January 2003 Website: · Merger and Acquisition Specialists in IT, Telecom and Media | Proprietary and Copyright | Ehrhardt & Ehrhardt | 8 Framework FTTH Market Analysis

Fiber-To-The-Home (FTTH)An Overview

Ehrhardt & Ehrhardt

January 2003

Website: www.ehrhardt2.com

Merger and Acquisition Specialists in IT, Telecom and Media| Proprietary and Copyright | Ehrhardt & Ehrhardt | 1

http://www.ehrhardt2.com/


Contents

• Background

• Introduction

• Business Issues

• Business Models

• The Market

• Products & Services

• Technology

• Case Studies

• Finance

• Glossary


Background


Background

• Objectives

• Approach Framework


Background

Objectives


We aim to understand the market for Fiber To The Home

BACKGROUND: OBJECTIVES

Objectives

To understand:

• Market drivers for Fiber To The Home (FTTH)– How the market has developed

– Where the market is today

– What future trends we see

• What are the overall business drivers for implementing FTTH solutions.

• Where are operators and service providers in implementing these solutions.


Background

Approach Framework


Framework FTTH Market

Analysis

Framework FTTH Market

Analysis

FTTH BusinessFTTH Business FTTH Products & ServicesFTTH Products & Services

FTTH CasesFTTH CasesFTTH TechnologyFTTH Technology

Approach

BACKGROUND: APPROACH FRAMEWORK

The framework we used for our FTTH analyses

• Description of the technology and technological issues of FTTH

• Description of the technology and technological issues of FTTH

• Describing the business issues, business models and market potential of FTTH

• Describing the business issues, business models and market potential of FTTH

• Description of the products and services that become possible with FTTH

• Insight into the uptake of products & services

• Description of the products and services that become possible with FTTH

• Insight into the uptake of products & services

• Description of FTTH implementations around the world

• Insight into the financials of a case

• Description of FTTH implementations around the world

• Insight into the financials of a case


Introduction


Introduction

• Understanding Broadband

• Trends


Introduction

Understanding Broadband


INTRODUCTION: UNDERSTANDING BROADBAND

What is bandwidth?

Bandwidth refers to the throughput capacity of a given communications network

• Historically the term bandwidth was used by radio communication engineers to refer to the amount of radio communications spectrum available or necessary for carrying an (often analog) signal.

– For example a telephone call uses four KHz of bandwidth while a television signal uses eight KHz*.

• In relation to digital transmission of data, the amount of bandwidth between the sender and the recipient determines how much data can be transmitted per unit of time. It’s measured in bits per second (bps) or Kbps, Mbps, Gbps, etc.

– A typical residential modem for example, may transmit in the range of 28.8 Kbps through to 56 Kbps.

* Six in the US



What is broadband?

Broadband is a transmission capacity of more 200 kbit/s

64 kbit/s 144 kbit/s 200 kbit/s ? Gbit/s

The term broadband has become a moving target!The term broadband has become a moving target!



The more advanced applications we want, the more bandwidth we need

Browsing144 Kbps

Music CDs160 Kbps

Music

½ Screen Video300Kbps

TV Shows

Full Screen600Kbps – 1.5Mbps

Live Events Pay Per View

High Resolution 6-8 Mbps



Different Technologies Are More or Less Suited to Particular Segments and Environments

• HDSL• Fibre to the curb• Leased Line

• SDSL• Fixed

wireless• Fibre to the

curb

• ADSL• Cable • Broadband

Satellite• UMTS• Fibre to the home

• SDSL • Fixed

wireless• UMTS

• ADSL• Cable• Broadband

Satellite• UMTS• DTT • fiber to the

neighborhood

• ADSL• Fixed wireless• Broadband

Satellite • DTT

Corporate

SME

Residential

Dense Urban Suburban Rural

• HDSL• Leased Line

• HDSL• Fixed Wireless

• SDSL• Fixed Wireless



Wired access technologies

Dia

l-up

ISD

N

Voice T

eleph

ony

Modem

acce

ss

ADS

L Li

te

Video

Confer

encin

g

HD

SL

ADS

L

High sp

eed

Inter

net a

cces

s

Full m

otion

vide

o

Applic

ation

Ser

vice p

rovid

ing

Cable modem

DPL Fibe

r

VDSL

Corporate

Small /MediumEnterprise

Residential

10 Mbit/s 100 Mbit/s100 Kbit/s 1 Mbit/s10 Kbit/s

FiberTwisted pair Power line Coax cable based



Wired access technology problem. “The last mile bandwidth bottleneck”

Personal computing networks (e.g networks in the office or networks at home)

Bandwidth bottleneck(the last mile, or first mile it’s sometimes called is

the biggest problem today for broadband services)

National backbones(the networks normally show an enormous amount of

over capacity, sometimes only 10% is used)



Characteristics of some wired access technologies

Technology Definition Bandwidth Advantages Disadvantages

ADSL

Asymmetric Digital Subscriber Line

Transmission of voice and data over copper

• Up to 8 Mbit/sdownstream

• Up to 1.5 Mbit/supstream

• Makes full use of existing copper

• Ideal for allways on webbrowsing

• Good platform for voice

• Limited video capability

• Distance limitation

• Limited upstream bandwidth

VDSL

Very high rate Digital Subscriber Line

Transmission of video, voice and data over copper

• Up to 52 Mbit/sdownstream

• Up to 26 Mbit/supstream

• Supports broadcast video, Video on Demand, Interactive TV

• Allways on network for voice, video and data

• Requires short distance

• Non standard products and technology

• Limited scalability

HFC

Hybrid FibreCoax

Transmission of video, voice and data over coaxial and fibrecable

• 10 to 42 Mbit/sdownstream

• Up to 2 Mbit/supstream

• Supports broadcast video, Video on Demand, Interactive TV

• Allways on network for voice, video and data

• Voice requires special engineering

• Difficult to guarantee speed

A Pure fibre access network would solve most of the scalability and distance disadvantages, but is still expensive!

A Pure fibre access network would solve most of the scalability and distance disadvantages, but is still expensive!

Source:Myrrill Lynch



Although Fiber is still expensive, its cost will go down

Low cost

High cost

High scalability

Low scalability

Fiber optics

ADSL

CoaxialISDN

Analog

VDSL

Price/performance of access technologies

Broadband Technology Cost Per Household 1999-2005E

$USD

/Hou

seho

ld (e

st)

0

500

1,000

1,500

2,000

2,500

99 00E 01E 02E 03E 04E 05E

Fiber

ADSL Upgrade

Cable Modem Upgrade

Year

Note: Technology will vary depending on existing infrastructure and urban versus suburban locations. Costs are relative numbers and do not include customer premise equipmentSource: Ovum: Access@Ovum, 10/00; executive interviews; Ernst & Young and Cap Gemini Ernst & Young analysis



Advantages of using fiber for the last mile

• FTTH can offer a very large bandwidth starting from 10 Mbitsup to almost no limits

– Upgrade will be very easy

• As a passive network, there are no active components from the Central Office to the end user minimizing the network maintenance cost and requirements

– Immunity to electrical interference

– Constant error-free transmission

– Long distance between repeaters (>40’000 feet)

• Optical Fiber is reliable, scalable, and secure and has lower cost for communication circuit.

