1. Dramatic Disruptions Sandy Teger and David Waks Co-Founders, BroadbandHomeCentral.com & System Dynamics Inc. FENG Teleconference May 18, 2006 Copyright © 2006

2. Slide 2 About Us: Professionally Sandy –18+ years with AT&T; multimedia strategy director Dave –13 years with Prodigy Services Company; founder and R&D director Together as System Dynamics Inc. –10 years as specialists in residential broadband –Consult for companies affected by residential broadband Strategy, business economics, competitive analysis –Operate www.BroadbandHomeCentral.com as industry resourcewww.BroadbandHomeCentral.com "100 BEST Undiscovered Web Sites" PC Magazine, 4/20/04 –Free monthly Report on the Broadband Home www.bbhreport.com Subscribers in ~100 countries –Broadband Home Labs Integrated in our lives Test new products

3. Copyright © 2006 Slide 3 Some Major Disruptions Context –Everything Digital –Widespread Broadband Penetration VoIP Makes Phone Calls Free Broadband Anywhere TV Being Transformed Convergence: A Virtuous Circle

4. Copyright © 2006 Slide 4 Everything Is Going Digital (2002 View) Audio Players Video Players Still Cameras Camcorders Satellite TV Cable TV Broadcast TV Telephone New CE 199220022012 ? ?

5. Copyright © 2006 Slide 5 US Digital TV Transition Poised In the Wings Original date for DTV transition: Yearend 2006 –1,500 TV stations were to cease analog broadcasts, continuing only in digital –Widely believed it wouldnt happen New deadline of February 17, 2009 –Free up spectrum for services such as mobile broadband Likely to be real end of analog TV –DTV sales increasing rapidly –Warning labels on analog TVs Impact on owners of older TVs –Millions rely on Over the Air (OTA) analog broadcasts that go away –Forces them to make a decision Obtain a (subsidized) digital-to-analog set-top converter box Buy new digital TV receiver Subscribe to cable or satellite

6. Copyright © 2006 Slide 6 Broadband Way Past Tipping Point US Has Major Broadband Penetration ~ 44% HH (Source IGI, May 06) –48 million HH, was 20 million YE 2002 Broadband is growing globally (Source: Point Topic) –Measured by broadband lines per 100 households, US ranks 15 th Leaders are in Asia (Korea, Hong Kong) and Europe (Denmark, Netherlands, Finland) –Measured by total number of lines, US ranks first China is second and catching up fast Broadband being deployed by more than telcos and cable companies –Satellite services – WildBlue –Municipal broadband – especially Muni Wi-Fi –Community fiber –Broadband over powerline (BPL) in many trials –Broadband wireless will be next big growth area

7. Copyright © 2006 Slide 7 Internet Telephony Makes Phone Calls Free

8. Copyright © 2006 Slide 8 Evolving Consumer Expectations: Broadband Available Any Time, Any Place FixedNomadicPortableFull Mobility Home or Office Coffee Shop Hotel Walking around town In a car Train or plane Increasing mobility

9. Copyright © 2006 Slide 9 All Applications & Content on Portable Devices Telephony, PTT IM, SMS, MMS E-mail, Web PIM Location Based Svcs Media Player Camera Games Audio/Video –Radio, TV –Streamed –Conferencing Presence Service Integration E911 Wallet … Source: Qualcomm

10. Copyright © 2006 Slide 10 LAN MANWAN PAN Wi-Fi WiMAX 3G UWB/Zigbee /Bluetooth A Spectrum of Wireless Technologies Optimized for different distances & speeds

11. Copyright © 2006 Slide 11 Broadband Wireless Broadband wireless will be next big growth area –Muni Wi-Fi – examples: St. Cloud, Florida; Philadelphia –Cellular companies deploying early broadband services with 3G, but limited in coverage and speed –Mobile WiMAX likely to trigger growth spurt Cable operators may play a role –Deal with Sprint for voice services: enable quadruple play –Sprint/Nextel running trials with several pre-WiMAX technologies –Sprint & Nextel have strong 2.5 GHz spectrum holdings, FCC requires them to use it or lose it FCC starting new auctions –3G cellular –Broadband wireless – WiMAX or other technologies –McCaw (Clearwire) is key insurgent player –Will MSOs partner with Sprint for broadband wireless, or acquire their own spectrum?

12. Copyright © 2006 Slide 12 TV Is Being Transformed Any Content, Any Device, Any Place, Any Time Time Shifting –Control over when to watch particular programming –Examples: TiVo, PVRs Place Shifting –Watch your TV programming from any place in the world –Example: Slingbox Device Shifting –Transporting content from one device to another –Examples: Mobi TV from Sprint, Lost at abc.com, TiVo To Go Content Shifting –Content created for one device, appears on different one –Example: Accuweather: personalized, interactive content with local TV weather broadcast ICTV blends interactive content with live video streams Impacts all stakeholders –Consumers, Service Providers, Content Providers, Advertisers

13. Copyright © 2006 Slide 13 Cable and Telcos Competing Directly Dueling video ads Cable InnovatesTV Freedom cable-innovates.com/trailer_content.html

14. Copyright © 2006 Slide 14 Broadband -- A Self-Perpetuating Cycle Broadband Growth PC/CE growth / proliferation Home network growth Content / services growth More homes with broadband access More devices capable of sharing More eyeballs More reasons to get broadband

15. Copyright © 2006 Slide 15 New Technologies Reinforce Growth -- and Foster Disruption Broadband Growth PC/CE growth / proliferation Home network growth Content / services growth DSL, Cable, Wi- Fi, WiMAX, 4G Viiv, Vista 802.11n, HomePlug A/V Movielink, Vongo, ABC.com, VoIP

16. Copyright © 2006 Slide 16 Questions?

17. www.BroadbandHomeCentral.com sandy @ bb-home.com dave @ bb-home.com For More Information:

18. Copyright © 2006 Slide 18 For More Information Links to some articles weve written on these topics –"End-to-End IP" - How Will The Telcos Survive? Part 1 (BBHR 9/26/2000) and Part 2 (BBHR 10/26/2000) -- End-to-end IP" as a disruptive technologyBBHR 9/26/2000BBHR 10/26/2000 –Broadband: Are We Reaching "The Tipping Point"? (BBHR 5/23/2002)BBHR 5/23/2002 –IntelligentCities 2002 (BBHR 10/8/2002) -- the impact of Community NetworksBBHR 10/8/2002 –Disruptive Technology in Action (BBHR 5/14/2003) -- impact of IP communications on voice services and high-speed InternetBBHR 5/14/2003 –Broadband Anywhere: The Extended Broadband Home (BBHR 8/21/2003) -- the spread of wireless broadbandBBHR 8/21/2003 –Convergence Is Back (BBHR 5/23/2005)BBHR 5/23/2005 Topical Index to our Website Topical Index Magazine articles and conference presentations Subscribe to our free newsletter to stay up to date Subscribe

19. Copyright © 2006 Slide 19 Broadband Penetration - Country Comparison US China Japan S. Korea Germany France UK Canada Italy Spain BB Lines Per 100 Population Top 10 countries by lines