Event | Broadband Traffic Management Featured Speaker Manish Singh, VP of Product Line Management, Continuous Computing When: Tuesday, November 17th, 2009 Topic: COMMERCIAL REALITIES AND SUBSCRIBER-CENTRIC STRATEGIES FOR BROADBAND TRAFFIC MANAGEMENT, Towards Usage-Based Charging Models In A Competitive Flat-Rate Environment: Is There A First-Mover Disadvantage Or Can QoE Be a USP? • How sustainable is flat-rate pricing? Does it create or erode value? • Exploring the commercial risk involved in a shift towards bandwidth-based pricing • Moving from all you can eat to all you can afford

1. Usage-Based Charging Models
Manish Singh
Vice President, Product Line Management
www.ccpu.com Confidential and Proprietary

2. At a Glance
Our Customers = Our Success
Protocol Software
LTE
DPI
Femtocell
ATCA Professional
Platforms Services
www.ccpu.com
See our display in the Exhibit Area
www.ccpu.com Confidential and Proprietary 2

3. Mobile Broadband: Huge Demand, Huge Challenges
Mobile voice revenues saturating
Mobile broadband driving growth
Traffic up 131% per year
Doubling every 9 months!
BUT new base stations & spectrum
Source: IDC
adding only 20% capacity / year
Video is the true network killer app
Will bring mobile networks to its knees!
Data streams are no longer bursty
Ex: Peer-to-peer (P2P) & streaming
The “Exa-Flood” is coming…
Source: Cisco Visual Networking Index, 2009
www.ccpu.com Confidential and Proprietary 3

4. What Is Driving this Growth?
Demographics Devices Demand
Internet Applications
Internet Generation Mobile Internet Devices
& Content
www.ccpu.com Confidential and Proprietary 4

5. And More to Come…
Smartphones, Netbooks, Notebooks…
Smartphones Netbooks Notebooks
Cameras, eReaders, Med Devices, Gaming, Navigation…
Personal
IP Cameras eReaders Medical Devices Gaming Consoles Navigation Systems
www.ccpu.com Confidential and Proprietary 5

6. Device Potential
Connected Devices M2M Connectivity
12 Today, predominantly WiFi
h
o wt Coverage limited to HotSpots
10
e Gr
ic Consumer Opportunity
ev
Relative Comparison
8
d D Social networking phenomenon
te
nec Facebook, YouTube…
6
C on Wireline on the decline
X
4 3.3 Emergency, home security…
2 Enterprise Opportunity
Operational efficiencies
0 Smart meters, tracking...
2009 2015 2020
Year
Inventory management
Connected Devices Legend:
BUT, there are challenges
Consumer Electronics – Cameras, eReaders, Gaming Consoles,
Personal Medical Devices, Smart Meters, Retail PoS terminal, etc. Security – embedding SIM
Traditional Mobile Devices – Cellphones, Smartphones, Netbooks, Indoor coverage
Data Cards, Dongles
Cost!! Cost!! Cost!!
Sources: various analyst reports, Continuous Computing estimates
www.ccpu.com Confidential and Proprietary 6

7. New Opportunities
Retailers Manufacturers Today’s Business Chain
Consumer Retailer Manufacturer
Mostly, pay one-time
Embedding LTE in consumer devices
New entrant: Operator
Recurring business model opportunity
Netbooks already setting the trend
Pay usage-based, application-based
Addressing the cost challenge
Operator subsidizes devices, OR
Operators Consumers
Mfgr subsidizes & shares revenue
Consumer Device Ecosystem Unified Billing is a must
User might have multiple devices
www.ccpu.com Confidential and Proprietary 7

8. Threat: “Mind the Gap”
Apple sold 7.4M iPhones in Q3
Intel reports blowout Q3 on strong mobile business; Atom rev up 14%
AT&T sells Nokia netbooks for $300 with 2 year contract
Verizon’s CTO: “Metered broadband is the future”
And… Operators need…
Traffic
Revenues & Femtocells =
Traffic Gap Cheapest
Widening Bit Pipe
Voice Era
Revenues
Data Era
LTE = Fastest Bit Pipe DPI = Smartest Bit Pipe
Network Infrastructure Meltdown
www.ccpu.com Confidential and Proprietary 8

9. LTE Delivers “Fast Pipes”
Significantly increased data rates
E-UTRAN Architecture
~100Mbps down, ~50Mbps up
Low latency for real-time apps
11 LTE design wins
MME / Serving GW MME / Serving GW
EPC: MME, SGW, PDN solutions
RAN: eNodeB, HeNodeB
S1 S1
S1 S1
S1
S1
S1
X2
X2
eNodeB X2 eNodeB HeNodeB HeNB Gateway
S1
S1
eNodeB HeNodeB HeNodeB
Spectral Efficiency Improved 4X
www.ccpu.com Confidential and Proprietary 9

10. Femtocells Deliver “Cheap Pipes”
Enables new LTE rollout strategy Femtocell Solutions
New: “Build-as-they-come”
Old: “Build-and-they-will-come” Offloads traffic Provides cell coverage indoors
from macro Low-power & self-configuring to
network minimize interference
Pricing: enables combo package deal Aligns with 3G / LTE standards
Ex: Femto bundled with netbook Leverages users’ broadband
Heavy data traffic offloaded from macro
+
Trillium Femtocell software
Optimized for small memory footprint
Optimized for high performance
Macro network LTE femtocell
LTE Devices
16 Femto design wins base station converged device
Spectrum Re-use Improved 1,000,000X
www.ccpu.com Confidential and Proprietary 10