• There are three broad stages in the evolution of fiber as it gets closer and closer to the home:

– FTTN: fiber to the neighborhood - brings a fiber to a small geographic area delivering the service to 100 or more house

– FTTC: Fiber to the curb - brings the fiber closer to a small group of homes or businesses

– FTTH: Fiber to the home - extends the fiber directly into the home

• Although the major obstacle to the fiber propagation has been the price is getting lower but it will be a reality only inareas of high population density



Capital spending is shifting from transport to broadband local access

Global Telecom Equipment Spending 1999-2003E

3,000

6,000

9,000

12,000

15,000

18,000

21,000

24,000

27,000

30,000

0

Transport Fiber and Cable

Access Data and Broadband

10,134

7,835

12,15713,411 13,616

18,605

14,842

24,703

16,029

30,743

99 00E 01E 02E 03E

TransportFiber and

CableCAGR

12%

Data andBroadband

AccessCAGR

41%

$USD

(Mill

ions

)

For the first time, capital investment in local access broadband capacity will exceed transport investment.

For the first time, capital investment in local access broadband capacity will exceed transport investment.

Source: Sanford Bernstein: Telecom Equipment: 2001 Carrier Equipment Spending to Decelerate 9/00,; IDC: Service Provider Gigabit and Terabit Routers 1999-2005 forecasts, 6/00,



Example of a value chainC

onte

nt c

reat

ors

/ rig

hts

owne

rs

Con

tent

Pac

kage

rsISP (portals)

TV (channels)

Others (media)

Telco (brands)

FTTH

Housing/Hosting

End

Use

r(R

esid

entia

l, S

ME

, Ind

ustry

)

LocalHousing

Corporations

Local Municipalities

OwnershipAssociations

Property OwnersNetwork Providers

Real estateDevelopers

Bank & Investors

ActiveInfrastructure

providers

PassiveInfrastructure

Providers

FTTHService

Management

Con

tent

Pro

vide

rs

CONTENTSERVICES

INFRA-STRUCTURE

CUSTOMERACCESS



Examples of parties in the value chain

End UsersAccess Providers Service Providers

Content Providers

NBC Internet

Infrastructure VendorsContent

Packagers



Why broadband matters

• Most people today connect to the internet over a phone line, typically using a modem with a speed of 28.8 or 56 kbit/s. This narrowband communication is slow.

• An estimate of one third of user time online is spent waiting, reducing the convenience and ease of use.

• Broadband services offer significantly faster data rates and always onconnections. As we move to a broadband economy we can therefore expect:

Higher connectivity

– People tend to spend more time online with a broadband connection

New value added services

– Broadband makes possible new services not feasible over narrowband



What use is all that bandwidth?

Downloading A music CD containing 660 Mbytes of data

• 56 Kbit/s PC Model 26.2 Hours

• 500 Kbit/s Cable Modem 2.93 Hours

• 1024 Kbit/s ADSL Modem 1.43 Hours

• 10 Mbit/s Fiber-To_The-Home connection 8.8 Minutes

• 100 Mbit/s Fiber-To-The-Home connection 53 Seconds

• 1 Gbit/s Fiber-To-The-Home connection 5.3 Seconds

Download speeds

Although the bandwidth of 1 Gbit/s seems immense, the next generation will probably find use for it!

Although the bandwidth of 1 Gbit/s seems immense, the next generation will probably find use for it!


0 10 20 30 40 50 60 70 80 90 100

E-mail

Browsing

Downloading software

Researching purchasing made online

Buying consumer products

Chat

Using online financial services

Playing games

Buying software

Time spend online (hours per week)


Comparison of time spend online

The two factors of higher speed and always on enhance the user experience significantlyThe two factors of higher speed and always on enhance the user experience significantly

BroadbandNarrowband

Source: Broadband changes eveything, McKinsey 2000


• Many countries have opened their markets to competition, leading to substantial infrastructure investment, declines in prices, greater service diversity and product innovation. Markets have become more contestable.

• There is a relative increase in the data traffic as compared with voice traffic and digitisation of communication networks. This has facilitated a change in the design philosophy of such networks, away from fixed path circuit switching, towards variable path packet switching.

• The traditional consortium approach to cable investment and control is being eroded. In many cases independent carriers have end-to-end customer access arrangements thus bypassing the need for inter-carrier settlements.

• New wholesale markets for communications capacity have emerged. Bandwidth has become a tradable commodity. There are two kinds of bandwidth market intermediaries:

Bandwidth exchanges

– Facilitates contact between buyers and sellers of bandwidth

Bandwidth brokers

– Operates their own facilities to which buyers and sellers connect their networks.

• Municipalities and/or other utilities have also entered the communications business either directly or by having facilities managed on their behalf. Examples of this can be found all over the world (e.g Stokab in Sweden and Palo Alto in the US).

TrendsINTRODUCTION: TRENDS


INTRODUCTION: TRENDS

Bandwidth paradigm shift

The Legacy The Transition The Bandwidth cloud

Copper Wireless

Telephony Television

• The traditional model was based on the vertically integrated supply of what was essentially a single product based on an exclusive relationship between service, supply and end-use.

Copper Wireless Coax

Telephony Television Internet

• More access technologies arrived and many access technologies are capable of delivering the same services*.

CopperCoax

Wireless

SatelliteFiber

• All access technologies are working on a packet based protocol (probably IP). As networks evolve these underlying technologies will become more and more invisible.

TelephonyTelevision

Internet

* Offcourse there are more access technologies than mentioned in this example.

Access will become more and more transparent!Access will become more and more transparent!


Broadband Access Technologies

Business Sphere Public Sphere

Personal security

Disaster information system

Information services for Pagers:NewsWeather forecastsFinancial information

Electronic newspapersElectronic shoppingTelevised shoppingHome schooling system

Portable televisionInteractive televisionInteractive gamesVideo-on-demand

Karaoke-on-demandMusic-on-demand

Video-based

Information services

DatabaseE-mail

Video-conferencing

Mobile Videophone Traffic

information system

Private Sphere

Remote supervision system

INTRODUCTION: TRENDS

Broadband applications will become less dependent of broadband access technologies

Source: “W-CDMA Makes Possible a World of Mobile Multimedia”, www.nttdocomo.com.


Business issues


Business issues

• The who goes first issue

• The convergence issue

• Regulatory issues


Business issues

The who goes first issue


BUSINESS ISSUES: THE WHO GOES FIRST ISSUE

FTTH is one of the few races where the gold medal might not be for the occupant of the first position!

High costs combined with high uncertainties and high competitiveness create a first mover disadvantage!

High costs combined with high uncertainties and high competitiveness create a first mover disadvantage!

Which customers should I target?

Which services should I

introduce? At what price?

How soon will technological

advances make my active components

obsolete?

What alliances should I develop?

How soon will CPE be available and

affordable?

How and who to finance the last

mile?

What technical standards will

emerge?


Business issues

The convergence issue


BUSINESS ISSUES: THE COVERGENCE ISSUE

FTTH is driving Convergence, but…

Entertainment Technology

Information Technology

Communication Technology

Age >100 years >100 years 30 years

Change Change from real to virtual

Changing from fixed to mobile

Changing from PC to network centric

Focus Physical distribution & Copyrights

Voice, Reliability and Capacity, standards

Internet, openness, scalability

Storage Local, non copyablephysical media

N/A

(Voice-mail)Network-servers

Totally Different Business Paradigms Will Not Make Convergence Easy.Totally Different Business Paradigms Will Not Make Convergence Easy.


