First over-the-top "solution" for broadband investors.

1. A FUNNY SOLUTION
Xiaolin Lu
April 1, 2003

2. What is this all about?
 Media companies (own or don’t own
distribution infrastructure) want to grown
business by directly connecting to users.
 Challenges are to overcome limitations of
incumbents and embedded base (if own).
 Over-the-top was the idea then and is now
widely adopted.

3. CHALLENGES
Content E-Commerce Investment
$ $
Networks Enablers
Customers
 Network Independent Content Distribution: good business model
but too early to materialize due to the limited control of suppliers and
customers
 Low switching cost
 Low barrier for substitutes
 Limited power of changing customer behavior

4. MIGRATION AND EXPANSION:
THREE-
THREE-ARM GIANT
 Content
 E-commerce
Arm One Arm Two Arm Three
Vertical integration Network-inside-network, Control the demarcation
through owned network utilizing channels (6MHz points while utilizing
with AT&T) others’ networks
Walled Garden
End-to-end control, aggregation, and distribution
 Control the customer presence and network access points
 Aggregation = Consumption = Revenue
 High cost for switching = High barrier fro substitutes
 Power of influence buyers and suppliers’ behavior

5. POSITIONING
Critical
Transition
Period
#1
Stickiness
#2
Stickiness
#2 #3
#1
#3
Cost Time

6. THE CONTROL
3rd
parties
Owned
Walled Garden
Content& E-commerce
Aggregation for ASPs
ETE control
POP
Metro ATT
HG
BB
Piggy-
Others back to
Strict SLA existing
& Co-Lo equip +
owned
HG
 Utilize owned & others infrastructure & equipment
 Cost sharing
 Control the “Presence”
 Establish a logical network (yellow lines and dots)

7. ARM ONE: OWNED CABLE NETWORK
DOCSIS Already Upgraded DOCSIS Current
STB
 No Change
Common
Home Home
Back-office
Gateway Network
Operation
MPEG To Be Upgraded MPEG Low-cost
Ethernet  Digital Cable Ethernet STB
DTV
Abandon
old upstream
 Digital Cable
 Simple, low-cost, more bandwidth capacity
 More functions in customer primes equipment
 Gain more control of customers

8. FEATURES OF DIGITAL CABLE
Multiple
Low-cost STBs
Current
6MHz QAM
Home Gateway
Digital with multiple tuners
Cable
Wideband Home Gateway
QAM with Single tuner
 Less stringent EOL requirements
 Low-cost design & deployment
 Low-cost equipment (amplifier, optics); Low power consumption
 Simplify HE equipment
 Common digital RF for all services (eliminate analog equipments)
 Move to wideband RF subcarrier
 Flexible and better bandwidth utilization (best statistic multiplexing)
 Easy A/D: digital baseband over fiber link
 Home networking for in-house distribution
 Create control and stickiness

9. ARM TWO: NETWORK-INSIDE-NETWORK
NETWORK-INSIDE-
 Common STB
Headend
 Use EPG to link to
Data
6MHz STB the 6MHz channel
Stream M QAM  Walled Garden
U QAM inside 6MHz
Metro X QAM
BB  Common STB
6MHz STB HG  Ethernet to HG
Dedicated  Coax & others for
Port home network
QAM
M STB
QAM  Stand alone HG
U
X QAM 6MHz  Fully controlled
HG home networking
 Establish Content Distribution Infrastructure
 Co-location & SLA
 Define solution for signal injection at cable headend

10. ARM THREE: COMMODATIZE THE PIPE
Content POP Metro HE ACCESS HG
BB
Value
Commodity
CM
POP Metro HE ACCESS HG
DSL
BB
Walled Garden
Content & E-commerce
Aggregation for ASPs Strict SLA
Control & management & Co-Lo
Network Network
Operation Build-in control Operation
System mechanisms System

11. COMPARISONS
OPTION 1 OPTION 2 OPTION 3
 Lowest  Medium  High
COST  Utilizing existing  Utilizing existing tuner  New equipment
equipment
 Low  Control 6MHz  Fully control
CONTROL  Difficult to create  Unbundled-loop
stickiness model
Difficult Utilize HPNA & wireless Can use all means
HOME
  
 Maybe difficult to use  Can re-use in-house
NETWORKING in-house coax coax
Legal  Easy  Medium  Difficult
Now Need development Work with home
Time to Market
  
network vendors
 Current STB does not have the flexibility
Issues  Next generation STB (DCT5K) is not ready
 Stand alone HG may make more sense

12. SUMMARY
Walled Metro Home
Garden POP HE ACCESS HG
& BB Network
+ NOS
 Content  Collaborate with  Owned network:  Work with home
Aggregation carriers to Digital Cable network vendors
strategy establish Content  Others: network- to enable the NOS
 Network Distribution inside-network and establish in-
Operation System Platform house distribution
for ETE control  Co-location and control
(work with HG)  Managed network platform
access (SLA)

13. WORKING STRUCTURE
Content E-Commerse
Network Solution
Content
Home
Owned Network-
In-network Network
Distribution
Platform