FMC (fixed-mobile convergence) can address customer demands for more flexible, convenient communication services. Key aspects of FMC include using Wi-Fi and femtocells to provide indoor mobility and reducing subscriber churn through bundled service offerings. However, launching FMC services presents challenges, as it requires coordination across all parts of a carrier's organization and every step from marketing to customer support. Successfully implementing FMC depends on selecting the right strategic options, target segments, and technology architecture to define services that meet real customer needs.

1. VON.x, March 17, 2008 FMC: What, Why and How

2. Contents What is FMC? 1 FMC is NOT Easy 3 A Blueprint for planning for FMC Launch 4 Why FMC? 2

3. FMC means many things to many people What is FMC? Communication Service Convergence Convergence of Voice/email/IM/SMS and Presence across different devices Business Application Convergence Access to key business Applications across multiple devices and networks such as email Device Convergence Single Device to access key communications and business applications UI Convergence User interventions is required on the device to choose network Network Convergence Single core network or integrated access

4. FMC Indoor Zone Network Evolution What is FMC?

5. Contents Why FMC? 2 FMC is NOT Easy 3 A Blueprint for planning for FMC Launch 4 What is FMC? 1

6. FMC Attractiveness and Drivers Proliferation of Broadband, Wi-Fi Market is demanding more flexible, more cost effective and more convenient communications services FMC can pave the way for 3Play and 4Play for many non-integrated operators which in turn will reduce subscriber churn There are trends toward One-Stop-Shop for communication services Push by Alternative Network Service Provides (Altnet) and Vendors FMC offers opportunities for all types of carriers Why FMC?

7. Proliferation of Wi-Fi and Broadband Why FMC? DMH and Wi-Fi availability is Driving FMC Fixed Broadband growth enables FMC Analysts predict by 2012, 50% of all Handsets shipped will be Wi-Fi Enabled Major Vendors are pushing FMC solution to larger businesses and VoWiFi is gaining momentum in Enterprise space, though the take up is slower than expected Wi-Fi and Fmeto cells will be key pieces in bringing mobility to in-door zones

8. Market is demanding more flexible, economic and convenient telecom solutions Why FMC? Households have more and more individual phones, and convenience of unified number and voice along with cost savings of FMC The work day is not constrained by location or time and this is growing demand for seamless delivery of Voice and Messaging in workplace or other locations Macro mobility: Employees continue to spend greater time outside of the office Micro mobility: Employees are away from their desk, roaming about the office Increased use of cell phone is threatening corporate identity

9. FMC paves the way for 3Play and 4Play for many non-integrated operators Why FMC? FMC can reduce churn Operators attempt to reduce churn by discount on bundled services. 2, 3, and 4 play reduces churn. A 15% discount could be justified economically if it reduced churn by 25%, but analysis shows that this is not the case. 2-play seem to only manifest 20%churn reduction (Source: Cox Communication) Source: Arthur D. Little Exane BNP Paribas Report ‘06

10. There is a trend for operators to becoming one-stop-shop for all communication services Why FMC? Customer Network Device Service Operator’s Convergence “One stop” Shop Mobile Nomadic Fixed Other Application/ Services Communication Services Outdoor Network In-Door Networks

11. A new breed of competitors (Altnet) are taking advantage of market shifts and technology advancements to disrupt the traditional telecom market structure Why FMC? Packet8 – Virtual Office Hosted PBX communications solution extending Simple self install and limited on-site hardware: Management via website and plug in IP enabled phone Truphone VoIP over WiFi via Nokia N and E series handsets, with access via any hotspot SIP enabled service routing calls over Internet Strata8 Hosted cellular product in 16 U.S. markets, Strata8 builds a custom wireless network via picocells and DAS to cover an office building Flat rates when on-net and roaming rates when outside of Strata8 network

12. FMC Offers Opportunities For all Types and Operators Why FMC? Integrated Operators Mobile Operators BB Operators (MSO, DSL) Churn reduction (Unik 30% gain) Provides enhanced services for Home and Office Zones Subscriber uptake by launching more attractive tariffs for entire family or a company employees with manageable costs Defending against Mobile and Cable Operators Churn reduction Gaining Market Share (50% of TMO USA HS@Home are new subs) Revenue uptake with no cannibalization downside Entering home and office zone Provide in-door 3G coverage, Platform for delivering TV, etc Churn reduction Leverage current customer base toward 4Play Acquire (or utilize) wireless license Possibility of low CAPEX MVNO option in partnering with a mobile carrier (TMO+Comcast??)