11. DPI Delivers “Smart Pipes”
Consumer / Subscriber Network Operator App & Content Provider
$
$?
Bit Pipe
$$
Enables new revenue streams Enables higher network efficiency
Tiered SLA / Bandwidth Allocation Traffic Offloading / Throttling (P2P)
Real Time Service-Tier Upgrade Security: IPS/IDS, DDoS, Firewall
12 DPI design wins
Still Limited by Spectrum; Traffic Management Is Essential
www.ccpu.com DPI = Deep Packet Inspection, P2P = Peer-to-Peer Confidential and Proprietary 11

12. Ramifications of Flat Rate Pricing
Hardware = Cost Reduction
Cost per bit over the life of a project must go DOWN
Implications
Standards (e.g., ATCA)
Outsourcing
Commoditization
Software = Revenue Growth
Application & Services
Implications
Context
Ease-of-use
Differentiation
www.ccpu.com Confidential and Proprietary 12

13. ATCA 40G = Lower Cost / Bit
40G ATCA essential for EPC to lower cost / bit
40G ATCA = Scalability + Reliability + Performance
EPC MME EPC SGW / PGW
Processing per session Processing per packet
High Availability Load Balancing
Multi-threaded S1-AP, eGTP-c… Fast Path SCTP, eGTP-u, MIP…
Encryption support for Snow3G… Deep Packet Inspection (DPI)
Continuous Computing enables wide range of LTE products
From … “Smallest All-in-One EPC”… …to “Highly Scalable MME / SGW”
www.ccpu.com Confidential and Proprietary 13

14. Key DPI Applications for Mobile Broadband
1. Traffic Management
Netbooks will drive P2P traffic 3G / LTE are spectrum limited
Internet video = Network Killer Rate limit / throttle traffic
Network Congestion = Poor QoE Application-aware, user-aware
2. Adaptive Traffic Shaping
Dynamic bandwidth allocation Not all cell sites loaded equally
RAN-aware Shaper Loading changes with time of day
3. Internet Offload (DPI)
Offload traffic to the internet Lower CapEx in wireless core
Offloading at network’s edge 12 DPI design wins!
www.ccpu.com Confidential and Proprietary 14

15. Metered vs. Flat Rate Pricing
Metered: $X / MB Flat Rate: $x / month
Consumer’s viewpoint Consumer’s viewpoint
What’s a Megabyte? Voice = Minutes
Want to download song, Data = Months
emails, web page, etc. In control
Lack of control Get my songs, emails, web,
Too complex etc.
Result: Result:
Simplicity Is Key
www.ccpu.com Confidential and Proprietary 15

16. Example – Airline, B2C
First
Business
Capacity-Limited Environment
Economy
Tiered Pricing Model: You Get What You Pay For
www.ccpu.com Confidential and Proprietary 16

17. Bandwidth-Based Pricing
Fast, Faster, Fastest $X / Mbps
Pros Cons
Consumer’s viewpoint “Guaranteed” data rates & QoE
I’m in control Dead spots?
Easy to understand Coverage gaps?
LTE – the right opportunity! Bit Pipe!
Leverage context Revenue / Traffic decoupling
Real-time service tier upgrades 20% users taking 80% capacity
Tiered SLAs, Tiered Pricing Model
www.ccpu.com Confidential and Proprietary 17

18. Device-Based Pricing
Traffic $x / month / device
High Volume
Leverage context
New growth engine
Low High
Mobility
Value
Recurring revenues
Easy to understand
Low
In control
Usage-Based, Tied to Device
www.ccpu.com Confidential and Proprietary 18

19. Example: Retail, B2B
Too Many Products Limited Shelf Space
Shelf Neutrality?
Premium shelf space = More sales
Balancing Choice, Monetizing Placement
www.ccpu.com Confidential and Proprietary 19

20. Let’s Also Not Forget the Other End of the Pipe…
Consumer Network Operator App & Content Provider
$
$?
Bit Pipe
$
Tiered bandwidth allocation Latency (msec) = lost sales
Mobile broadband “highways” The Google model
Charging content providers Balancing ‘relevance’
Consumer is King Monetizing ‘priority’
Game Changer: Let the Content Providers Compete
www.ccpu.com Confidential and Proprietary 20

21. Summary
Mobile broadband driving growth
Revenue / Traffic decoupling
Flat rate not sustainable
Usage-based did not work
Uniquely
Uniquely
New charging models
Bandwidth & device-based positioned to
positioned to
bridge the gap
bridge the gap
Monetizing other end of the pipe between
between
Traffic Management essential for QoE
Network capacity limited by spectrum
DPI +
DPI +
Cost / bit must go down Wireless
Wireless
40G ATCA = lower cost / bit
www.ccpu.com Confidential and Proprietary 21

22. Questions & Comments
Manish Singh
Vice President, Product Line Management
www.ccpu.com/solutions/dpi/
www.ccpu.com Confidential and Proprietary