Wireline Broadband Technologies

Addressing the Bandwidth Challenge External drivers are stimulating demand Movement towards more symmetry and less oversubscription

External drivers are stimulating demand

Movement towards more symmetry and less oversubscription

Wireline Technologies Hybrid Fiber Coax RF Video DOCSIS Twisted Pair ADSL2+ VDSL2 Fiber-to-the-Premises P2P Ethernet BPON---->GPON

Hybrid Fiber Coax

RF Video

DOCSIS

Twisted Pair

ADSL2+

VDSL2

Fiber-to-the-Premises

P2P Ethernet

BPON---->GPON

Residential Internet Access

HFC Architecture Voice Switch Data Router/ IP Switch Video DFB Laser Optical Node Coax RG6 Headend Home RF MUX RF RF RF RF RF RF RF RF Optical Distribution Node 100 - 2000 Households Passed 4 coaxial branches typical l 4-20 spare fibers “ extra fiber simplifies node splitting” 6kft max Distribution Coaxial Cable P/S

0 100 200 300 400 500 600 700 800 Frequency [MHz] Return 5 - 42 MHz Analog Forward Digital Forward FM 266 digital channels (8 SDTV per 6Mhz avg.) 77 - 6Mhz analog TV channels (NTSC) Multiple digital and analog carriers of mixed size Basic 550Mhz system Basic 750Mhz system Return for both systems MSO 750 MHz Spectrum

Downstream HFC Capacity Improvement Subdivision of existing optical nodes. “Node split”. Stat mux digital channels . “Switched Digital Video” . Movement of analog channels to digital. “Spectrum re-use”. Increase the upper RF spectrum to 1Ghz. “Spectrum expansion” Use RF spectrum above 1Ghz. “Spectrum overlay”.

Subdivision of existing optical nodes. “Node split”.

Stat mux digital channels . “Switched Digital Video” .

Movement of analog channels to digital. “Spectrum re-use”.

Increase the upper RF spectrum to 1Ghz. “Spectrum expansion”

Use RF spectrum above 1Ghz. “Spectrum overlay”.

0 Hz 5 MHz 10 MHz 15 MHz 20 MHz 25 MHz 30 MHz 35 MHz 40 MHz 42 MHz 45 MHz 90 MHz Status Monitor Set top control Typically not used Cable Modem “ Typical” Cable Telephone “ Typical” Typically not used Typical N.A.Diplex Filter Cutoff Both platforms are generally able to use this space MSO Upstream Spectrum Useable with mid-band split future

Upstream HFC Capacity Improvement Subdivision of existing optical nodes. “Node split”. Conversion to all digital. Allocate a portion of former downstream bandwidth to upstream. “Mid-split”. Use RF spectrum above 1Ghz. “Spectrum overlay”. Use micronode (fiber-to-the-premise, aka Docsis PON or DPON) technology where more bandwidth is needed

Subdivision of existing optical nodes. “Node split”.

Conversion to all digital. Allocate a portion of former downstream bandwidth to upstream. “Mid-split”.

Use RF spectrum above 1Ghz. “Spectrum overlay”.

Use micronode (fiber-to-the-premise, aka Docsis PON or DPON) technology where more bandwidth is needed

DOCSIS Overview Standard adopted by the cable industry in the late 1990’s DOCSIS is an IP over ethernet standard Layer 3 based architecture Broadcom chips in the serving office (Cable Modem Termination System) and the Cable Modem Cisco routed core network (Cisco dominates the CMTS business) All future CATV IP services run over DOCSIS PacketCable-VOIP standard, uses NCS (MGCP) moving to SIP PacketCable Multimedia-extends control plane to all multimedia services DOCSIS is a global standard Certification waves for vendors across the globe Testing labs in Europe and Asia

Standard adopted by the cable industry in the late 1990’s

DOCSIS is an IP over ethernet standard

Layer 3 based architecture

Broadcom chips in the serving office (Cable Modem Termination System) and the Cable Modem

Cisco routed core network (Cisco dominates the CMTS business)

