WHO ARE THE ECHO BOOMERS?

Echo Boomers are the generation born between the early 1980s and the mid 1990s. They are the children of the baby boomer generation of the 1950s and 1960s. There are over 250 million of them and the oldest are now moving into adulthood to become the first true digital citizens.

They are also known as: ‘Generation Y’, ‘Bridgers’ or ‘Millennials’. Most have grown up in a world where they’ve never ridden in a car without a seat-belt, spent a day at the beach without sun cream or left home without a mobile phone.

Real World Quadruple Play:Converging Fixed and Mobile

Broadband25 September 2006

Jeremy Steventon-Barnesjeremy.barnes@tellabs.com

Key Message

Consumers demand services that are instant, intelligent, and indispensable

Converged services require deep fibre for high quality triple play, plus bandwidth scaling for mobile broadband

Agenda

>Convergence trends>Triple play and deep fibre>Mobile broadband

About Tellabs

> Over 30 years’ experience> Leader in North American

fibre access> Over 1/3 of global wireless

calls are made on Tellabs’ customers’ networks

> Solutions in about 300 networks in about 100 countries

> About 3,700 employees > 2005 annual revenue $1.9B

Operator ChallengesFixed Operator Business Challenges

Source: Infonetics, “Service Provider Plans for IP, MPLS, and ATM”

Reducing opex and creating new services are key to growing revenues and beating the competition

Operator ChallengesMobile Operator Business Challenges

Again: creating new services and reducing opex

Source: Infonetics, “Service Provider Plans for Next Gen Mobile and Wireless Broadband”

Convergence Vision

Converged Network

Mobile

Business Access

ResidentialAccess

New services, opex synergies, lower churn…

31st May 2006Orange Pioneers Total Communications: Integration of Mobile, Fixed-Line and Broadband plus business communications services

- Orange, Wanadoo, Equant and Etrali unite under the Orange brand- A single customer experience from sales to service- Launch of free Orange broadband for Orange mobile Pay Monthly customers- Free fixed-line calls to Orange mobiles with new "Anytime" broadband talk service- Future converged services announced, including One Phone, single email and one address book across mobile and broadband- Orange Business Services: a single banner for all business services

Convergence by Orange

Convergence by Sky18 July 2006BRITISH SKY BROADCASTING PLCFree Broadband for Sky CustomersLaunch sets new standards in quality, ease and savings

Convergence by Vodafone30 May 2006Vodafone Group

Strategy update from Vodafone

“In the context of changing customer requirements and the growing convergence of mobile, broadband and the internet, Vodafone's third strategy objective will be to innovate and deliver on customers' total communications needs.”

> 1 September: “Vodafone Germany launched … flat rate … fixed, mobile and DSL services”

> 11 September: “Vodafone to deliver fixed-line broadband services in the UK”> 15 September: “Vodafone Italy and Fastweb announce joint broadband initiative”

Marco Tronchetti Proveraex-Chairman, Telecom Italia[“The Economist”, 14 Sep 2006]

Thanks to broadband, telecoms

and the media are converging

and that is where we are moving

Convergence by Telecom Italia

3play and 4play defined

Triple play (telecommunications)From Wikipedia, the free encyclopedia

In telecommunications, the Triple Play service is a marketing term for the provisioning of the three services: high-speed Internet, television (Video on Demand or regular broadcasts) and telephone service over a single broadband connection.

Triple Play has led to the term "Quadruple play" (or 4play) where wireless communications is introduced as another medium to deliver video, Internet and voice content. The grouping together of services (as triple or quadruple play) is called multi-play.

Multi-play bandwidth needs

HDTV in multi-play need for deep fibre

SDTV Stream 1 = 4MbpsPVR Stream = 4Mbps

Premium HDTV Stream = 12MbpsSDTV Stream 2 = 4Mbps

High Speed Data and VOIP = 5Mbps

AoD/VoD Stream = 4Mbps Gaming Stream = 4Mbps

FTTx Options

Local Exchange

150m

FTTC

FTTP

1.2-2.4km

FTTN

BPON/GPON

ADSL2+/VDSL2

GE

100M

100M

10-20M

VDSL2

1980s 1990s YE-99 YE-00 YE-01 YE-02 YE-03

Fibre costs in for greenfield deployments

FTTP Per Home Capital Costs

Parity with Cost of Deploying New Copper

Source: In-Stat/MDR

Fiber

Copper

Triple play summary

> 3play is as old as cable modems> 1st generation 3play with IPTV over

ADSL2+ only delivers SDTV> Satellite, cable and competitive

operators are offering a growing menu of HDTV plus instant Internet

> To compete, incumbent operators need deep fibre, ie FTTP or FTTC

Mobile Broadband

>4play is more than just adding mobile voice to 3play

>Mobile broadband is being realised through 3G HSPA

>Data traffic grows rapidly large bandwidth upgrades

>Revenue growth is slower>Operators must decouple

bandwidth from cost…

Europe: Mobile Revenue Trends

2004 2005 2006 2007 2008 20090

50

100

150

200

250

300

US$

Bn 18% 21% 24% 27% 30% 32%

Voice Data Source: Pyramid Research

Data revenue grows steadily…But data traffic grows dramatically…

Mobile Operator Revenues

Backhaul Costs (traditional approach)Margin Squeeze

Mobile Margin Trends?

Cost-effective backhaul OR margin squeeze?Time

Money

Mobile Network Evolution

> Wireline broadband as a precedent> Minimise backhaul opex

> Reduce leased line bandwidth for 3G data with statistical gain

> Substitute Metro Ethernet & DSL for expensive TDM leased lines

> Deploy Ethernet Microwave with adaptive modulation

> Converge with wireline broadband infrastructure where possible

> Anticipate new standards and services

Summary

Consumers demand services that are instant, intelligent, and indispensable

Converged services require deep fibre for high quality triple play, plus bandwidth scaling for mobile broadband