13. Contents Why FMC? 2 FMC is NOT Easy 3 A Blueprint for planning for FMC Launch 4 What is FMC? 1

14. FMC launch Challenges FMC is Different from Fix or Mobile Telecom Services FMC Launch Will Challenge Every Part of the Carrier’s Organization Get It Right the First Time, Second Chance Road is Rocky Distribution, Provisioning and good Installation/Usage Experience is CRITICAL FMC is NOT Easy

15. FMC Challenges FMC is NOT Easy Carrier is no longer is identified by its Network or Infrastructure User contributes to FMC service delivery (CPE, Broadband, etc) Operator most likely need to partner with competition to deliver FMC FMC cannibalizes carrier’s traditional revenue streams, Innovative ways should be adopted to augment revenue FMC launch needs dealing with issues that are new to most carriers such as with CPE, 3 rd party connection for backhauling, etc There are low barriers of entry for Non-traditional competitors FMC is Different from Fixed/Mobile Services

16. FMC launch Challenges Every Part of the Carrier’s Organization in delivering and maintaining good user experience FMC is NOT Easy Pre-Sales Sales Installation Service Usage Billing Customer Support FMC Service Customer Experience Significantly impact User Experience

17. FMC launch Will Challenges Every Part of the Carrier’s Organization in delivering and maintaining good user experience FMC is NOT Easy Web advertising & education TV & print advertising Simple, easy to understand, compelling In-store information, packaging design & sales rep overview Pre-Sales Sales Installation Service Usage Billing Customer Support FMC Service Customer Experience

18. FMC launch Will Challenges Every Part of the Carrier’s Organization in delivering and maintaining good user experience FMC is NOT Easy Educated, well trained reps, creating excitement about this easy to use, revolutionary new product & service Well priced devices with rebates/subsidies tied to contract durations and purchase decisions Channel collateral and training that clearly articulates and visually depicts the benefits and features of this new product & service Pre-Sales Sales Installation Service Usage Billing Customer Support FMC Service Customer Experience

19. FMC launch Will Challenges Every Part of the Carrier’s Organization in delivering and maintaining good user experience FMC is NOT Easy Easy AP Self-Installation instructions via install poster and CD tutorial One step security set-up Plug & play install for all scenarios: New Access Point (user does not have existing AP) Access Point replaces existing AP Access Point used together with existing Access Pre-Sales Sales Installation Service Usage Billing Customer Support FMC Service Customer Experience

20. FMC launch Will Challenges Every Part of the Carrier’s Organization in delivering and maintaining good user experience FMC is NOT Easy Main issues concerning Usage Experience: QoS Handoffs (Security, Reliability) Femtocell/Wi-Fi AP Security Battery Life (Mostly DMH) Simple, intuitive interface on the phone Easy to see WiFi versus GSM designation in case of DMH Pre-Sales Sales Installation Billing Customer Support FMC Service Customer Experience Service Usage

21. FMC launch Will Challenges Every Part of the Carrier’s Organization in delivering and maintaining good user experience FMC is NOT Easy Simple, clear to understand Monthly service fee on top of existing wireless plan Unlimited local calling any time of day while on the cell phone at home Landline long distance rates while on the mobile phone at home or at the office Pre-Sales Sales Installation Service Usage Billing Customer Support FMC Service Customer Experience

22. FMC launch Will Challenges Every Part of the Carrier’s Organization in delivering and maintaining good user experience FMC is NOT Easy Trained staff on resolving issues of in-door AP (Wi-Fi or Femto) Telephone Support & remote management of AP? On-line support & education (on-line chat? On-line self-help? Or both?) On-site Technical Support Pre-Sales Sales Installation Service Usage Billing Customer Support FMC Service Customer Experience

23. FMC launch Will Challenges Every Part of the Carrier’s Organization to deliver and maintain good user experience FMC is NOT Easy Simplicity is KEY, FMC is often a new service, both for the operator's organization and the market Careful planning and coordination on all parts of the organization is required to lead to a successful launch and a healthy up-take Market education will facilitate the sales process, so cross industry effort can be very effective Pre-Sales Sales Installation Service Usage Billing Customer Support FMC Service Customer Experience