All future CATV IP services run over DOCSIS

PacketCable-VOIP standard, uses NCS (MGCP) moving to SIP

PacketCable Multimedia-extends control plane to all multimedia services

DOCSIS is a global standard

Certification waves for vendors across the globe

Testing labs in Europe and Asia

DOCSIS Version Overview [1] Assumes 750MHz of available downstream spectrum (125 channels) [2] Aggregation of four 6MHz channels. With 256QAM = 160 Mbps [3] Assumes ~25MHz of useable upstream spectrum [4] Assumes ~35MHz of useable upstream spectrum [5] Aggregation of 4 6MHz channels Upstream Bandwidth Downstream Bandwidth Consumer Devices Services X X X X X X X X X X X X X X Cable Modem VoIP Phone (MTA) Residential Gateway Video Phone Mobile Devices IP Set-top Box X X X X X X X X X X X X X X X Broadband Internet Tiered Services VoIP Video Conferencing Commercial Services Entertainment Video 120 m i n i m u m [5] 170 [4] 30 170 [4] 10 80 [3] 10 80 [3] Mbps/channel Mbps/node 160 minimum [2] 5 [1] 40 5 [1] 40 5 [1] 40 5 [1] Mbps/channel Gbps/node DOCSIS 3.0 DOCSIS 2.0 DOCSIS 1.1 DOCSIS 1.0 DOCSIS Version

DOCSIS Capacity Roadmap 30Mbps (U) DOCSIS 2.0 (symmetric services ) 40Mbps (D) DOCSIS 3.0 (channel bonding) Spec Release Service Available 160Mbps (D) 120Mbps (U) 2002 2004 2006 2008 2010 Spec Release Service Available

30Mbps (U)

40Mbps (D)

160Mbps (D)

120Mbps (U)

2002

2004

2006

2008

2010

DOCSIS Downstream Rate Equally Distributed <node @ 192 subs

DOCSIS Upstream Rate Equally Distributed <node @ 192 subs

HFC Capacity Upgrade Comparisons HFC Upgrade: Case1: (Switched Digital Video): DS: 4Gbps /192 subs ~ 20Mbps even distribution. US: 360Mbps /192 subs ~ 1.8Mbps even distribution. Case2 (Bandwidth Expansion): DS: 5.64Gbps /192 subs ~ 29.3Mbps even distribution. US: 360Mbps /192 subs ~ 1.8Mbps even distribution. Case3 (Deep Fiber) : DS: 4Gbps /192 subs ~ 20Mbps even distribution. US: 4Gbps /192 subs ~ 20Mbps even distribution. Case 4 (Spectrum Overlay): DS: 4.6Gbps /192 subs ~ 23Mbps even distribution. US: 2.4Gbps /192 subs ~ 12Mbps even distribution. DOCSIS 2.0 (3.0): DS: 40 (160Mbps) peak. US: 30 (120Mbps) peak Conclusion: In order for the HFC network to meet or exceed FTTN “Committed” Information Rate capabilities, enhancement via one or more of the several techniques mentioned above will be required. In order for the HFC network to meet or exceed the VDSL (FTTN) “Peak” Information Rate capabilities, DOCSIS3.0 Modems and upgraded CMTS will be required. In order for the HFC network to exceed the FTTN “Committed + Peak” Bandwidth capabilities both A) and B) would be necessary. However; a) or b) alone could have an interim marketing advantage over FTTN.

HFC Upgrade:

Case1: (Switched Digital Video):

DS: 4Gbps /192 subs ~ 20Mbps even distribution.

US: 360Mbps /192 subs ~ 1.8Mbps even distribution.

Case2 (Bandwidth Expansion):

DS: 5.64Gbps /192 subs ~ 29.3Mbps even distribution.

US: 360Mbps /192 subs ~ 1.8Mbps even distribution.

Case3 (Deep Fiber) :

DS: 4Gbps /192 subs ~ 20Mbps even distribution.

US: 4Gbps /192 subs ~ 20Mbps even distribution.

Case 4 (Spectrum Overlay):

DS: 4.6Gbps /192 subs ~ 23Mbps even distribution.

US: 2.4Gbps /192 subs ~ 12Mbps even distribution.

DOCSIS 2.0 (3.0):

DS: 40 (160Mbps) peak.

US: 30 (120Mbps) peak

Conclusion:

In order for the HFC network to meet or exceed FTTN “Committed” Information Rate capabilities, enhancement via one or more of the several techniques mentioned above will be required.

In order for the HFC network to meet or exceed the VDSL (FTTN) “Peak” Information Rate capabilities, DOCSIS3.0 Modems and upgraded CMTS will be required.

In order for the HFC network to exceed the FTTN “Committed + Peak” Bandwidth capabilities both A) and B) would be necessary. However; a) or b) alone could have an interim marketing advantage over FTTN.

