Wireline Technologies Dave Russell

Slide 1: Wireline Broadband Technologies

Slide 2: Addressing the Bandwidth Challenge External drivers are stimulating demand Movement towards more symmetry and less oversubscription

Slide 3: Wireline Technologies Hybrid Fiber Coax  RF Video  DOCSIS Twisted Pair  ADSL2+  VDSL2 Fiber-to-the-Premises  P2P Ethernet  BPON---->GPON

Slide 4: Residential Internet Access

Slide 5: HFC Architecture Distribution Coaxial Cable Home 6kft max Headend Voice RF RF Switch 4-20 spare fibers “extra fiber simplifies node splitting” Data DFB RF RF RF RF RF Optical Router/ Laser MUX Node IP Switch Video RF RF Coax P/S RG6 Optical Distribution Node 100 - 2000 Households Passed 4 coaxial branches typicall

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

Slide 7: 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”.

Slide 8: MSO Upstream Spectrum Both platforms are generally able to use this space Useable with mid-band split future Status Monitor Cable Cable Typically Typically Set top Telephone Modem not used not used control “Typical” “Typical” 0 Hz 5 MHz 10 MHz 15 MHz 20 MHz 25 MHz 30 MHz 35 MHz 40 MHz 42 MHz 45 MHz 90 MHz Typical N.A.Diplex Filter Cutoff

Slide 9: 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

Slide 10: 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 1

Slide 11: DOCSIS Version Overview DOCSIS Version DOCSIS 1.0 DOCSIS 1.1 DOCSIS 2.0 DOCSIS 3.0 Services Broadband Internet X X X X Tiered Services X X X VoIP X X X Video Conferencing X X Commercial Services X X Entertainment Video X Consumer Devices Cable Modem X X X X VoIP Phone (MTA) X X X Residential Gateway X X X Video Phone X X Mobile Devices X IP Set-top Box X Downstream Bandwidth Mbps/channel 40 40 40 160 minimum[2] Gbps/node 5[1] 5[1] 5[1] 5[1] Upstream Bandwidth Mbps/channel 10 10 30 120 minimum[5] Mbps/node 80[3] 80[3] 170[4] 170[4] [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 1

Slide 12: DOCSIS Capacity Roadmap 160Mbps (D) DOCSIS 3.0 (channel bonding) 120Mbps (U) Spec Service Release Available 40Mbps (D) DOCSIS 2.0 (symmetric services ) 30Mbps (U) Spec Service Release Available 2002 2010 2008 2004 2006 1

Slide 13: DOCSIS Downstream Rate Equally Distributed <node @ 192 subs Downstream Rate (Equal Committed Distribution) 3.500 3.000 2.500 DOCSIS 1.x: Peak Rate 40Mbps DOCSIS 2.0: Peak Rate 40Mbps DOCSIS 3.0: Peak Rate 160Mbps 2.000 Mbps 1.500 1.000 0.500 0.000 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050 Subs per Node 1

Slide 14: DOCSIS Upstream Rate Equally Distributed <node @ 192 subs Upstream Rate (Equal Committed Distribution) 3.000 2.500 DOCSIS 1.x: Peak Rate 10Mbps 2.000 DOCSIS 2.0: Peak Rate 30Mbps DOCSIS 3.0: Peak Rate 120Mbps Mbps 1.500 1.000 0.500 0.000 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050 Subs per Node 1

Slide 15: 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. 1

Slide 16: Copper and FTTH Technologies

Slide 17: 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  1

Slide 18: Distribution Network Loop Lengths Percentage of Distribution Loops Shorter than X 95% Percentile Distribution Loop Length (1983 Survey) 95% Percentile Distribution Loop Length (1990 Survey) Percent of loops shorter than X 95.0% 85.0% 1983 Survey 75.0% 65.0% 1990 DLC Survey, 55.0% CSA-designed loops (60% of loops ) 45.0% 35.0% 25.0% 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 X, Length (feet) Source: T1E1.4/2003-212, Telcordia Technologies 1

Slide 19: ADSL2+ Technology Competitive Broadband Architectures:  BBDLC, MSAP Technologies:  ADSL2+ (VDSL2 Long Reach) Drivers:  Brownfields, retrofits, low/medium competition, basic IPTV, competitive HSD ADSL2+ 3.5kft 6kft Beyond 18kft Competitive Broadband Advanced Broadband Ultimate Broadband <15 Mbps 20-30 Mbps >30 Mbps 1

Slide 20: VDSL2 Advanced Broadband Architectures:  FTTN Technologies:  VDSL2 Drivers:  Brownfields, high competition, advanced IPTV VDSL2 3.5kft 6kft Beyond 18kft Competitive Broadband Advanced Broadband Ultimate Broadband <15 Mbps 20-30 Mbps >30 Mbps 2

Slide 21: DSL Rate / Reach Graph (downstream) VDSL2 Profile 8d ADSL2+ / ADSL2 Bandwidth (Mbps) VDSL2 / ADSL2+ Cross-over Point Loop Length (26 AWG) 2

Slide 22: 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. 2

Slide 23: Fiber-to-the-Premises Ultimate Broadband Architectures:  FTTP Technologies:  GPON, P2P Drivers:  Greenfields, overbuilding existing copper GPON plant, high competition areas 3.5kft 6kft Beyond 18kft Competitive Broadband Advanced Broadband Ultimate Broadband <15 Mbps 20-30 Mbps 30-100+ Mbps 2

Slide 24: 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) 2

Slide 25: North American FTTP Deployments D e p lo y e d T e c h n o lo gy 4% 87% 2

Slide 26: 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 Video Headend IP Video Enterprise IP Services ISP VOIP P2P Switch Remote Residential 2

Slide 27: Gigabit Passive Optical Network (GPON) – 1490 nm OLT – Optical Line Termination Businesses Voice Switch OLT Internet – 1550 nm IP Video RF Video MDUs ODN – Optical Central Office / Remote Terminal Distribution Network Homes – 1310 nm ONT – Optical Network Termination 2

Slide 28: Fiber-to-the-Premise Projections 2

Slide 29: Fiber is the End Game… The question is how fast? Aggressive Conservative Rapid overbuild from the start Primarily green field builds  Accelerated capital investment Slow overbuild ramp High target for eventual coverage 2

Slide 30: Flexible Residential Service Delivery 10/100 or Gigabit Ethernet Personality Module TDM or VOIP BPON or 1.2 or 2.5 Gbps GPON RF Video or Not 3

Slide 31: 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 3

Slide 32: Minnesota Rate of Adoption of FTTH Over half of Minnesota’s Independent Telephone Companies are now deploying FTTH 600 500 400 300 200 100 0 1997-2005 2006 2007 New FTTH Homes Per Month 3

Slide 33: 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 3

Slide 34: Residential Technology Summary Peak Average Support for RF Downstream Downstream Video Bandwidth Bandwidth DOCSIS 3.0 160 Mbps 1 Mbps Yes (HFC) ADSL2+ (copper) 13 Mbps at 5 kft 5 Mbps at 12 kft No VDSL2 30 Mbps at 3 kft 13 Mbps at 5 kft No (copper) GPON (fiber) 1 Gbps 78 Mbps Yes at subscriber interface 3

Slide 35: Thank You