24. Get it Right The First Time, Second Chance Road Is Rocky FMC is NOT Easy An easy-to-understand value proposition is an important factor to FMC penetration Indoor coverage : This is a very tangible benefit for an end customer. improved coverage can be an important message at the point of sale. Low-cost calling : FMC can be used to control costs by encouraging Fixed to Mobile Substitution and reducing churn. These savings can be passed on to customers. High quality/low-cost data connections : FMC will enable the mobile operator to attack the home and the office with innovative multimedia services without regard for network bandwidth limitations. It will allow a mobile operator to encourage the substitution of fixed services for mobile services—akin to Blackberry with email—or introduce new high bandwidth mobile-centric services An FMC service will succeed ONLY if it solves a real customer need

25. Marketing Challenges The Indoor sector corresponds to a new segmentation compared to mobile sector – new user specific needs have to be identified and correspondingly addressed Operators should understand the churn drivers in the market and develop a customer “stickiness” and “convert” driven approach Operators need to achieve fast penetration to reach significant economies of scale Mobile VoIP solutions further threaten the mobile voice market of traditional mobile integrators, which requires innovative counteractions Integrated operators are well positioned to roll out FMC service, while the pure mobile operators may consider a partnership with a fixed operator to better control the backhaul network and QoS in its services FMC is NOT Easy

26. Contents Why FMC? 2 FMC is NOT Easy 3 A Blueprint for planning for FMC Launch 4 What is FMC? 1

27. FMC from Concept to Service A Blueprint For Planning For FMC Launch Determining Strategic Options Market Assessment Analysis There are three steps in getting from FMC Concept to Service Launch 1 Developing Business Case 2 Developing Value Proposition Implementation Plan 3 Beta/Soft Launch Planned Architecture Selection

28. Market Assessment Analysis A Blueprint For Planning For FMC Launch The following factors need to be analyzed to select the right strategic FMC option: Churn drivers and reduction Addressable market Market Size and development Operator positioning towards homes Tariff structure and evolution voice/data services Handsets and home devices (WiFi gateways, etc.) Regulatory framework

29. Market Assessment Analysis A Blueprint For Planning For FMC Launch Operator’s Positioning Toward Home Existing home services (e.g. MSO’s cable) Existing Fixed Line assets Operator’s Business Oriented offerings Existing Business Offering Business Target Segment Business Sales Models (Direct, VAR, etc) Tariff structure and evolution voice/data Operator’s position in bundled rates, unlimited plans, etc Handsets and home devices (WiFi gateways, etc.) CPE management business processes Handset Management Business Processes Regulatory framework Position toward Net Neutrality, etc

30. Determining Strategic Options A Blueprint For Planning For FMC Launch FMC Strategic Options Parameters Market Segments Technology Service Offering Residential: City core Suburb Business SOHO, SMB, Enterprise Architecture : UMA, SIP/WiFi IMS/VCC Indoor Wireless Wi-Fi, Femto Fixed Access Own, Partner, Any Bundling : HSI, Mobile, Fixed Pricing Ultd V, Ultd D, VoD Subsidizing Handset, CPE Cust. Care, CPE prov Own, Outsrced Three Parameters need to be examined when Determining FMC Strategic Options

31. Determining Strategic Options – Consumer FMC A Blueprint For Planning For FMC Launch Consumer FMC Convergence Options FMS FMC Home Zone Femto cells SIP/WiFi SMH UMA VCC/IMS or SIP DMH Key Features Essentially a tariff/billing option. Call is kept on carrier’s own network and frequency Calls over WiFi are no longer on carrier’s network. Calls are no longer are on macro network, but on IMS band Integration with Home Gateway, True FMC. Ownership Operator Operator Operator/ Altnet Operator Operator, Altnet Network Req. Licensed Freq, Broadband by consumer WiFi access points Campus-wide WiFi access points* Campus-wide WiFi access points* Special Handset Req. None None Dual mode WiFi/Cellular handset Dual mode WiFi/Cellular handset* with UMA stack Dual mode WiFi/Cellular handset*

32. Determining Strategic Options – Business FMC A Blueprint For Planning For FMC Launch Business FMC Convergence Options FMS FMC Office Zone Femto, Micro, /Pico Cell UMA/ Business UMA On-Premise FMC Hosted FMC Key Features Essentially a tariff/billing option. Call is kept on carrier’s own network and frequency Calls over WiFi are no longer on carrier’s network. Allows for single number and voice mail, simultaneous ring, and mobile PBX functions. Extends mobile PBX capabilities to organizations that don’t own PBX. Ownership Operator Operator Operator Operator Operator Network Req. Campus-wide radio access nodes WiFi access points Campus-wide WiFi access points* Campus-wide WiFi access points* Handset Req. Dual mode WiFi/Cellular handset Dual mode WiFi/Cellular handset* Dual mode WiFi/Cellular handset*

