2. Page 1 Roderick K. Randall Senior Managing Director Vesbridge Partners, LLC The Future Of Network Intelligence February 23, 2005 21st Century Communications World Forum

3. IP Is The 1 st Global Language

5. The Global Economy is Networked All Economic Activity Adds Traffic

6. Telecom The Global Economy is Networked All Economic Activity Adds Traffic

7. But, Who Is Going To Profit? Don’t Get Skyped! Message to Telcos…

8. The Stupid Network is a Stupid Idea Stupid Networks lead to stupid and unsustainable Business Models Stupid Networks would ultimately only have price/bit as differentiation… Leading to rapid commoditization… Which drives profitability out of all competitors… Which makes the business un attractive… Which makes it un-finance-able… Which makes it un-staff-able with top talent Which leads to collapse

9. Dimensions Of Network Intelligence Signaling and Control Control Management PSTN Content Voice Messaging Multimedia messaging Network Based Security Parental Control Spam Filtering Intelligent Storage Management/ILM AIN Services 800/900, Caller ID/Name Voice Mail, IVR Mobility SMS SIP Martini DNHR Self Healing Networks Flow Through Provisioning MPLS Management IP Enhanced 3-D Intelligence

10. The Future Of Network Intelligence s Defensive ã Prevention of Unnecessary profit erosion ã Protection from Abusive Offenders s Offensive ã Creation and Enablement of new Network Services based revenue streams ã Provide for participation in the benefits as well as providing service in the IP Economic Value Chain

11. Network Services Have Varying Value “Not all bits are created equal” $5.00 $15.00 $625.00 Web Browsing MMS 40c per message SMS 10c per message $ / MByte for traffic GamingVoice Per minute Video Clip $1.50 per clip E-Mail 10c per E-mail MP3 $1 per song $10.00 $1.00 $0.75 $0.20 Flat rate over prices service Reduces demand Flat rate under values Unrealized revenue Flat rate under values Unrealized revenue Flat Rate Charging Pressure to reduce Drives commoditization Pressure to reduce Drives commoditization Differential Charging

12. Network Napster Threat Current Network Deployments Are Vulnerable

13. IP/ATM Managed IP GPRS SMS/MMS Bypass Leaks Revenue and Profits BSC MSC SS7 SMSCHLRVLR IP/ATM BSC Managed IP GPRS RAN WAP GW MMS C Ring Tones Games etc. Re- Charge RAN Mobile AAA Intranet Internet Java MM IM Email MMS 2.5G 2G SMS To MSC MSC $625/MByte Pre- Paid $40/MByte What would happen if this traffic were to shift to the lower priced GPRS bearer Service? The mobile operator would receive less revenue for the same traffic load Network Applications

14. IP/ATM Managed IP GPRS Network Napster Threat: App Downloads That Enable Bypass BSC MSC SS7 SMSCHLRVLR IP/ATM BSC Managed IP GPRS RAN WAP GW MMS C Ring Tones Games etc. Re- Charge RAN Mobile AAA Intranet Internet Java MM IM Email MMS 2.5G 2G SMS To MSC Advertiser $$$ MSC $625/MByte $1-3/MByte Pre- Paid $40/MByte $625/MByte $1-3/MByte $30B/year$50M/yr $625/MByte $40/MByte $625/MByte $40/MByte Network Applications

15. IP/ATM Managed IP GPRS Session Intelligence Based Scenario BSC IP/ATM BSC Managed IP GPRS RAN WAP GW MMS C Ring Tones Games etc. Re- Charge RAN Mobile AAA Intranet Advertiser $$$ Internet Java UMTS CDMA2000 GPRS TDMA 2.5G 2G SMS To MSC S A D A HILayer 3 Payload D A Layer 4 PayloadHI Layer 5 Payload HI Layer 6 PayloadHI Layer 7 Payload HI Application HI S A D A Layer 3 Payload D A Layer 4 PayloadHI Layer 5 Payload HI Layer 6 PayloadHI Layer 7 Payload HI Application HI S A D A Layer 3 Payload S A D A HI Layer 3 Payload D A Layer 4 PayloadHID A Layer 4 PayloadHI Layer 5 Payload HI Layer 5 Payload HI Layer 6 PayloadHI Layer 6 Payload HI Layer 7 Payload HI Layer 7 Payload HI Application HIApp HI ProQuent Deep Packet Processing TM Billing Mediation Pre- Paid Post Paid Rating 10 cents for mobile short messages, while allowing pictures at 40 cents, songs at $1, and emails at $1 per MByte (min $20) $40/MByte $.10/Msg

16. What if… You could associate traffic with services? You could package Network with Applications and/or Content? You could advantage traffic which is packaged with premium network services from your own Retail service offerings… Or those from other providers with which you have a paid revenue sharing arrangement? By not specifically advantaging non recognized or non- compensated traffic, this traffic could be truly given “best effort” service, but only in the sliver of the network set aside for “Cargo Class”… And they could not just automatically upgrade to First Class just because no one is currently in the seats?

17. What Are Some Network Intelligence Based Opportunities? A Few Ideas…

18. VoIPoEverything VoIP Over Broadband VoIP Over WiFi VoIP Over Cordless VoIP Over Cellular PTT Over VoIP Over Cellular, WiFi, and Desktops VoIP Over WiFi Overseas on Airplanes Cellular/WiFi Convergence, or at least co-habitation VoIP Over Open Source

19. Moogle Google Gone Mobile Search has now been proven to be Extremely Valuable Mobility is Extremely Valuable Think 411 Information on Steroids  Already a $9 Billion/yr Business at $1/Querry + $1/Min Scenario:  Push-To-Talk Zero delay natural language request  Speech Recognition reception  Back-end search Google style (or MSN or Alta Vista or whatever)  Graphical Scrolling delivery Multi-Modal style using Mega Pixel display Content Optimized for Mobile broadband  Hyper-linkable connections to call, browse, or buy

20. Network Based Security Consumers Spend hours per month dealing with Security related issues on their computing devices  Viruses  Worms  Spam  Pop-Ups  Spyware  Phishing/Identity Theft A Network with Suitable Intelligence can block malicious or curb abusive traffic on inbound and outbound paths Network Providers have an opportunity to provide this service on behalf of subscribers for a fee This is a Huge potential business and Mobile is next

21. Gear Shifting Networks

22. Some Users will pay more occasionally for more speed, or throughput, or less latency, or other QoS/ToS attributes Some Destinations will pay to “Up Speed” a visiting user in a 1-800 number model to provide the appropriate network quality for the duration of this session Need Broadband Capable Access even though a particular user may subscribe to a narrowband service; like HDTV is offered on Cable, though a user may not have paid to get it Scenario:  User buys cheap narrowband service on a BB capable access  He pays $2 per session to “NOS” the connection to BB  He visits “www.DreamVacations.com” who pays the fee to Up Speed his connection for a visceral experience leading to a sale  He may decide to upgrade to BB later, online

23. Fiber To The Node + Wireless Across the Lawn Optical Ethernet and PON as base level service Wireless delivery from street to Subscribers Not just a bandwidth play IP based Entertainment from MP3 to HDTV Packaged Offerings with a variety of bundled services with a variety of price points

24. Prediction The Fall Of The Stupid Network The Rise of A New Cycle of Telecom Economic Opportunity

25. Thank You! www.vesbridge.com