Copper and FTTH Technologies

DSL Technologies Residential to Small-Medium Business Services Centric ADSL, ADSL S=1/2 Considered legacy ADSL 2+ Today’s mainstream technology Bonding emerging as an option for rate-reach expansion VDSL2 Big in Asia, emerging in North America – optimized for MDU and sub 5 Kft loops Business Services Centric HDSL 4 Today’s mainstream DS1 services technology SHDSL CLEC centric approach, also used for bonded Ethernet services ADSL2+ Annex M Symmetric service mode ~ 1 Mbps, higher with bonding VDSL2 Emerging

Residential to Small-Medium Business Services Centric

ADSL, ADSL S=1/2

Considered legacy

ADSL 2+

Today’s mainstream technology

Bonding emerging as an option for rate-reach expansion

VDSL2

Big in Asia, emerging in North America – optimized for MDU and sub 5 Kft loops

Business Services Centric

HDSL 4

Today’s mainstream DS1 services technology

SHDSL

CLEC centric approach, also used for bonded Ethernet services

ADSL2+ Annex M

Symmetric service mode ~ 1 Mbps, higher with bonding

VDSL2

Emerging

Distribution Network Loop Lengths 95% Percentile Distribution Loop Length (1983 Survey) Source: T1E1.4/2003-212, Telcordia Technologies 95% Percentile Distribution Loop Length (1990 Survey)

ADSL2+ Technology Competitive Broadband Architectures: BBDLC, MSAP Technologies: ADSL2+ (VDSL2 Long Reach) Drivers: Brownfields, retrofits, low/medium competition, basic IPTV, competitive HSD Competitive Broadband <15 Mbps Advanced Broadband 20-30 Mbps Ultimate Broadband >30 Mbps 3.5kft 6kft 18kft ADSL2+ Beyond

Competitive Broadband

Architectures:

BBDLC, MSAP

Technologies:

ADSL2+ (VDSL2 Long Reach)

Drivers:

Brownfields, retrofits, low/medium competition, basic IPTV, competitive HSD

VDSL2 Advanced Broadband Architectures: FTTN Technologies: VDSL2 Drivers: Brownfields, high competition, advanced IPTV Competitive Broadband <15 Mbps Advanced Broadband 20-30 Mbps Ultimate Broadband >30 Mbps 3.5kft 6kft VDSL2 18kft Beyond

Advanced Broadband

Architectures:

FTTN

Technologies:

VDSL2

Drivers:

Brownfields, high competition, advanced IPTV

DSL Rate / Reach Graph (downstream) Bandwidth (Mbps) Loop Length (26 AWG) VDSL2 Profile 8d ADSL2+ / ADSL2 VDSL2 / ADSL2+ Cross-over Point

FTTN Deployment Targets Existing copper serving areas Reuses high quality copper in urban/suburban areas. Remote DSLAM placement at feeder-distribution interface Greenfield fill-in New homes in areas already served by copper plant. MDU’s VDSL2 is a natural choice for serving MDU’s. To date, most VDSL2 deployments are for MDU’s.

Existing copper serving areas

Reuses high quality copper in urban/suburban areas.

Remote DSLAM placement at feeder-distribution interface

Greenfield fill-in

New homes in areas already served by copper plant.

MDU’s

VDSL2 is a natural choice for serving MDU’s.

To date, most VDSL2 deployments are for MDU’s.

Fiber-to-the-Premises Ultimate Broadband Architectures: FTTP Technologies: GPON, P2P Drivers: Greenfields, overbuilding existing copper plant, high competition areas Competitive Broadband <15 Mbps Advanced Broadband 20-30 Mbps Ultimate Broadband 30-100+ Mbps 3.5kft 6kft GPON 18kft Beyond

Ultimate Broadband

Architectures:

FTTP

Technologies:

GPON, P2P

Drivers:

Greenfields, overbuilding existing copper plant, high competition areas

FTTP Standards Standards bodies that have specified FTTP protocols International Telecommunications Union (ITU-T/FSAN) Institute of Electrical & Electronics Engineers (IEEE) ITU-T/FSAN BPON (G.983) GPON (G.984) IEEE EPON (aka GEPON or 802.3ah P2MP) Point-to-Point Ethernet (aka Active Ethernet or 802.3ah pt-to-pt)

Standards bodies that have specified FTTP protocols

International Telecommunications Union (ITU-T/FSAN)

Institute of Electrical & Electronics Engineers (IEEE)

ITU-T/FSAN

BPON (G.983)

GPON (G.984)

IEEE

EPON (aka GEPON or 802.3ah P2MP)

Point-to-Point Ethernet (aka Active Ethernet or 802.3ah pt-to-pt)

North American FTTP Deployments Deployed Technology 87% 4%

P2P Ethernet FTTP P2P is well suited for serving enterprise customers Designed to support transport and the dedicated facilities that enterprise customers demand Enterprise customers take responsibility for security, on-premises networking, VLAN management, etc. P2P is suitable for residential customers beyond the reach of PON Remote Residential P2P Switch Enterprise IP Services IP Video VOIP ISP Video Headend

P2P is well suited for serving enterprise customers

Designed to support transport and the dedicated facilities that enterprise customers demand

Enterprise customers take responsibility for security, on-premises networking, VLAN management, etc.

