A presentation for the 2015 Border to Border Broadband conference in Minneapolis MN. Sponsored by the Blandin Foundation.

1. 1 © Calix – Proprietary and Confidential
The information contained in this presentation is not a commitment, promise, or legal obligation
to deliver any material, code, or functionality. The development, release, and timing of any
features or functionality described for our products remain at our sole discretion.
Why Fiber?

2. 2 © Calix – Proprietary and Confidential2
Topics
Value of Fiber to the Community
Fiber Technology Overview
Trends in Fiber Deployments
Fiber Economics

3. 3 © Calix – Proprietary and Confidential
Why Fiber?
Bandwidth growth is exponential
Fiber is the path to long-term sustainability
Offers virtually unlimited bandwidth
Allows network to be built “once”
VDSL2 FiberADSL/2/2+
1.5-3 Mbps
8-24 Mbps
50 Mbps
100 Mbps
500 Mbps
Multi-Pair
Bonding
2-Pair
Bonding
Competitive
Battleground (today)
20 Mbps service today will
require 150 Mbps in 5 years,
1 Gbps in 10 years

4. 4 © Calix – Proprietary and Confidential
Peak Bandwidth Growth over Time?
Nielson’s Law
Internet peak consumption doubles every 2 years

5. 5 © Calix – Proprietary and Confidential
Growth in Technology Innovation
The growth rate of Internet speeds has lagged behind Moore's
Law and rapid upgrades in storage capacity
Prior Momentum
Google Fiber
Launch
*

6. 6 © Calix – Proprietary and Confidential
Fiber as a Community Asset?
Gives your community a competitive advantage
Businesses need high speed fiber optics to be competitive
Young people won’t settle where they can’t get high speed
broadband
Critical infrastructure for economic development
Why is fiber the technology of choice?
The only technology that has the bandwidth and flexibility to keep
up with projected consumer demand
Fiber has a high initial cost, but a low operating cost eliminating
truck rolls and ongoing maintenance
Provides a communication infrastructure for grid modernization
Fiber future proofs the network; bandwidths can scale with
consumer demand
Fiber cable infrastructure has unlimited bandwidth potential

7. 7 © Calix – Proprietary and Confidential
Fiber Value Proposition
Enterprise
World-class infrastructure to collaborate, innovate and compete
Serving business of any size
Community
Economic development and vitality
World-class healthcare, enriched education and public safety
Improved public services and government efficiencies
Consumers
Freedom: no constraints, no boundaries, no limits
Access to all the things you care about, anytime, anywhere.
Highest quality communications: video, voice and data
Value to community stakeholders

8. 8 © Calix – Proprietary and Confidential
Broadband is the New Necessity
Broadband and Economic Development
Question 1:
Would you rather have 100
five employee companies
or a single 500 person
company in your
community?
Question 2:
Would the people running
those five person
companies be able to grow
without adequate
broadband?
High speed broadband is now
considered a fundamental element
of a community’s ability to compete
in the global economy

9. 9 © Calix – Proprietary and Confidential
Communities and Fiber Access
Well served communities
Minnesota has many
communities well served with
fiber by incumbents
Talk to incumbents
Public-private partnerships
Talk to nearby telecom
operators that are looking to
expand
Private financing now
becoming more available
Community owned
Few options for government
help except in unserved or
underserved rural areas
Most have been done by
municipal electrics

10. 10 © Calix – Proprietary and Confidential
Fiber Technology Overview

11. 11 © Calix – Proprietary and Confidential
Fiber Access Standards
Deployments for residential and small business
ITU Standards Deployment Status
2.5G GPON Millions deployed worldwide
10G PON: XG-PON and XGS-PON Just starting
Multiple 10G PON: NG-PON2 Likely to start in 2017
IEEE Standard Deployment Status
Pt-to-Pt GE Millions deployed-Europe and U.S.
10G Pt-to-Pt Just starting
1G EPON Millions deployed in East Asia
10G EPON Started in 2014

12. 12 © Calix – Proprietary and Confidential
GPON and Active Ethernet
FTTP Technologies
PON
16, 32 and 64-way split
Bandwidth is allocated
dynamically to ensure
optimal user experience
Fiber efficient
Distances to 32km with
32 way split
Point-to-Point GE
Dedicated bandwidth
per home
Fiber intensive
Distances to 50km
Both technologies can offer a Gigabit experience
PON Architecture
Ethernet
2.4 Gbps
1.2 Gbps
ResidentialBusiness
Point-to-Point GE / AE Architecture
Ethernet
1 Gbps
ResidentialBusiness
OLT
OLT

