2 Integrated Carrier-Grade Platforms: Lowering Entry Barriers for New Voice over Broadband Service Offerings Randy Waters Founder and Chief Technical Officer

3 Voice Over Broadband (VoBB) promises to provide more competition in the telecommunications service space. However, for VoBB services to be successful, they must offer high-quality service and be economically feasible for providers to deploy them. “Traditional” carrier-grade distributed approaches to deploying next-generation VoBB services include multiple elements such as softswitches, media gateways, signaling gateways, and application servers. These solutions are costly and do not promote the entry of new smaller providers to the marketplace to introduce competition. Intelligent and scalable carrier- grade platforms that offer tight integration of various components (app servers, media gateways, signaling gateways, media servers, session controllers) will be required for emerging VoBB service providers to quickly and economically get a foothold in the marketplace. This presentation will explore and different approaches for new entrants to deploy new VoBB services. Session Topic

4 2. Enable new IP services (Increase ARPU) (Increase ARPU) Growth Time 1.IP-enable legacy infrastructure (reduce cost) Service Provider Dilemma

5 Broadband Services Growth Source: IDC, August 2003 CAGR: 23-36%

6 The Rise of VoIP Source: ING Estimate, ING – Voice over IP: Targeting Broadband, November 2004

7 Source: Probe Research, IDC, March 2004 VoBB Lines Broadband Subscribers BB Data Only Global VoBB Subscriber Penetration

8 Voice Over Broadband Broadband Access Internet Cable DSL IP Phones Circuit-Switched Network MGW Border Control Application Server Broadband Infrastructure Service Provider VoBB Service Provider Other Services VoIP Network OSS Billing Server Ownership of broadband access transport infrastructure not required!

9 Why the VoBB Model?  Voice still dominates service provider revenues  Voice now a commodity service – prices dropping  Regulatory constraints discourage enhancements to circuit- switched access network  Bundling services required to retain customers  Fiber rollouts for video underway – big broadband pipes  Access transport ownership not required to own customer  Vonage validated the business model  Now being adopted by carriers worldwide  Plays to Residential & Enterprise markets

10 VoBB Changes the Game  Specialized service providers can enter market  Cost of market entry much less than old model  Avoids expensive access costs and fees  Can focus on service & feature differentiation  Wireline carriers can serve wireless subscribers  Wireless carriers can serve wireline subscribers  Redefines carrier competition

11 SS7 Fixed-Mobile Convergence Internet Circuit-Switched Network MGW Application Server Broadband Access3GPP UMTS RAN 3GPP2 CDMA RAN Dual-Mode Wi-Fi Core IP Network SGSNGGSNPDSN Multi-Media Services Other IP Networks Border Control SCP IMS MMD Border Control WIN/CAMEL IN Services  Flat Rate Plans imminent  Wireless subscribers surpassed wirelines in 2001  ARPU declining since 2000  Increase network efficiency  Reduce OpEx  Migrate to All-IP network IP Multimedia Subsystem Multi-Media Domain

12 VoBB Service Provider Entrants  RBOCs, ILECs, CLECs, MSOs, IXCs, ISPs, ITSPs, VNOs  Mostly residential consumers today  Expanding to enterprise  Consolidation will slow entrant growth over time  Current solutions based on multiple supplier systems  Large SPs can integrate systems  RBOCs, ILECs, IXCs, MSOs  New or smaller SPs less inclined to integrate  VNOs, CLECs, RLECs, ISPs, ITSPs Source: IDC - US Hosted IP Voice Services Forecast : VoIP Invades the Enterprise, September 2004 Mid 2004 Mid VoBB Service Providers

13 Emerging VoBB Service Providers  Quick market entry  Serve growing specialized market  Focus on compelling feature/service differentiation  Minimize integration efforts  Minimize CapEx and OpEx  Enable broad range of features & services Solution: à la carte bundling of VoBB components

14 VoBB Network Components MTA IAD Application Server Media Server Trunking Softswitch OSS PSTN POP City A Trunk GW Public Internet VoBB Service Provider PSTN POP City B PSTN POP City C MTA IAD PBX Broadband – DSL, Cable, T1 Broadband – DSL, Cable Any service provider can offer VoBB with Internet access to broadband subscriber VoBB Service Provider IP Network Other VoIP Networks Border Controller Key Components  Application Server  Trunking Gateway  Trunking Softswitch  Session Controller  Media Server  IAD

15 Network Integration Issues  Seamless call flow and feature interworking  End-to-End IP network fire-walling  Nat traversal  Inter-system and network IP security  Cohesive network management  OAM&P interworking  Network operations  Cohesive operational training and documentation  Responsive customer support

16 VoBB – Bundled Systems Application Server Media Server Session Controller Trunking GW Trunking Softswitch IAD Intelligent GW Suppliers partner to tightly bundle the solution

17 Integrated Function Savings  Softswitches and SGWs ~ 40% of loaded port cost  Intelligent Gateway = Softswitch + TGW + SGW + BC  Intelligent GW saves 30-40% of loaded port cost ComponentAvg. Selling Price Softswitch/SGW$20-40/port Border Controller$15-30/session TGW$40-60/port Intelligent GW$50-70

18 VoBB SP Outlook  VoBB is obvious high-growth application  Residential VoBB is currently targeted by vendors  Enterprise VoBB is the next growth area  VoIP market validated and attracting SPs and vendors  Price-per-port will decline – equipment costs must keep up  Intelligent GWs will integrate: TGW and Trunking Softswitch, and Signaling functions Border Controller, Address Translation, Billing functions Application interfacing functions Intrusion protection, IP Security, and Management functions Wireline-to-wireless migration  New VoBB SP entrants will look for bundled solutions  Vendors must partner to provide bundled solutions to succeed

19 Acronyms  3GPP – 3 rd Generation Partnership Project  ARPU – Average Revenue Per User  BB – Broadband  BC – Border Controller  CAGR – Compound Annual Growth Rate  CapEx – Capital Expenditure  CDMA – Code Division Multiple Access  CLEC – Competitive Local Exchange Carrier  DSL – Digital Subscriber Line  GGSN – Gateway GPRS Support Node  GPRS – General Packet Radio Service  IAD – Integrated Access Device  ILEC – Incumbent Local Exchange Carrier  IMS – IP Multimedia Subsystem  IP – Internet Protocol  ISP – Internet Service Provider  ITSP – Internet Telephony Service Provider  IXC – Interexchange Carrier  MMD – Multi-Media Domain  MSO – Mobile Service Operator  MTA – Media Terminal Adapter  OAM&P – Operations, Administration, Maintenance, & Provisioning  OpEx – Operational Expenditure  OSS – Operational Support System  PBX – Private Branch Exchange  PDSN – Packet Data Serving Node  POP – Point of Presence  PSTN – Public Switched Telephone Network

20 Acronyms  RAN – Radio Access Network  RBOC – Regional Bell Operating Company  RLEC – Rural Local Exchange Carrier  SCP – Signaling Control Point  SGSN – Serving GPRS Support Node  SGW – Signaling Gateway  SP – Service Provider  SS7 – Signaling System 7  TGW – Trunking Gateway  UMTS – Universal Mobile Telecommunications System  VNO – Virtual Network Operator  VoBB – Voice over Broadband  VoIP – Voice over IP  Wi-Fi – Wireless Fidelity