P2P is suitable for residential customers beyond the reach of PON

Gigabit Passive Optical Network (GPON) Businesses Homes MDUs ODN – Optical Distribution Network Voice Switch Internet IP Video RF Video Central Office / Remote Terminal OLT OLT – Optical Line Termination ONT – Optical Network Termination 1490 nm 1310 nm 1550 nm

1490 nm

1310 nm

1550 nm

Fiber-to-the-Premise Projections

Fiber is the End Game… The question is how fast? Conservative Primarily green field builds Slow overbuild ramp Aggressive Rapid overbuild from the start Accelerated capital investment High target for eventual coverage

The question is how fast?

Conservative

Primarily green field builds

Slow overbuild ramp

Aggressive

Rapid overbuild from the start

Accelerated capital investment

High target for eventual coverage

Flexible Residential Service Delivery BPON or 1.2 or 2.5 Gbps GPON RF Video or Not Personality Module TDM or VOIP 10/100 or Gigabit Ethernet

FTTP Deployments in Minnesota Total FTTP homes in Minnesota (as of 9/30) ~ 18 to 20,000 2007 FTTP deployments in Minnesota (through 9/30) Homes 5,610 Up 75% year over year Percent RF Video 50% Declining over the next few years Percent with GE interfaces 17% Likely to exceed 80% in 2008 Percent GPON 53% Likely to exceed 80% in 2008 as BPON fades

Total FTTP homes in Minnesota (as of 9/30) ~ 18 to 20,000

2007 FTTP deployments in Minnesota (through 9/30)

Homes 5,610 Up 75% year over year

Percent RF Video 50% Declining over the next few years

Percent with GE interfaces 17% Likely to exceed 80% in 2008

Percent GPON 53% Likely to exceed 80% in 2008 as BPON fades

Minnesota Rate of Adoption of FTTH Over half of Minnesota’s Independent Telephone Companies are now deploying FTTH

Obstacles to FTTH Deployment in MN Most operators in Minnesota deploying FTTH are in low growth areas Independent Telcos have led the way rebuilding their ILEC areas with FTTH and through CLEC activity. Over half in Minnesota now deploying FTTH High growth Twin Cities suburbs have recently deployed copper plant; not yet depreciated No Verizon type overbuilding of copper plant, except in greater Minnesota by IOC CLECs and some innovators, such as Hiawatha Broadband and Jaguar Most new housing growth in Minnesota is in Qwest territory; Qwest is the only major operator in the U.S. still not deploying FTTH for new residential developments Expect to see more activity in 2008. Committed $300 Million for FTTN deployments over the next two years, probably includes FTTH for some greenfields Minnesota has few large master planned communities Large sunbelt states projects can demand FTTH Minnesota law restricts HOAs from signing long term exclusive contracts with FTTH service providers; limits FTTP deployments in new developments Sunbelt states benefiting from new FTTH service providers

Most operators in Minnesota deploying FTTH are in low growth areas Independent Telcos have led the way rebuilding their ILEC areas with FTTH and through CLEC activity. Over half in Minnesota now deploying FTTH

High growth Twin Cities suburbs have recently deployed copper plant; not yet depreciated No Verizon type overbuilding of copper plant, except in greater Minnesota by IOC CLECs and some innovators, such as Hiawatha Broadband and Jaguar

Most new housing growth in Minnesota is in Qwest territory; Qwest is the only major operator in the U.S. still not deploying FTTH for new residential developments Expect to see more activity in 2008. Committed $300 Million for FTTN deployments over the next two years, probably includes FTTH for some greenfields

Minnesota has few large master planned communities Large sunbelt states projects can demand FTTH

Minnesota law restricts HOAs from signing long term exclusive contracts with FTTH service providers; limits FTTP deployments in new developments Sunbelt states benefiting from new FTTH service providers

Residential Technology Summary No 13 Mbps at 5 kft 30 Mbps at 3 kft VDSL2 (copper) Yes 78 Mbps 1 Gbps at subscriber interface GPON (fiber) No 5 Mbps at 12 kft 13 Mbps at 5 kft ADSL2+ (copper) Yes 1 Mbps 160 Mbps DOCSIS 3.0 (HFC) Support for RF Video Average Downstream Bandwidth Peak Downstream Bandwidth

Thank You