BUSINESS ISSUES: THE COVERGENCE ISSUE

Convergence also challenges all players to redefine their role in the value chain

• Companies can be in one or several roles in this business system.– Some major players cover larger parts, while others are more focused.

• Strategic moves will happen (vertical integration).– Partnerships, strategic alliances, mergers and acquisitions will continue to happen.– No one can survive alone in this environment.

• Alternative and complementing distribution alternatives must be considered.– Accessing the same content via fixed, wireless and satellite is an increasingly compelling customer proposition (Multi channel access)

Play

er

Studios

• TV studios

• Web pages

• User created content

• TV studios

• Web pages

• User created content

TV Authoring Tools

• Traditional Authoring Tools:– Avid

• Traditional Authoring Tools:– Avid

Content Creation

Content Aggregation

Web page creators

Content Authoring Tools

Distribution

Interactive Authoring Tool Providers

Interactive Application Designers

Interactive Designers

Operators Middleware Providers

Conditional Access

End User Interface

Channels

• Channels:– CNN

• Portals BBC.co.uk

• Channels:– CNN

• Portals BBC.co.uk

• Software developers

• Software developers

• Developers of interactive applications

• Developers of interactive applications

• Application design houses to customiseservices

• Application design houses to customiseservices

• FTTH providers:– For TV

– For PC

– Telephony

• FTTH providers:– For TV

– For PC

– Telephony

• Middle software manu-facturers

• Middle software manu-facturers

• Conditional access software manu-facturers

• Conditional access software manu-facturers

• Set top box manu-facturers

• TV manu-facturers

• PC manu-facturers

• Set top box manu-facturers

• TV manu-facturers

• PC manu-facturers

Interactive Enablers

Portals PC manufacturersBroadband ISPs

Players must select which roles to take in the value chain.Players must select which roles to take in the value chain.


Business issues

Regulatory issues


A multitude of international, national & local regulations must be taken into consideration

BUSINESS ISSUES: REGULATORY ISSUES

• .Backbone- Internet Highway

Backbone- Internet Highway

Metropolitan Area Network (MAN)- Middle Mile / City Loop

Metropolitan Area Network (MAN)- Middle Mile / City Loop

Access- Last MileAccess- Last Mile

• Large Businesses

• SOHO’s

• Residential Customers

Content Caching

• Fibre Optic Lines– DWDM

• Satellite Systems

• Point to Point Microwave

• Sonet/SDH Rings

• Gigabit Ethernet

• 10 GigE

• Copyright and intellectual property laws

FTTB

FTTH

• Ownership, Interconnect, Access & digging rights

• Operating licenses


Business Models


Business Models

• Business Model Parameters


Business Models

Business Model Parameters


The Business issues that have to be tackled are...BUSINESS ISSUES: BUSINESS MODEL PARAMETERS

• Market Segmentation.– Assess and define optimal mix of client-base (residential, SME, corporate), in line with physical FTTH-site roll-

out (Greenfield, renewal and existing).

• Value chain positioning– Choice of roles in the FTTH value chain (access only, service provisioning and full service operator).– No one can survive alone in this environment.

• Content provisioning strategy– Buy and/or make content

• Products & services roll-out map– Make a selection of what when to roll out

• Ownership “first mile”– Assess and decide upon ownership (capex/opex) of “first mile”, from local municipalities, housing corporations

to private companies

• FTTH technical design– Assess and define required FTTH technical architecture: single mode, fiber only, passive optical network, hybrid

solutions, etc


BUSINESS ISSUES: BUSINESS MODEL PARAMETERS

Market Segmentation

Residential opportunities including SOHO

FTTH could become a commercially viable option if implemented on new local sites (Greenfield), provided no other alternative physical infrastructure is constructed, and alternative service providers are willing to purchase fiber-connectivity on a wholesale basis

Greenfield

FTTH could become a commercially viable option if implemented on new local sites (Greenfield), provided no other alternative physical infrastructure is constructed, and alternative service providers are willing to purchase fiber-connectivity on a wholesale basis

Renewal

FTTH could become a commercially viable option if multi-tenant dwellings in highly dense populated urban areas are targeted; given possible coax/copper penetration, a twofold approach is advised: offer unique services (VOD), and/or consider strategic partnerships with existing infrastructure/service providers (ADSL).

Existing


One has to determine what position to take in the value chain


Con

tent

cre

ator

s / r

ight

s ow

ners

Con

tent

Pac

kage

rsISP (portals)

TV (channels)

Others (media)

Telco (brands)

FTTH

Housing/Hosting

End

Use

r(R

esid

entia

l, S

ME

, Ind

ustry

)

LocalHousing

Corporations

Local Municipalities

OwnershipAssociations

Property OwnersNetwork Providers

Real estateDevelopers

Bank & Investors

ActiveInfrastructure

providers

PassiveInfrastructure

Providers

FTTHService

Management

Con

tent

Pro

vide

rs

CONTENTSERVICES

INFRA-STRUCTURE

CUSTOMERACCESS


The depth of the service is a strategic choiceBUSINESS ISSUES: BUSINESS MODEL PARAMETERS

Depth of the service provided

Business model is focused around offering access to broadband services, provided by other parties (content and/or service providers). revenue-drivers are based upon initial set-up fee and monthly access subscription revenues.

Infrastructure access

Business model is focused upon a combination of access and value added services for both service providers and end-consumers (subscriber management, content management, housing/hosting, billing, etc). revenue-drivers are based upon initial set-up fee and monthly value added services revenues.

Access and Service

Provisioning

Business model encompasses total ownership of customer, and as aconsequence is build up of access, service and content revenues from both residential end-users as well as content/service providers.

Fully Integrated Services


Television

“Open Garden”-model

‘

ExclusiveBroadbandOfferings

“Walled Garden”-model

“Flower Garden”-model

Internet

Telephony

End-user FTTH-Company

Content positioning modelBUSINESS ISSUES: BUSINESS MODEL PARAMETERS


Content positioning model explainedBUSINESS ISSUES: BUSINESS MODEL PARAMETERS

Possible content “Gardens”

So-called “open garden” model does not restrict the end-user access to information and/or services. Standardisation will become an serious issue. Model requires critical mass, in order to work successfully. Operator loses (control of) certain cash-flows, since its role is reduced to providing access, and optional subscriber services.

Open Garden

Best of both worlds model, combining preferential high-quality, easy-to-use value-added broadband services to end-users, thereby not restricting access to other sources and services. Focus is to retain customers within the “flower-garden”, to ensure revenue-flows.

Flower Garden

So-called “walled garden” model implies exclusivity towards content & service Providers (revenue-sharing Deals), as well as limited access to content & services from the end-user point-of-view. This approach allows rapid roll-out, the delivery of quality of service, and solves standardisation issues (set-top boxes, etc).

Walled Garden


The Business Model WebBUSINESS ISSUES: BUSINESS MODEL PARAMETERS

Access OnlyAccess Only

Access + ServicesAccess + Services

”Open Garden””Open Garden”

”Flower Garden””Flower Garden”

Integrated ServicesIntegrated Services

”Closed Garden””Closed Garden”

FTTH business model web


Most of the time products and services get launched in a certain order


Revenue margins Motivation

• Network roll-out drives market share

• Services roll-out drives revenues and margins

• A substantial subscriber base is needed to get the interest of content suppliers, but you need interesting content to get subscribers and to reduce churn (chicken-egg dilemma)

• Bredband, eBiscom and HanseNet use this roll-out scenario. HanseNet will start delivering VoD services in Q4 2001. The others have already started.