33. Determining Business Case for FMC A Blueprint For Planning For FMC Launch Costs+ ARPU melt FMC revenues + Savings Acquisition effect Churn Revenue Value Creation ARPU uplift Additional Data Revenue Bundling Revenue FMC Service Offerings components for Business Case: Revenue: Service revenue, Acquisition Effect, Churn Management, Additional Multimedia revenue Cost Savings: Macro net offload, Backhaul Savings Costs: CPE, Network Infrastructure, On premise support, Marketing and CRM Costs+ Mobile ARPU melt FMC Revenue + Savings Acquisition Total Value Churn

34. Value Proposition A Blueprint For Planning For FMC Launch Define Service Offerings Define Go To Market (Channels) Design Customer Care Organization Identify Target Segments Business and/or Consumer: Who are we selling to? Demographics What are customer needs and behaviors in these segments What are we selling? Features, Bundling, combinations, etc Do we need partners to deliver these offerings? Who? How? OOBE, Pricing, Bundle Discounts How do we sell these services, Channel Strategy, Required Sales trainings Sales compensation structure for different channels 1 2 3

35. Technology and Architecture Selection: FMC Sample Architectures A Blueprint For Planning For FMC Launch Depending on the identified segments and defined service offerings, UMA can be a candidate for consumer FMC and SOHO/Small Business offerings Hosted FMC can be a good technology architecture for FMC offerings targeted to Small Business and Medium size businesses UMA Hosted FMC

36. Micro, Pico and Femto cells can provide in-door zone coverage without having to deal with DMH issues A Blueprint For Planning For FMC Launch Micro cells Pico cells Femto cells Active users: 4 BW: 7Mbps (HSDPA) Coverage: 100m (a home is much smaller) Price: $300 (target in 5 years:$100-$200) Active users: 32 BW: 14Mbps (HSDPA) Coverage: 1km Price: $4000-$8000 Active users: 32 BW: 14Mbps (HSDPA) Coverage: 300m Price: $1000-$2000 (Target price in 3 years)

37. Implementation Plan: Launch Planning should be realistic. It always takes longer than you think to launch a FMC service A Blueprint For Planning For FMC Launch DMH and Wi-Fi Certification Field Trial Market Trial Technical Product Validation Customer Experience and Operational Validation Full Customer Life-cycle Validation Service Usage Experience Testing Retail Experience Testing Customer Trial Product Certification Cellular Certification Simulations Benchmarking Exercise A typical implementation plan should cover technical validation through market trials and commercial launch Jan Feb Mar Apr Apr May Jun Jul Aug Sep

38. Implementation Plan: Success launch can ONLY be achieved by tight performance measurement /control at the exit of each gate. A Blueprint For Planning For FMC Launch Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gates from 1 to 5 will have a clear set of Service Performance Metrics. The SPM from the previous gate will be added to with more SPMs until ORT and Market Test when we have a full set of SPMs FMC Network Infrastructure Product End2Eend test Beta Test ORT Market Test Product End2End test FMC Network Infrastructure Beta Test ORT National Launch

39. FMC is happening, it’s promising to create more growth opportunities, but launching FMC services is not easy SUMMARY Market is demanding more flexible, more cost effective and more convenient communications services, FMC can address these new demands Wi-Fi and Fmeto cells will be key pieces in bringing mobility to in-door zones FMC paves the way for 3Play and 4Play for many non-integrated operators and can reduce churn There is push by non-coventional competitors such as Alterative Network operators and vendors for adoption of FMC at the expense of operator’s revenue melt FMC launch Will Challenges Every Part of the Carrier’s Organization: Marketing, Retail, Customer Care and Tech Support It is important to succeed with FMC launch on the first offer, Second Chance Road Is Rocky, Simple value proposition is CRITICAL A new marketing approach is required to successfully launch and sell FMC services, For FMC to succeed, it has to address real customer needs, so the right segmentation, service definition and technology choice are essential Business case for and total value creation by FMC are not straight forward

40. Q&A Q&A

41. Q&A Backup Slides

42. Single Identity for Business FMC Backup Slides