green GPON, reduced power consumption


The Business Case is in favor of eco-sustainability

Breaking the OPEX trend with GPONGPON provides more capacity at the lowest TCO

Assumptions:

5 years cost of ownership

0.1 Euros/kWh

0

5

10

15

20

25

30

35

40

ADSL VDSL P2P GPON

Life

-tim

e En

ergy

OPE

X /u

ser

[€]

ECO


Agenda

€

ECO




FTTx market

All Rights Reserved © Alcatel-Lucent 200932 | Presentation Title | Month 2008 32 | Next Generation Access | February 2009

Manage the technology cycleCapacity, reach, split and optical troubleshooting

Less dense areas addressed and central office consolidation

10Gb/s

2.5Gb/s

Reach 20km 30 km 60 km

Split 32 64 128

GPON B+Today

GPON B+Today

GPON C+2009-2010

GPON C+2009-2010

Extended GPON2009-2010

Extended GPON2009-2010

10 Gb/s PON2010-2011

10 Gb/s PON2010-2011

Extended 10 Gb/s PONExtended 10 Gb/s PON1

2 3

Three targetapplications

1.FTTB backhaul

2.Business Access

3.Fiber to the base-station: LTE backhaul

Three targetapplications

1.FTTB backhaul

2.Business Access

3.Fiber to the base-station: LTE backhaul

RE

RE


Making 10 Gb/s PON backwards compatibleIndustry converging on operationally acceptable standard

GPON

10 Gb/sGPON

No changes to OSP, including

fiber and splitter

Many GPON ONTs today have

WBF

10 Gb/s ondifferent

wavelengths(up and down)

WDM to split GPON from

10 Gb/s GPON

Wavelengths for XG-PON same as symmetric 10G EPON – cost efficiency

1260-1280

1290-1330

1480-1500

1550-1560

1575-1580

(in nm)

GPON up GPON downXGPON up XGPON downCATV


10G PON(10Gb on top of 2.5Gb)

WDM PON (as P2P) solutions are subscriber density ‘challenged’

Zoom in WDM PON CAPEX and operational disadvantages

WDM PON(Everyone Gets a Lamda)

Today Over Time Today Long term

GPON

GPON

OLT

Splitter

ONT

Based on a1:32 split

CAPEX Operations

TDM PONWDM PONCAPEX Lowest cost

FTTHx3-4 TDM PON

OPEX LowCO Power,

CO floor space

Eco Lowest power consumption

High power consumption

Standardized Yes Not started

Dynamic BW Yes Not possible

Video overlay Yes Not possible

Passive OSP Passive splitters

Temp controlled or temp

extended AWG

System Design

Straight forward

Complex, many dependencies

Reliability ExcellentAWG needs to be

athermal & reliable


Summary

Alcatel Lucent #1 in GPON

Eco-sustainability = eco-efficiency

Next Gen Access: backwards compatible, no stranded investments

FTTx market is a reality > 40M users

€

ECO


36 | Presentation Title | Month 2009

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