13. 13 © Calix – Proprietary and Confidential
Gigabit Advantage
Infrastructure designed for future decades
0
200
400
600
800
1000
1200
Mbps
DOCSIS 3
(8 channel bonding)
Distance (ft)
Copper
Technologies
Gigabit
Fiber

14. 14 © Calix – Proprietary and Confidential
GPON Standard
Light is shared, bandwidth is dynamic
GPON Bandwidth:
Downstream: 2.5 Gbps
Upstream: 1.2 Gbps
Bandwidth per ONT
Any ONT can have 0 to 2.5 Gbps in D/S
Any ONT can have 0 to 1.2 Gbps in U/S
Bandwidth oversubscription
Detailed specification of Dynamic Bandwidth Allocation (DBA)
Guidelines
GPON allows enormous flexibility
Up to 128-way split. Customers are only using 16, 32 and 64
Optical budget of 28dB (20km distance, 12 miles) to 31dB with FEC
enables distances out to 40km (24 miles)

15. 15 © Calix – Proprietary and Confidential
GPON Optical Network Architectures
1:32
CO
OLT
Interface 32
• Home Run
NAP
1
8
NAP
NAP
NAP
Dist.
8
8
1:8
CO
OLT
Interface
• Distributed Split
1x8-to-1x4 or 1x4-to-1x8
1:4
1
32
1:4
1:4
1:4
1
8
1
1:32
CO
OLT
Interface
• Centralized Split w/
hand hole for drops
(aka Network Access
Point or NAP)
NAP
1
8
NAP
NAP
NAP8
8
1

16. 16 © Calix – Proprietary and Confidential
Comparing GPON and Active Ethernet
GPON is more flexible, lower
cost to deploy
2.5 Gbps of shared bandwidth
Optical network can be point-to-
point or split in the field
Outside plant architecture can be
active or passive
Standard supports legacy services:
RF video and TDM
Can be deployed in areas with
limited fiber cable or conduit
Consumes much less CO space
and 1/3 as much power at the CO
Generally 20-30% cheaper to
deploy
AE has higher, dedicated
bandwidth
Delivers up to 1 Gbps to every
home and business served
Fiber network is dedicated point-to-
point
Symmetrical bandwidth better
suited for SLA based services (100
Mbps+) to medium and large
businesses
Optical reach beyond 40 km
Familiar to IT staff at enterprise
customers

17. 17 © Calix – Proprietary and Confidential
Outside Plant Design is Key
Active Ethernet must have dedicated fibers in the feeder plant, so all
fibers are home run to the OLT
When feeder fibers or conduit are plentiful, AE or GPON can both work
In higher density areas the sheer number of fibers favors GPON
Example: Imagine putting 2300 fibers on a pole versus 72 fibers
When feeder fibers or conduit is limited, GPON is favored
Passive splitting in the outside plant is cheaper than placing cabinets with active
electronics
Video
PSTN
ISP
Video
Headend
Data
Central Office
Homerun
Aggregate

18. 18 © Calix – Proprietary and Confidential
Trends in Fiber Deployments

19. 19 © Calix – Proprietary and Confidential
FTTH Map of the USA
Source: http://www.broadbandmap.gov/

20. 20 © Calix – Proprietary and Confidential
The Internet of Things is Growing
New generations of “connected” devices will change home
networking and bandwidth consumption
By 2020, some are projecting average U.S. internet connected
home could have as many as 50 internet connected devices
Source: Gigaom, Parks Associates,
The Wall Street Journal, stltoday.com
95% of U.S. broadband
homes are projected to
have home networks by
2016

21. 21 © Calix – Proprietary and Confidential
Device Enabled Subscribers
The revolution is here. Are you ready?
The device-driven subscriber
Explosion of devices throughout the home
Wireless becoming ubiquitous and preferred in-home network
Devices, applications, video increase complexity for subscriber
New services and applications contend for bandwidth and priority
Entertainment
Home security
Home automation Game Console
Wireless
Printer
Laptop Smartphone
Wireless TV
Tablet
Security
Camera
Thermostat
Camera
Femtocell
Storage
Card
OTT Stick