Time

Broadband access

Access revenues

Network cost

Telco services

Flat rate revenues

Interconnection cost

TV services (VoD)

TV revenues

Content cost

Portal services

Advertising/e-commerce revenues

Content cost

Community services

Usage revenues

Application cost

Service

Revenue drivers

Costs drivers


Ownership passive

infrastructure including

telecomhouse

Commercialoperators

Propertydevelopers

Housingcorporations

Ownership active infrastructure

Government /local

municipality

Service Providers


Ownership scenario’s first mile

Service Providers Service Providers Service Providers

Combinations are possible

Combinations are possible

Residential End UsersUsage fiber infrastructure


Bredband (Sweden)• Drive long-term Company value by owning

the end-user and maximizing available services

• Bredband branded access & telephony services

– Leverage company expertise

• Bredband co-branded media & entertainment services

– Bredband to provide content providers with QoSdistribution, billing & support services

– The key is focus and execution

Stokab (Sweden)• Stokab is building and operating a fiber-

optic network, on an operator-neutral basis.

• Stokab acts as a wholsaler, offering dark fiber to operators that provide services to business and residential customers. The customers must provide the electronic equipment necessary for transmission of telecommunications traffic.

• Help ensure that insufficient network capacity does not impede the establishment of new businesses on the telecom market.

e-Biscom (Italy)• eBiscom has two primary ventures are

Metroweb and Fastweb

• Metroweb is developing a high capacity fiber optic network. Fastweb provides integrated broadband communications services to business and residential customers.

• eBiscom’s objective is to become the leading creator and developer of broadband communications in Europe. It’s pursuing this goal by carrying out projects in several segments of the value chain in telco, Internet and media.

BUSINESS MODELS: BUSINESS MODELS

Examples of initiatives around the world

Palo Alto (US)• Drive long-term Company value by owning

the end-user and maximizing available services




– Bredband to provide content providers with QoSdistribution, billing & support services


Lynchburg (US) Western Integrated Networks (US)

• Main objectives for the site were to efficiently link all computer systems involved in city government, and to allow the sharing of costly resources (such as Internet access, system monitoring, and GIS information).

• To bring the network to local homes, making advanced services available throughout the community

• To secure multiple services & providers, promoting competition for lower-cost services

• Western Integrated Networks is dedicated tobuilding the first "state-of-the-art broadbandnetwork" to every home in each market thatwe serve.

• By building the first broadband network WIN is positioned to be the nation's first true full-service provider of voice, video and data services.

• WIN's market approach will give its customersthe highest quality and choice, the convenience of one-stop shopping, and the value of a bundled service offering.



Overview Service Levels vis-à-vis Ownership “First Mile”

Fully Integrated

Services

Almere (NL)

Palo Alto (USA)

Stokab (SW)

KPN (NL)

E.Biscom (IT)

Bredbandsbolaget (SW)Western Integrated Services (US)

Planned

Pilot / trialHanseNet (GE)

Operational

Access & Service

ProvisioningFree market

approach

Government-controlled approachProduct-driven approachInfra-

structure Access

Property Developers

Commercial operators

Government / Local

municipality

Housing cooperations / house owners


Open Garden

Flower Garden

Walled Garden

Almere (NL)Palo Alto (USA)

Stokab (SW)

KPN (NL)Bredbandsbolaget (SW)

Government / Local

municipality

Commercial operators

Housing cooperations / house owners

Property Developers

Planned

Pilot / trial

Operational

Free market approach

Government-controlled approachProduct-driven approach


Overview Acces to Information vis-à-vis Ownership “First Mile”

Western Integrated Services (US)

E.Biscom (IT)


The Market


The Market

• Market potential


The Market

Market Potential


THE MARKET: MARKET POTENTIAL

Overview Service Levels vis-à-vis Ownership

“First Mile”Per Capita Telecom Expenditures (Euro)

409

686

528

359314

509

682

492

700 728

495

337

551

662

563

724

574

0

100

200

300

400

500

600

700

800

B DK D EL E F IRL I L NL A P FIN S UK USJA

P

Source: Yankee Group, Forrester, EITO


Products & Services


Products & Services

• Types of products & services

• Uptake of products & services


Products & Services

Types of products & services


PRODUCTS & SERVICES: TYPES OF PRODUCTS & SERVICES

Like other broadband access technologies, FTTH is still focussed on three main channels

Motivation

• The cable company UPC has three mainstream offerings:

– UPC Telephony (Priority Telecom)

– UPC Internet (Chello)

– UPC TV (Digital)

• The telecom company KPN has two mainstream offerings and is starting to trial the third:

– KPN Telephony

– KPN Internet (ADSL) MxStream

– KPN TV (Trial)

• The FTTH company Bredband has three mainstream offerings:

– Bredband Telephony

– Bredband Internet

– Bredband TV

Telephony

FTTH Broadband InternetTelevision

?

The enormous FTTH bandwidth will enable things we cannot imagine yet!The enormous FTTH bandwidth will enable things we cannot imagine yet!



Products and services can be developed within each of the channels

Internet Television Telephony

Telephone services

Additional lines

Voice mail

Fax

Hotline

Directory services

ISP services (internet access,

e-mail, chat, hosting)

E-commerce

Streaming audio/video

Video conferencing

Distant learning

Educational services

Healthcare services

Bandwidth on demand

Virtual private networking

Portal services (news)

Games, multiplayer gaming

Application service providing

Music on demand

Games on demand

TV channels (thematic channels)

Video on demand

Personalized television

Interactive television

Especially the on demand services, like VoD, make FTTH so special!Especially the on demand services, like VoD, make FTTH so special!



Some examples of Bredband Sweden and eBiscomItaly



Most of the time products and services get launched in a certain order

Revenue margins Motivation

• Network roll-out drives market share

• Services roll-out drives revenues and margins

• A substantial subscriber base is needed to get the interest of content suppliers, but you need interesting content to get subscribers and to reduce churn (chicken-egg dilemma)

• Bredband, eBiscom and HanseNet use this roll-out scenario. HanseNet will start delivering VoD services in Q4 2001. The others have already started.

Time

Broadband access

Access revenues

Network cost

Telco services

Flat rate revenues

Interconnection cost

TV services (VoD)

TV revenues

Content cost

Portal services

Advertising/e-commerce revenues

Content cost

Community services

Usage revenues

Application cost

Service

Revenue drivers

Costs drivers


Products & Services

Uptake of products & services


PRODUCTS & SERVICES: UPTAKE OF PRODUCTS & SERVICES

Factors affecting the demand for bandwidth

Value of multimedia applications

Need for faster CPE processing

Lower prices

Demand for Bandwidth

Increased availability


156 151

149

54

71

83 13434

73

134

62

81

0

100

200

300

400

500

600

700

Dial UpHouseholds

BroadbandHouseholds

Minutes PerDay

Change

Total 16%

Net Media1 111%

Internet 61%

CD/Tape 14%

VCR/DVD 15%

Radio -9%

TV -3%

635

547522

0

100

200

300

400

500

600

700

AllHouseholds

Dial UpHouseholds

BroadbandHouseholds

Minutes PerDay


Factors affecting the demand for bandwidth

Daily U.S. Consumption of ElectronicMedia and Entertainment

Breakdown of Media Consumptionin U.S. Households

Broadband is snacking technology. With broadband’s convenience you will eat more.Broadband is snacking technology. With broadband’s convenience you will eat more.


