1. From TV to TELCO: The Transformation of the Cable Industry Presented By: Seyhan Civanlar CTO and Co-Founder scivanlar@lemurnetworks.com

2. IP POTS MPEG CM NIU STB  Internet access  Email  Primary line  Secondary line  Digital video  Video on Demand  Pay Per View DOCSIS-based IP access Class-5 TDM backend Broadcast-based MPEG Now...Cable Operator owns disjoint network infrastructures and offers a limited set of services

3. IP  Tiered Bandwidth  Instant Bandwidth  Email  Unified Messaging  Gaming  Web hosting  Primary line  Teen Line  Basic Line  Business Line  Digital video  Video on demand  Video on PC  Pick your channel  Reserve your video  Pay Per View  Video conferencing  Caller-Id on TV  Conferencing Single IP access Browser-based controls Transactional billing Home Gateway Self-subscription Multimedia IP Unicast Future...Cable Operator owns a single IP infrastructures and offers innovative new services

4. Key characteristics of next generation cable networks  Everything is in IP packets  Runs a converged access infrastructure  Is a multiservice and QoS enabled broadband network  Open and distributed control architecture replaces monolithic TDM switch, transforming the local switch into a multimedia softswitch  Relies heavily on  Open APIs for creation, provisioning and delivery of intelligent services  Web technology for management of networks and services including customer self-management.

5. Voice will be the biggest revenue growth 2002 20% of revenues from voice 20042007 $45B $4B $3B $51B $7B $9B $60B $9B $17B video data telehony Source: Goldman Sachs, May 2002 US Cable TV Revenues

6. 0 5000 10000 15000 20000 25000 199719981999200020012002200320042005200620072008 (000's) Voice over Cable Source: Deutsche Banc Alex Brown, April 2002 Cable operators have consistently achieved 30% to 40% penetration in the earliest markets where residential telephony service is offered. Cox reports 2.4% reduction in annual churn by bundling cable with data and voice AT&T Broadband reports telephone customer net additions of 8,500 per week and Cox reports it is pacing at 4,800. US Cumulative New Subscribers 20 Million cable subscribers will use IP Telephony by 2007...

7.  One Service Provider for Video, Data and Voice  Price  Poor Incumbent Service Quality 30% of Households are interested in obtaining telephone, cable TV and internet access from the same company – Yankee Group TAF ® Survey 16% of Households are interested in switching their local phone service even at the same price. When a 10-15% discount is offered, 65% of Households are interested in switching - Yankee Group TAF® Survey 11% of Cox telephony customers only subscribe to telephony Cox Telephony Statistics 18% of Cox homes subscribe to telephony. Phone revenue is about $50 per customer. Steady state margins are approaching 40%. Churn rates are 33% lower for telephony homes AT&T Broadband Telephony Statistics 16% of AT&T BB homes subscribe to telephony Phone revenue is about $57 per customer. Telephony revenue increased 77% in 2Q02 vs. 2Q01. Positive Telephony EBITDA margin. Source: Cedar Point Why does the subscriber prefer the cable operator?

8. Cable Modem Termination System IP PSTN Media Terminal Adaptor Softswitch CBR Network Interface Unit Class 5 Switch Host Digital Terminal V5.x/GR-303 Cable Modem Termination System IP PSTN SS7/C7 Pure IP Telephony CBR to IP Telephony Major technology changes will happen... IP

9. DOCSIS 1.0 (Base Standard)  15 million products shipped worldwide as of YE2001  Modem price has declined from $300 in 1998 to $50 in 2002 DOCSIS 1.1 (Tiered bandwith, QoS)  “Quality of Service” and dynamic services, a MUST for PacketCable  Increased Security: authentication and secure software downloading  Account Management for usage and event-based billing DOCSIS 2.0 (Symmetric services, More bandwidth)  Greater (x3) upstream capacity of DOCSIS 1.1  Improved robustness against interference PACKETCABLE (Telephony components)  Built on top of DOCSIS 1.1  Defines the interaction with the MTA and CMS  Uses secure protocols CableLabs completed the required standards for IP Telephony over HFC

10. MTACM CMTSCMS MG SG SS POTS PacketCable DOCSIS 1.1 IP INTERNET Ordering Billing Workflow LDAP Directory IP Server Manager Policy Service Manager Name Service Manager Telephone numbers MAC/IP addresses Service Availability FQDNs Service Delivery Platform DHCPTFTPSNMPKDCEmailWebDNSRKS  5+ IP device touch- points  8+ IP server touch points  many data stores Cable IP Telephony is very complex… Key issues are service provisioning and management

11.  Initialize Cable Modem  IP address and TFTP configuration upload  Initialize Media Terminal Adapter  Service availability checking; FQDN, IP addr. and Tel# assignments and configuration upload; SNMPv3; KDC; DDNS  Assign IP address to PC behind the Cable Modem  Configure subscriber’s email and hosting  Add a telephone line and set call features  Set MTA service descriptors  Specify or update access bandwidth Cable IP Telephony service provisioning tasks...

12.  Eliminate manual operations and truck rolls  Must address flow-through provisioning and automation  ILECs still use fax machines to confirm orders  Enable shared data across multiple OSSs  Improve scalability (size and density of serving area)  Leverage web to give control to the customer  Must address IP security issues  Solve traffic engineering and SLA management  Address parity with CBR: 911 and CALEA issues Final Remarks Cable IP Telephony’s success depends on solving backoffice problems