1. Can VoIP Replace “Legacy Voice” in Asia? Steven Rago Principal Analyst, iSuppli Corporation

2. VoIP in Asia – 2 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending Agenda  VoIP Overview  VoIP is not a single application  VoIP vs. Legacy PSTN Technolgoy  Requirements, Advantages & Issues  Advanced Feature  Successes in Asia  Broadband access ‘Foundation of Residential VoIP’  Types of Broadband technologies  Broadband penetration in Asia  Can Broadband sustain growth  VoIP potential in Asia  VoIP drivers in Asia  Forecast residential VoIP  VoIP “DSP” Opportunities  Summary

3. VoIP in Asia – 3 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending VoIP Overview- not a single application VoIP Application Market  VoIP over Broadband…………..Residential xDSL, Cable, Ethernet first mile, WiMAX,… Competitive or supplementary service for traditional voice  VoIP PBX……………………………Enterprise Convergence of voice and data in the enterprise  VoIP “IP Centrex”………………Enterprise PBX IP services offered by Service providers  VoIP Virtual Pvt. Networks…..Enterprise Enterprise networks with converged voice and data, may be managed by the PTT, ILEC, IXC  VoIP Linking Switches…………Service Provider Long haul transport of voice utilizing packet technology  VoIP Public Internet……………Residential (IP voice over Internet) Use voice over public internet services for long distance calling

4. VoIP in Asia – 4 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending VoIP vs. Legacy PSTN Technolgoy SS 7 Network Class 5 Circuit Switch Class 4 Circuit Switch Legacy PSTN Call Signaling Analog Telephone Voice-IP Gateway Call signaling IP Router Soft Switch Media Servers Analog Telephone Broadband pipe residential Gateway SIP phone Analog Telephone IP MPLS Network VoIP-Requirements, Advantages & Issues Analog Telephone residential Gateway

5. VoIP in Asia – 5 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending VoIP- Requirements, Advantages & Issues VoIP over Broadband Residential Service  Requirements: Always on Broadband connection Voice quality “better then cellular” Instant dial tone every time (non blocking) No dropped calls  Advantages: Less expensive to deploy Soft Switches vs. Circuit switch offices Statistically Multiplexed vs. TDM Richer suite of applications

6. VoIP in Asia – 6 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending VoIP- Requirements, Advantages & Issues  Issues: Quality of: Service!!!! Voice!!!! Line power Emergence call (ie 911) Security Country’s wire tape for law enforcement

7. VoIP in Asia – 7 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending VoIP Advanced Feature  Number portability Telephone number no longer tied to specific location  Single message center for both email and voice Can enhance with text to voice  Distinctive Ring and other features based upon IP address Multiple IP address can address one residential gateway  For enterprises: Enhances call center operations  Residential gateway can make decisions on how to direct outgoing call to PSTN circuit switched for high quality call to VoIP packet switched for low cost

8. VoIP in Asia – 8 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending VoIP - Successes in Asia  Japan’s Growth in fixed line VoIP subscribers BB Subs. VoIP Subs.

9. VoIP in Asia – 9 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending Broadband access ‘Foundation of Residential VoIP’  Types of Broadband technologies  ADSL:  Fastest growing of Broadband access technologies  Offered by incumbent and competitive fix line service providers  16-24 Mbps down stream at 3K feet  Voice over Ethernet (VoIP) over AAL-5 ATM  Cable Modem:  Dominate Broadband technology in NA  Defined standards for Toll quality Voice – VoIP  MSO in US offering VoIP over cable modem  FTTx-LAN:  Strong growth in China  Could become backbone for VoIP services  WiMAX:  Wireless broadband technology  Reach up to 15Km  Could become a candidate for VoIP services to rural areas

10. VoIP in Asia – 10 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending Broadband-Penetration in Asia Potential Strong Mkt for VoIP services Critical Mass

11. VoIP in Asia – 11 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending Can Broadband sustain growth? CAGR = 32%

12. VoIP in Asia – 12 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending VoIP Drivers in Asia  Asia is prime for VoIP Services  Expensive Local Phone Tariffs (metered services)  High cost of long distance services coupled with strong demand  Significant levels of broadband penetration  Low tele-density in many nations in the region  Success of VoIP in Japan  Minimal expectations for voice quality, availability,…  More competition among service providers then Europe or NA.  Absence of any major installed base of legacy phone equipment in many nations

13. VoIP in Asia – 13 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending Forecast residential VoIP  …. CAGR ’03-’08 = 76% VoIP Subscriber Growth in Asia wo Japan

14. VoIP in Asia – 14 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending VoIP “DSP” Opportunities Node in VoIP NetworkTechnology and function Soft SwitchGeneric Computer with Telephony Software (no DSPs in Soft Switch) Provides: Call control, Telephone number translation, Advance features, Service registration Voice/IP GatewayEither DSP technology or ASSP designed for multiple channels of to IP conversion Provides: Terminates/initiates signaling with Class 5 switch, Encodes and compress voice data, Generates IP packet, Latency compensation-Echo cancellation (major DSP function) SIP TelephoneASSPs that perform all the phone functionality including protocol stacks DSP is core in ASSP

15. VoIP in Asia – 15 Copyright  2000-2004 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending Summary  Asia is a prime market for VoIP technology  China is expected to pass Japan as the number one market for residential VoIP by 2006  Demand for soft switches and Gateways will become significant by mid 2005  The market for SIP phones in the residential space will be minimum while residential broadband gateways will be significant  Not all is smooth for VoIP there are several hurdles to overcome, however iSuppli sees a bright future.