Increases In Internet Usage Before and After Broadband Access (Hours Per Month)a

2.2

6.8

6.8

7.51.9

1.9

3

3.2

1.3 1.1

0.9

0.6

0

5

10

15

20

25

Portals/ISPs

Entertainment

Community

ConsumerTransactions

News

Others

Average usage while on Narrow-bandMarch 2000

Average usage after switching to Broadband

Sept 2000

15.9 hours

Composition of Additional Online TimeIn Entertainmenta

Sports10% Adult

3%

Others*

12%

Games75%

21.4 hours

Hou

rs

So Far, Broadband Consumers Are Quickly Realizing the Value of Broadband Entertainment...


Entertainment-centric content is the primary beneficiary of increased Internetusage due to broadband.

Entertainment-centric content is the primary beneficiary of increased Internetusage due to broadband.

Source: aMedia Metrix March 2000, September 2000; CGEY Analysis. *Note: Others includes animation, multimedia, television, kids, hobbies, and lifestyle content.



Consumer content is a crucial piece of the jigsaw

50% • Consumer created content is a crucial element of online programming

• Loyalty

• Traffic growth

• Longer visits

• Why ?

Source: Jupiter Communications


BACKGROUND / INTRODUCTION: TRENDS

Quotes

“FTTH is the technologist’s dream and the finance director’s nightmare”

“Building FTTH is like builing a six-way driveway to your doorstep…..”

Mergers and Acquisition Specialists in IT, Telecom and Media| Proprietary and Confidential | Ehrhardt & Ehrhardt

Technology


Technology

• Technology

• Architecture

• Active Equipment (CPE + COE)

• Organizational aspects

• Alternatives


Technology

Technology


TECHNOLOGY: TECHNOLOGY

Technology: 3 Main Issues

• Architecture of physical infrastructure– Describing the way the ducts, cables, cabinets and houses are configured

• Active equipment (CPE + COE)– Describing the functionality of the active network components at the customers premises

(CPE) and the Central Office Equipment (COE) in the Street Cabinets and Telecom Houses

• Organisational aspects– Describing the related operational aspects to operate and maintain the physical

infrastructure, the active equipment and the services


Basic PrerequisitesTECHNOLOGY: TECHNOLOGY

• In order to make a big step, in all cases FTTH is considered to be part of the solution

• When comparing the options a greenfield (new building sites) is considered

• All considerations are done for providing services to homes and small offices


TECHNOLOGY: TECHNOLOGY

Technology Impact

• Selecting an architecture for the physical infrastructure may have a high cost impact on required equipment and operations and viceversa

• The total cost of ownership can only be achieved considering allthree parts integrally

• Choice of architecture will make FTTH a success or a failure

• The existing situation (services and equipment) should take intoaccount

• Needs for a long period of migration


Technology

Architecture


• The physical infrastructure should last at least 20 to 40 years and cater for possible unforeseen changes in customer needs and technology developments

• The basic duct system should enable reconfiguration without the need to dig or open up streets

• The infrastructure should be suitable for current services and allow for a wide variety of (partly unknown) new services

• The infrastructure should allow for cheap and easy connection ofthe active equipment

• The infrastructure should have high availability

• The infrastructure should be easy-maintenance, allowing for low operational costs

TECHNOLOGY: ARCHITECTURE

Design Criteria


Telecom House

Central OfficeEquipment

Street Cabinet

DuctCablewith 1 or 2 fibers

fiber

PatchPanel

Cable with many fibers, normally ring structure

AreaHousing

ActiveEquipment

To national network


Design Options - Physical Infrastructure


Designing the architecture of the physical infrastructure means selecting the best combination of:



• Location of Telecom House, Area Houses and Street Cabinets– Close or remote to homes

– Active equipment in Street Cabinet?

– Need for Area Houses?

• Type of ducts– Allowing changing of cables by blowing new cables or only for cable protection

• Type of cable– Fiber only; fiber and copper; fiber, copper, coax

– One fiber or two fibers per home

– Type of fiber: single-mode of multi-mode

Every choice has impact on type of equipment and operational costs




• Alternative 1: Future proof– Central Telecom House within 5 km of homes

– No Area Houses

– Street Cabinets without active equipment

– Ducts only for cable protection

– Two single-mode fibers per house

• Remarks– Future proof concept due to the single-mode

– Expensive due to long cables and fibers

– Need to convert existing services for optical transport, this requires expensive equipment at customer site


Design Options - Physical InfrastructureTECHNOLOGY: ARCHITECTURE

• Alternative 2: Hybrid concept (fiber, copper, coax)– Central Telecom House within 5 km of homes

– No Area Houses

– Street Cabinets with active equipment for conversion from optical to coax

– Ducts only for cable protection

– Three cables per house

– Two single mode fibers per house

• Remarks– Future proof concept due to the single mode

– Expensive due to long cables and fibers and additional copper & coax

– No need for additional equipment for existing services (POTS & CATV)



• Alternative 3: Growth Alternative (hybrid: fiber + copper)– Central Telecom House within 5 km of homes

– Street Cabinets within 500 m of houses with Ethernet Access Switch

– Ducts for future cable blowing

– Two multi-mode fibers per home + copper

• Remarks– Need for replacement of fiber in future

– Higher operational costs due to active equipment in street cabinet

– Low initial investment cost for fiber and CPE

– Need for additional CPE for CATV



• Alternative 4: Growth Alternative (hybrid: fiber + copper + coax)– Central Telecom House within 5 km of homes

– Street Cabinets within 500 m of homes with active CATV equipment & Ethernet Access Switch


– Two multi-mode fiber per house + copper + coax

• Remarks– Need for replacement of fiber in future.

– Higher operational costs due to active equipment in street cabinet




• Alternative 5: Broadband PON– Central Telecom House within 5 km of homes

– Area Houses with active equipment

– Street Cabinets without active equipment (only fiber splitters)


– One ???-mode fiber per house

– POTS on separate wavelength

• Remarks– Need for replacement of fiber in future.

– Higher operational costs due to active equipment in Area Houses


– Need for additional CPE for CATV

– Need for special CPE for POTS (technology is already used in CATV systems)



• Only 5 alternatives are given here, many more can be defined

• Heavily dependent on design considerations:– Possibility of High Initial Investments versus Pay as you grow

– Does the home owner pay for the ducts only or also for the fiber cable (the first mile)?

– Is there enough room for Area Houses in the new building area?

– Size of the particular new building site


Technology

Active equipment (CPE + COE)


Design criteriaTECHNOLOGY: ACTIVE EQUIPMENT (CPE + COE)

• Customer Premises Equipment will have more functionality and will continuously become cheaper.

• Equipment in Telecom House, Area Houses and Street Cabinets may have to be upgraded every 5 years.

• We have to provide the existing services with the same Quality of Service as experienced nowadays

• In the future all customer equipment will be IP-based, also many more home equipment (refrigerators, washing machines) will get an IP interface.

• All CPE will have an ethernet interface connected to in-house wiring• There will also be a trend that the functions of PC’s and TV will blur;

people may want to see movies on the PC and surf the internet (and download movies) on the TV or enjoy new possibilities like videoconferencing, gambling or gaming with other residents

• We should cater for the existing customer equipment such as Telephones, TV’s, Radio’s, Alarm equipment

• Measures have to be taken to prohibit unauthorised copying of digital content


Customer Premises Equipment

O/ESwitch fiber

In-house wiring

Coax

IP - POTSConverter

PSTN

TECHNOLOGY: ACTIVE EQUIPMENT (CPE + COE)

The dotted lines can only be implemented when a hybrid physical infrastructure is implemented, it allows the user to use the traditional services in the standard way. The set-top box and IP-POTS converter are not necessary in this case.


