Nortel Networks Confidential Fiber Services Group September 7 – 8, 2000 Alpharetta, GA

Nortel Fiber Services Nortel Networks Confidential What is Nortel Fiber Services? Value-added service to our customers Locate dark fiber for customers’ short- and long- term needs through our extensive relationships with fiber providers Increasingly a critical edge in winning bids Combine with other Nortel value-added services, such as collocation, fiber characterization and network planning to roll out customer networks faster, easier and at lower cost

Nortel Fiber Services Nortel Networks Confidential Nortel Fiber Services Vision & Mission Vision Customers view Nortel Networks Optical Internet as the leader in solutions-oriented optical network services Mission Aggressively build-out “Fiber Services” that greatly enhance the overall Nortel Networks value proposition and are a key market differentiator

Nortel Fiber Services Nortel Networks Confidential Fiber Services Objectives Pull-Through sales Nortel Center of Excellence for dark fiber Ensure Nortel is the partner of choice to work with for fiber providers and equipment customers in the dark fiber and optical internet solutions market Develop alliances with fiber providers in metro and long-haul markets with regional, national, and global reach Educate, internally and externally, about dark fiber opportunities with revenue potential Prime partnerships with Professional Services, Market Development, Network Planning, Brand Management and Strategic Marketing to enhance customer proposals and differentiate Nortel Networks

Nortel Fiber Services Nortel Networks Confidential The Nortel Fiber Services Team Steve Drenker, Senior ManagerESN James Puzan, Fiber SpecialistESN Brian Walker, Fiber SpecialistESN Aniqa Tariq, Business AnalystESN Andres Rojas

Nortel Fiber Services Nortel Networks Confidential Who Needs Dark Fiber? Wireless Providers (backhaul) CATV/Voice/Internet converged companies ICPs Voice & Data CLECS Data Centers ASPs ISPs BLECs & OLECs Long-Distance Providers Enterprises – manufacturing, financial, universities, medical centers

Nortel Fiber Services Nortel Networks Confidential Range of Fiber Services Provide names of companies selling or leasing fiber in specific markets Solicit custom build bids Provide fiber prices – general & specific Managed RFP service Qualify & recommend collocation sites Range of Services SimpleComplex tomorrow today Negotiate DF deals for customer Characterize legacy fiber Identify “anchor tenants” or joint-build partners Obtain maps and routes Introduce fiber provider to customer Locate OSP software Market analysis Locate OSP construction companies for FTTH

Nortel Fiber Services Nortel Networks Confidential Fiber Services Team Interactions Fiber Services Team 1.Develop Fiber Provider Relationships 2.Find Dark Fiber and other assets and/or Information for Nortel customers

Nortel Fiber Services Nortel Networks Confidential Fiber Services are VALUABLE ! Commercial fiber brokers charge both buyer and seller up to 2% or charge the seller alone up to 7%. For example, a $20M IRU would cost $800,000 to $1,400,000! Brokers justify this because they are positioned as an “outsourced sales force” for the fiber provider

Nortel Fiber Services Nortel Networks Confidential Potential New Revenue Sources Service fees paid by customer to Nortel Service fees paid by fiber providers to Nortel upon successful sale, or lease, of their fiber with commission to Nortel sales team for selling provider’s fiber. Service fees paid to Nortel by fiber providers to belong to Nortel “Preferred Fiber Provider” program (conceptual) – pattern after Nortel Co-Marketing Services

Nortel Fiber Services Nortel Networks Confidential Fiber Service Price Strategy Three Price Models 1.Service provided free to customer, with value statement of service in proposal 2a.Customer pays in advance, but is reimbursed via product credits upon purchase of Nortel Networks equipment 2b.Service initially free, but if customer purchases from competitor, they agree to pay Nortel for fiber services (impossible to collect?) 3.Service charged separately as Professional Service, regardless of equipment purchase Price model depends on the customer and account strategy Price model depends on the customer and account strategy

Nortel Fiber Services Nortel Networks Confidential Proposal Development Fiber Services Team develops technical and cost proposal information to include in full customer proposals Nortel Fiber Services costs increase with complexity and project scale To minimize our costs, a close working relationship between the Customer, Account Teams and Fiber Providers is essential

Nortel Fiber Services Nortel Networks Confidential Development Plan Next 6 Mo. Expand fiber provider relationships Preferred Fiber Provider program Promotion Automation –Web site –Order entry –Maps –Provider information Geographic expansion Market analyses