22. 22 © Calix – Proprietary and Confidential
Google Fiber Experience Provider
A “clean-sheet” approach to communications

23. 23 © Calix – Proprietary and Confidential
The Gigabit Phenomenon

24. 24 © Calix – Proprietary and Confidential
Creating Gigabit communities
Gigabit Residential Announcements
Cedar Falls, Iowa
Bristol, VA
Ten Cities
Red Wing, Minnesota Rural Vermont
100 Cities
Multiple Cities
Rural Missouri
Burlington, Vermont
Multiple CitiesChattanooga, Tennessee
Lafayette, Louisiana Longmont, Colorado
Leverett, MA

25. 25 © Calix – Proprietary and Confidential
Where Does the Network Begin ?
Here
NID

26. 26 © Calix – Proprietary and Confidential
Carrier Class Wi-Fi
Complete the gigabit experience with Carrier Class Wi-Fi
STB
Data
Data STB
GE
DVR
Phone
New Wi-Fi delivers extraordinary coverage and speed
Optimized for IPTV video and video streaming
Dramatically lowers cost of wiring homes and accelerates IPTV
service velocity
STB
STB

27. 27 © Calix – Proprietary and Confidential
Obama Visits Cedar Falls
Some significant recent events
Rural Broadband Experiments - $100M … fiber participants offered
CAF II opportunity
Call for Title II treatment for broadband … it will happen, but when?
Definition of broadband increased to 10/1 …soon may be 25/3
CAF programs embrace utilities, MSOs, Munis … not just for
ILECs anymore
$40M new dollars added into RUS loans … expanded for Munis
E-Rate significantly expanded … $1.5B for fiber infrastructure
A new ROR algorithm solidified … Price Cap next
A shift from wireless to fiber … Obama get a Calix gig demo!

28. 28 © Calix – Proprietary and Confidential
Fiber Economics

29. 29 © Calix – Proprietary and Confidential
Fundamentals of FTTH Success
Key FTTH success factors
Higher penetration rate
Higher ARPU
Low operating costs
Faster service velocity
(speed of deployment)

30. 30 © Calix – Proprietary and Confidential
Cost study done by FTTH Council
and CSMG for the FCC
Cost per home passed is all OSP
construction labor and materials,
based on all aerial construction
(engineering and make ready costs
are not included)
Cost per home served is around
$650 for each subscriber served-
includes OLT, ONT and subscriber
drop costs
Cost to Pass a Home
Based on Housing Density
• 5X difference in FTTH costs per HH passed over the
range of HH densities with publicly reported data
• Range of densities represents a wide spectrum of HH
densities from rural (5 HHs per sq. mile) to urban
(1,375 HHs per sq. mile)
Source: FCC Filings, SNL Kagan, CSMG Analysis

31. 31 © Calix – Proprietary and Confidential
Cost per Home Passed Formula
Cost per home passed @ 14 homes per square mile
Formula: y= -467.24 Ln(x) + $3658.9
Calculation: =-467.24 Ln(14) +$3658.9
=-467.24 X 2.64 +$3658.9
= $2,425 per home passed

32. 32 © Calix – Proprietary and Confidential
Cost Case Study: Town of 3600 Homes*
Average density of 851 per square mile
30% Take Rate 50% Take Rate 70% Take Rate
Cost per Home
Passed $550 $550 $550
Incremental
Cost per Home
Served $650 $650 $650
Meters served 1,080 1,800 2,520
Total Cost $2.7 million $3.2 million $3.6 million
Actual Cost
per Home
Served
$2,500 $1,800 $1,400
*Assumes all aerial construction. Does not take in to account
make ready costs, IPTV headend or engineering costs

33. 33 © Calix – Proprietary and Confidential
Fiber: The Optimal New Build Technology
Rural FTTH deployments, with up to 1 Gigabit symmetrical, are
being deployed in areas as low as under 10 homes per square
mile-without any government subsidy
With government support even lower density areas are being
served by fiber
LTE and fixed wireless do not have the bandwidth or data usage
cost structure to be competitive with an all fiber network or to
provide consumers and businesses with the bandwidth they need
Question: What does 212 Gigabytes per month of use cost
over a wireless network? This is the amount of bandwidth
consumed by the average consumer using streaming video,
not on a cable or satellite system
Fiber deployed in small rural towns can be as cost effective as
urban and suburban areas