Customer Premises Equipment TECHNOLOGY: ACTIVE EQUIPMENT (CPE + COE)

• Major challenge for the introduction of fiber is the cost of the CPE– These components are currently not available and will only be cheap when massive

deployment takes up

• Additional costs comprises– The required Optical/Electrical converter

– An in-house IP-switch if more services are connected through IP

– Converters for translating IP-services to existing analogue equipment or new IP-phones and IP-television sets

• Minimal requirements– An O/E converter and a simple switch for connecting PC. In this case all new services

can be accessed by the PC-only and future IP-based CPE


Technology

Organisational aspects


FTTH Delivery AspectsTECHNOLOGY: ORGANIZATIONAL ASPECTS

• Service Delivery– An operational organisation has to be set-up to manage and maintain the access network

• Service Level– When the traditional services are provided over the fiber infrastructure, these services

define the required Quality of Service. This will be a big challenge since new technology is used with inherent child-diseases

– In the case hybrid infrastructures are used, POTS and CATV services can rely on their traditional infrastructures and service provider organisations

• Voice over IP– Providing the POTS service over IP using fiber requires special measures to translate the

currently known features by the customers in the IP-environment

• Customer Self Care


FCAPS should be implementedTECHNOLOGY: ORGANIZATIONAL ASPECTS

•• FFault management• The service are delivered by a complete chain including active Customer Premises

equipment. This requires that the CPE can be managed from the network for troubleshooting purposes

•• CConfiguration Management• Introducing IP-based services in a residential environment requires configuration of the

home

•• AAccounting

•• PPerformance

•• SSecurity


Technology

Alternatives


TECHNOLOGY: ALTERNATIVES

An overview of some alternativesPhysicalInfrastructure

CPE equipment Operational issues Overall remarks Conclusion

Future Proof Expensive O/E, IP-Converters; limitationexisting services

Need to deliverTelephony grade serviceimplies expensiveorganisation

High initial investmentsand high operational costs

CGEY: Notcommercially viable

Hybrid Concept CPE costs limited to O/Einterface for 1 Gb/s

Use of existingoperational excellence forPOTS & CATV, only neworganisation forbroadband access andnew services

Are enough customersinterested in broadbandand new services to payback the initial additional

investments

Technical feasibilityand financial analysisneeds to be prepared

GrowthAlternative I

CPE costs limited, CATVconverter needed, enablingdirect new services on TV

How to manage thegrowth for differentcustomers.

Needs intensivecalculation of BusinessCase, with unclear factorwhen upgrade has to take

place


GrowthAlternative II

CPE equipment cheapest,cheap O/E interface

Limited impact onoperational challenges

Business case heavilydepended on costs multi-mode cable versus optical

interface


Broadband PON Additional costs needed forO/E converters

Limited impact onoperational challenges

Business case heavilydepended on costs optical

components



Case Studies


Case Studies

• Overview of FTTH initiatives

• Specific Dutch situation


Case Studies

Overview of FTTH initiatives


CASE STUDIES: OVERVIEW OF FTTH INITIATIVES

Where are the FTTH initiatives located?



Bredband Sweden

ProfileName : Bredband

Ownership : Commercial

Location : Sweden

Startdate : December 1999

Status : Operational

Key figures

• Installation fee 500 euro

• Subscription fee 50 euro/month

• 130.000 homes installed

• 30.000 homes connected

Strategy

• Drive long-term Company value by owning the end-user and maximizing available services




– Bredband to provide content providers with QoS distribution, billing & support services


Channels:Service Offer:

Infrastructure

Service provisioning

Content provisioning

Content packaging

√√√√

√√√

Telephony

Internet

Television



Stokab Sweden

ProfileName : StokabAB

Ownership : Municipality

Location : Sweden

Startdate : 1994


Key figures

• Stokab has more than 3,500 kilometres of fibre-optic cable with a total of more then 400,000 kilometres of fibre

Strategy• Stokab is building and operating a

fibre-optic network, on an operator-neutral basis.

• Stokab acts as a wholsaler, offering dark fibre to operators that provide services to business and residential customers. The customers must provide the electronic equipment necessary for transmission of telecommunications traffic.

• Help ensure that insufficient network capacity does not impede the establishment of new businesses on the telecom market.


√ Telephony

Internet

Television

Infrastructure



Content packaging



eBiscom Italy

ProfileName : eBiscom


Location : Italy

Startdate : June 1999


Key figures• 5300 customers (31/12/2000)

• Subscription unlimited use 50-55 euro/month residents

• Subscription business 30-35 euro/month

• Revenue (31/12/2000) 42.400.000 euro

• Net income (31/12/200) (102..600.000) euro

Strategy• eBiscom has two primary ventures

are Metroweb and Fastweb

• Metroweb is developing a high capacity fiber optic network. Fastweb provides integrated broadband communications services to business and residential customers.

• eBiscom’s objective is to become the leading creator and developer of broadband communications in Europe. It’s pursuing this goal by carrying out projects in several segments of the value chain in telco, Internet and media.


Telephony

Internet

Television

Infrastructure



Content packaging

√√√√

√√√



HanseNet Germany

ProfileName : HanseNet


Location : Germany



Key figures


Telephony

Internet

Television*

Infrastructure



Content packaging

√√

√√√√

√*planned

• Subscription unlimited use 50-55 euro/month residents

Strategy• eBiscom bought 80% of HanseNet

and want to copy its formula to get a footprint in Germany



Palo Alto United States

ProfileName : Palo Alto

Owenership : Municipality

Location : United States


Status : Operational Trial

Key figures• Investment $753.000

• Operating cost $16.400/year

• Revenues sources 10 Mbit/s 100 Mbit/s– Installation cost $1200 $2400

– Connection fee $45/month $100/Month

– ISP fee $43/month $70/month

• Trial size 100 homes

• Cost recovery in 10 yearsStrategy• The goal is to bring the enormous

information bandwidth of the Internet to residents' homes. The method is to create a citywide Fiber to the Home data network.

• City of Palo Alto Utilities will build, own and maintain the physical network.

• Darwin Networks will operate the network and provide ISP services and access tot the Internet.


Infrastructure



Content packaging

√√

Telephony

Internet

Television√



Lynchburg United States

ProfileName : Lynchburg

Owenershp : Municipality


Startdate : May 1996


Key figures• The system has grown steadily since then, and currently

encompasses some 40 miles of fiber-optic cable, connecting:

– 26 municipal buildings

– 20 school buildings

– 37 traffic signals

– 2 city contractors

– 3 quasi-governmental agencies

Strategy• Main objectives for the site were to

efficiently link all computer systems involved in city government, and to allow the sharing of costly resources (such as Internet access, system monitoring, and GIS information).

• To bring the network to local homes, making advanced services available throughout the community

• To secure multiple services & providers, promoting competition for lower-cost services

Channels:

√Service Offer:

Telephony

Internet

Television

Infrastructure



Content packaging

√√



Lina.Net Iceland

ProfileName : Lina.Net

Ownership : Commericial

Location : Iceland

Startdate : February 2001

Status : Operational Triall

Key figures• 13.5M dollar investment

• 100 Mbit/s offering

• 12.000 homes

Strategy• Lina.Net was founded by the

Reykjavik Energy Company

• The main objectives of the company are to establish a carrier system for telecommunications within the Reykjavik Metropolitan area, and to establish a distribution system for telecommunications within residential areas


√ Telephony

Internet

Television

Infrastructure



Content packaging

√√



Western Integrated Networks United States

ProfileName : Western Integrated Networks

Ownership : Commericial


Startdate : November 1999


Key figures• $ 830M investment

• $ 2000 investment per household

• 10 Mbit/s offering

• Current active regions show a potential market of 1.65 million homes

• The company expects each market to become profitable within 18 months of rollout

Strategy• Western Integrated Networks is

dedicated to building the first "state-of-the-art broadband network" toevery home in each market that we serve.

• By building the first broadbandnetwork WIN is positioned to be the nation's first true full-serviceprovider of voice, video and data services.

• WIN's market approach will give itscustomers the highest quality and choice, the convenience of one-stopshopping, and the value of a bundledservice offering.

Telephony

Internet

Television

√√√


√√√√

Infrastructure



Content packaging


Case Studies

Specific Dutch situation


Dutch Newspaper HeadlinesCASE STUDIES: SPECIFIC DUCTH SITUATION


Dutch Newspaper HeadlinesCASE STUDIES: SPECIFIC DUCTH SITUATION

Sources:A - Automatiserings Gids, 2001/06/29B - Automatiserings Gids, 2001/07/13C - Automatiserings Gids, 2001/07/13D - Automatiserings Gids, 2001/07/13E - Automatiserings Gids, 2001/06/29

A B

C

D

E


Finance


Finance

• Financial data


Finance

Financial data


FINANCE: FINANCIAL DATA

Cost drivers year 4 including CPE and Telcohouse costs

10%

3%

29%

45%

1%

0%

7%

0%

3%

1%

Capacity lease(fiber)

Active networkinfrastructure

Passive networkinfrastructure

CPE

Telecom house

Consultancy andsystem integration

Software andapplications

Hardware

Organisation andmanagement

Marketing andsalescosts


FINANCE: FINANCIAL DATA

Revenue PotentialActual spend per NL household in January 2001

Other software & media spends excluded!


Glossary


GLOSSARY: ABBREVIATIONS & ACRONYMS

Abbreviations & Acronyms - “A / B”

ACD Automatic Call DistributionACTEW Australian Capital Territory Electricity & WaterADSL Asymmetrical Digital Subscriber LineAIU Administrative Interface UnitAOL America OnlineARPL Average Revenue Per LineATM Asynchronous Transport ModeBDT Broadband Digital TerminalBNU Broadband Network UnitBPS BDT Power SupplyBTA Basic Trading AreaBWOD BandWidth On Demand

ACD Automatic Call DistributionACTEW Australian Capital Territory Electricity & WaterADSL Asymmetrical Digital Subscriber LineAIU Administrative Interface UnitAOL America OnlineARPL Average Revenue Per LineATM Asynchronous Transport ModeBDT Broadband Digital TerminalBNU Broadband Network UnitBPS BDT Power SupplyBTA Basic Trading AreaBWOD BandWidth On Demand

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Abbreviations & Acronyms - “C / D”

CAPEX Capital ExpendituresCATV Community Antenna TelevisionCDSL Consumer Digital Subscriber LineCENTREX Centralized Exchange ServiceCEV Controlled Environment VaultCLASS Custom Local Area Signaling Services CLEC Competitive Local Exchange CarrierCoMPAS City of Morganton Public Antenna SystemCOPA City of Palo AltoCPAU City of Palo Alto UtilitiesCPE Customer Premises EquipmentCVI Cablevision IndustriesDID Direct Inward DialingDISA Direct Inward Service ArrangementsDLC Digital Line ConcentratorDS Digital SignalDSL Digital Subscriber LineDSLAM Digital Subscriber Line Access MultiplexerDWDM Dense Wave Division Multiplexing

CAPEX Capital ExpendituresCATV Community Antenna TelevisionCDSL Consumer Digital Subscriber LineCENTREX Centralized Exchange ServiceCEV Controlled Environment VaultCLASS Custom Local Area Signaling Services CLEC Competitive Local Exchange CarrierCoMPAS City of Morganton Public Antenna SystemCOPA City of Palo AltoCPAU City of Palo Alto UtilitiesCPE Customer Premises EquipmentCVI Cablevision IndustriesDID Direct Inward DialingDISA Direct Inward Service ArrangementsDLC Digital Line ConcentratorDS Digital SignalDSL Digital Subscriber LineDSLAM Digital Subscriber Line Access MultiplexerDWDM Dense Wave Division Multiplexing

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Glossary



Abbreviations & Acronyms - “E / F / G / H”

EBITDA Earnings Before Income Tax and DepreciationEMS Element Management SystemEOY End-of-YearFAX FacsimileFCC Federal Communications CommissionFDI Feeder Distribution InterfaceFTTC Fiber-to-the-CurbFTTH Fiber-to-the-HomeFTTN Fiber-to-the-NodeFWA Fixed Wireless AccessG&A General and AdministrationGHz GigaHertz (1 billion cycles-per-second)HDSL High-bit-rate Digital Subscriber LineHDTV High-Definition TelevisionHFC Hybrid-Fiber CoaxHH HouseHoldHHP Households PassedHO HeadQuarters

EBITDA Earnings Before Income Tax and DepreciationEMS Element Management SystemEOY End-of-YearFAX FacsimileFCC Federal Communications CommissionFDI Feeder Distribution InterfaceFTTC Fiber-to-the-CurbFTTH Fiber-to-the-HomeFTTN Fiber-to-the-NodeFWA Fixed Wireless AccessG&A General and AdministrationGHz GigaHertz (1 billion cycles-per-second)HDSL High-bit-rate Digital Subscriber LineHDTV High-Definition TelevisionHFC Hybrid-Fiber CoaxHH HouseHoldHHP Households PassedHO HeadQuarters

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Abbreviations & Acronyms - “I / J / K / L”

ILEC Incumbent Local Exchange CarrierINA Integrated Network ArchitectureIP Internet ProtocolIRR Internal Rate of ReturnIS Industry StandardISDN Integrated Services Digital NetworkISP Internet Service ProviderIT Information TechnologyJIT Just-In- TimeJV Joint VentureKHz KiloHertz (1,000 cycles per second)KTS Key Telephone SystemLAN Local Area NetworkLD Long Distance

ILEC Incumbent Local Exchange CarrierINA Integrated Network ArchitectureIP Internet ProtocolIRR Internal Rate of ReturnIS Industry StandardISDN Integrated Services Digital NetworkISP Internet Service ProviderIT Information TechnologyJIT Just-In- TimeJV Joint VentureKHz KiloHertz (1,000 cycles per second)KTS Key Telephone SystemLAN Local Area NetworkLD Long Distance

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Abbreviations & Acronyms - “M / N / O”

MAN Metropolitan Area NetworkMBU Multiple Business UnitMCG Media Connections GroupMDU Multiple Dwelling UnitMFS Metropolitan Fiber SystemsMHz MegaHertz (1,000,000 cycles per second)MIRR Modified Internal Rate of ReturnMUX Multiplex, MultiplexerNCIH North Carolina Information HighwayNID Network Interface DeviceNIU Network Interface UnitNLC Next Level CommunicationsNPV Net Present ValueOC Optical CarrierODU Optical Distribution UnitOlE OpticlElectronicONU Optical Network UnitOSP Outside PlantOSS Operations Support Systems

MAN Metropolitan Area NetworkMBU Multiple Business UnitMCG Media Connections GroupMDU Multiple Dwelling UnitMFS Metropolitan Fiber SystemsMHz MegaHertz (1,000,000 cycles per second)MIRR Modified Internal Rate of ReturnMUX Multiplex, MultiplexerNCIH North Carolina Information HighwayNID Network Interface DeviceNIU Network Interface UnitNLC Next Level CommunicationsNPV Net Present ValueOC Optical CarrierODU Optical Distribution UnitOlE OpticlElectronicONU Optical Network UnitOSP Outside PlantOSS Operations Support Systems

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Glossary



Abbreviations & Acronyms - “P / Q / R”

PA Per AnnumPBX Private Branch ExchangePCS Personal Communications SystemPMP Point-to-MultiPointPON Passive Optical NetworkPOTS Plain Old Telephone Service (Basic Telephone Service)P-P Point-to-PointPPP Purchasing Power ParityPPV Pay-Per-ViewPRI Primary Rate InterfacePSTN Public Switched Telecommunications NetworkQAM Quadrature Amplitude ModulationRAA Rendall and AssociatesRBS Radio Base StationRDU Raleigh-Durham International AirportRFI Request For InformationRJ-45 Connector for 10BaseT CableRMT Remote TerminalRTP Research Triangle Park

PA Per AnnumPBX Private Branch ExchangePCS Personal Communications SystemPMP Point-to-MultiPointPON Passive Optical NetworkPOTS Plain Old Telephone Service (Basic Telephone Service)P-P Point-to-PointPPP Purchasing Power ParityPPV Pay-Per-ViewPRI Primary Rate InterfacePSTN Public Switched Telecommunications NetworkQAM Quadrature Amplitude ModulationRAA Rendall and AssociatesRBS Radio Base StationRDU Raleigh-Durham International AirportRFI Request For InformationRJ-45 Connector for 10BaseT CableRMT Remote TerminalRTP Research Triangle Park

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Abbreviations & Acronyms - “S / T”

SAM Service Access MultiplexerSBC Southwestern Bell CorporationSBU Strategic Business UnitSCE Service Creation EnvironmentSDA Switched Digital AccessSDH Synchronous Digital HierarchySDSL Symmetric Digital Subscriber LineSDV Switched Digital VideoSMS Service Management SystemSOHO Small Office, Home OfficeSONET Synchronous Optical NetworkSTB Set Top BoxTAF Technically Affluent FamilyTIU Telephony Interface UnitTOC Town of CaryT/R Transmit/ReceiveTVA Tennessee Valley AuthorityTVPPA Tennessee Valley Public Power AssociationTWC Time Warner Cable

SAM Service Access MultiplexerSBC Southwestern Bell CorporationSBU Strategic Business UnitSCE Service Creation EnvironmentSDA Switched Digital AccessSDH Synchronous Digital HierarchySDSL Symmetric Digital Subscriber LineSDV Switched Digital VideoSMS Service Management SystemSOHO Small Office, Home OfficeSONET Synchronous Optical NetworkSTB Set Top BoxTAF Technically Affluent FamilyTIU Telephony Interface UnitTOC Town of CaryT/R Transmit/ReceiveTVA Tennessee Valley AuthorityTVPPA Tennessee Valley Public Power AssociationTWC Time Warner Cable

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Abbreviations & Acronyms - “U / V / W”

UADSL Universal Access Digital Subscriber LineUSAM Universal Services Access MultiplexerVDSL Very-high-bit-rate Digital Subscriber LineVOD Video On DemandVolP Voice Over Internet ProtocolVPN Virtual Private NetworkWAM Wide Area ManagementWAN Wide Area NetworkWLL Wireless Local LoopWWW World Wide Web

UADSL Universal Access Digital Subscriber LineUSAM Universal Services Access MultiplexerVDSL Very-high-bit-rate Digital Subscriber LineVOD Video On DemandVolP Voice Over Internet ProtocolVPN Virtual Private NetworkWAM Wide Area ManagementWAN Wide Area NetworkWLL Wireless Local LoopWWW World Wide Web

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GLOSSARY: GLOSSARY OF TERMS

Glossary of Terms

DSL: Digital Subscriber Line

DSL provides high-speed digital connections that work over copper telephone-typelines. DSL uses a different part of the frequency spectrum than analog voicesignals, so it can work in conjunction with standard analog telephone service, sharing the same pair of wires.

It should be noted that actual transmitted bandwidth depends on the length of the copper loop from the DSL line card to the end user. The condition of the loop facilities is also an issue.

There are several versions of DSL, which has led to the common designation of "xDSL" when referring to this type of technology in general.

DSL: Digital Subscriber Line

DSL provides high-speed digital connections that work over copper telephone-typelines. DSL uses a different part of the frequency spectrum than analog voicesignals, so it can work in conjunction with standard analog telephone service, sharing the same pair of wires.

It should be noted that actual transmitted bandwidth depends on the length of the copper loop from the DSL line card to the end user. The condition of the loop facilities is also an issue.

There are

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several versions of DSL, which has led to the common designation of "xDSL" when referring to this type of technology in general.



Glossary of Terms

ADSL (Asymmetric Digital Subscriber Line) can support downstream bandwidths of upto 8 Mbps and upstream bandwidths of 1.5 Mbps The copper loop must typically beless than 12,000 feet.

A variation of ADSL is G.Lite, DSL-Lite or UADSL, and is a notched down versionaimed at the short-term consumer market. Going by many brand names thisservice provides speeds up to 1.5 Mbps downstream and 384 Kbps upstream. The copper loop can be as much as 18,000 feet.

HDSL (High-bit-rate Digital Subscriber Line) is intended as an improved way to provideT1/E1 (15/2.0 Mbps) services by the telephone companies. It uses 4 copper wires(2 pairs) and offers a wider coverage area the previous methods.

SDSL (Symmetric Digital Subscriber Line) is an enhanced version of HDSL requiringonly one pair of wires It provides the same bandwidth in both directions.

VDSL (Very-high-bit-rate Digital Subscriber Line) is targeted at high-access demandingapplications and can support speeds of 52 Mbps downstream and 13 Mbps upstream. The copper loop must be about 4,000 feet or less.

ADSL (Asymmetric Digital Subscriber Line) can support downstream bandwidths of upto 8 Mbps and upstream bandwidths of 1.5 Mbps The copper loop must typically beless than 12,000 feet.

A variation of ADSL is G.Lite, DSL-Lite or UADSL, and is a notched down versionaimed at the short-term consumer market. Going by many brand names thisservice provides speeds up to 1.5 Mbps downstream and 384 Kbps upstream. The copper loop can be as much as 18,000 feet.

HDSL (High-bit-rate Digital Subscriber Line) is intended as an improved way to provideT1/E1 (15/2.0 Mbps) services by the telephone companies. It uses 4 copper wires(2 pairs) and offers a wider coverage area the previous methods.

SDSL (Symmetric Digital Subscriber Line) is an enhanced version of HDSL requiringonly one pair of wires It provides the same bandwidth in both directions.

VDSL (Very-high-bit-rate Digital Subscriber Line) is targeted at high-access demandingapplications and can support speeds of 52 Mbps downstream and 13 Mbps upstream. The copper loop must be about 4,000 feet or less.

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