Fiber Access Networks and The GPON Standard

1. Fiber Access NetworksandThe GPON Standard David Cleary VP, Advanced Technology Calix david.cleary@calix.com

2. Agenda The Need for Fiber Access The Choices of Access Networks The GPON Standard The Market Opportunities for GPON Meeting Overview

3. Agenda The Need for Fiber Access The Choices of Access Networks The GPON Standard The Market Opportunities for GPON Meeting Overview

4. It’s all about Bandwidth!!! Video will drive Bandwidth for the foreseeable future Bandwidth usage doubles every 18 to 24 months MPEG4 offers some relief (18 to 24 months?) How Much Bandwidth is enough? Probably more than you think. The Need for Fiber Access

5. What is special about Fiber Access? Fiber is fundamentally different from copper We are at the limit for bandwidth over copper Double the bandwidth and halve the reach We are decades away from any limitations on fiber We are at 2.4 Gbps today Fiber can support over 100 Terabits per second without reducing the reach Eventually, every operator will deploy fiber... It’s just a matter of time The Need for Fiber Access

6. Agenda The Need for Fiber Access The Choices of Access Networks The GPON Standard The Market Opportunities for GPON Meeting Overview

7. There are 2 choices for Fiber Access: Point to Point Point to Multi-point Point to Point is sometimes called Active Ethernet Point to Multi-point is called PON (passive optical network) The Choices for Fiber Access

8. The Choices for Fiber Access • PON is analogous to wireless telephony (cellular) • Active Ethernet is analogous to wireline telephony • Both CapEx and OpEx cost savings favor PON

9. Agenda The Need for Fiber Access The Choices of Access Networks The GPON Standard The Market Opportunities for GPON Meeting Overview

10. The Challenge • Edge/Core Network • Equipment • Low Volume • Small Customer pool • High customer influence

11. The Challenge • Consumer • Equipment • Edge/Core Network • Equipment • High Volume • Enormous Customer pool • Low customer influence • Low Volume • Small Customer pool • High customer influence

12. The Challenge • Access Network • Equipment • Consumer • Equipment • Edge/Core Network • Equipment • High Volume • Small Customer pool • High Customers influence is desired

13. The first step to writing a standard is to choose the Standards Body The 2 primary players for networking standards are: IEEE (Institute of Electrical and Electronics Engineers) ITU (International Telecommunications Union) Developing the Standard

14. IEEE well known Protocols 802.3 Ethernet 802.11 WiFi 802.16 WiMAX IEEE Membership is diverse System vendors, chip vendors, optics vendors, industry cunsultants and academia IEEE Voting Each member gets one vote No limit to the number of votes from a given company “Personality” of IEEE standards reflect interests of Vendors Often leads to low-cost solution Often only hits 80% of market Often doesn’t produce migration strategy IEEE standards don’t necessarily reflect Operator Preferences The IEEE

15. ITU well known Protocols SDH V 5.2 ISDN VoIP protocols H.248 and H.323 ITU Membership Membership controlled by ITU Member-Countries Membership open to Operators, Institutions, and Vendors ITU Voting Voting is through consent Each company get one vote Companies can object (but can’t stall process) “Personality” of ITU standards reflect interests of Operators Addresses the operator requirements Addresses the operator constraints Addresses the service provider’s operational models Not focused solely on low cost Duration of Standardization Process relatively short The ITU

16. In the late 1990’s a “Clandestine” group of operators was formed: Objective: “Global Domination of the Fiber Access Market” The group called itself FSAN The ITU and FSAN

17. FSAN stands for Full Service Access Network Loosely affiliated with the ITU Develops all PON standards prior to submission to the ITU FSAN membership consists of both operators and vendors But operators make all final decisions Membership of vendors is tightly controlled by FSAN Operators The FSAN Committee

18. The FSAN Operators Eirecom Telia KT Kuwait MOC BT Telus NTT KPN Bell Canada Bezeq DTAG Chunghwa Sprint FT SwissCom SingTel AT&T TI Telstra Telefonica Verizon Qwest Malta BellSouth FSAN Operators represent a world-wide membership

19. FSAN OAN-WG members Vendors Adtran Lucent Alcatel Mitsubishi Alphion Motorola BroadLight NEC Calix Nortel Conexant Novera Optics ECI Telecom OFN / Oki Entrisphere LG Electronics FlexLight Optical Zonu Freescale Samsung FujitsuSiemens Hitachi Tellabs Huawei Terawave IambaVitesse Infineon ZTE Operators AT&T Bell Canada BellSouth British Telecom Deutsche Telekom France Telecom Korea Telecom Kuwait MOC NTT QWEST Sprint Telecom Italia Telstra Telus Verizon

20. Agenda The Need for Fiber Access The Choices of Access Networks The GPON Standard The Market Opportunities for GPON Meeting Overview

21. There are Numerous Market Opportunities for GPON Lower OpEx Greater Service Offering Future-proof investment The real question is When and Where does it make economic sense to deploy GPON The quickest application appears to be the Developer Market and ‘Smart FTTH’ Communities The Market Opportunities for GPON

22. Total U.S. Homes Served by FTTH Source: 2007 RVA

23. Homes Served by FTTH by Non-Verizon Service Providers Source: 2007 RVA

24. Breakdown of Homes Served: RBOC versus Non-RBOC FTTH Source: 2007 RVA

25. FTTH Homes Marketed By Architecture Source: 2006 RVA Note: 2006 Forecast (2007 Forecast not yet available)

26. Competing for Developers • New home developments have become the fastest growth Fiber-to-the-Home market • Master planned communities • Multi-tenant buildings • Resort communities • New service providers (developer integrators) are competing in this market against incumbents • Innovative and fast moving companies • Strong IP and project management experience • Strong ties to the developer and builder community

27. Overview of the Developer Market • FTTH is now highly desired by Developers • FTTH communities are most prevalent in: • West Coast (California, Las Vegas) • Southeast (Florida, etc.) • U.S. integrators expanding into • Caribbean • Latin America

28. U.S. Developer FTTP Market Size • 1.5 million new homes per year are built in U.S. • Source: U.S. Department of Commerce • 50% are managed by Associations • Source: U.S. Housing Census. • Half of these communities will deploy FTTP

29. Who is the Competition? • Over 50 companies are now acting as developer integrators in the United States and the Caribbean • Many have formed partnerships with specific developers for all their projects • Many companies specialize in security or ISPs • Very low overhead organizations • In most cases these integrators out source one or more of their services

30. Why Developers Choose Integrators • Developers want recurring revenue streams • Incumbents are perceived as unwilling to share revenue with developer • Incumbent telcos are seen as inflexible • Incumbents are perceived as not delivering newer service offerings

31. What is Required to Compete? • Minimal requirements • Fiber-to-the-Premise architecture • Diverse video channel selection (IPTV or RF) • News, movies, sports, etc • Voice (TDM or VOIP) • High speed internet 10 Mb+ • Additional offerings • Home networking and support • Security systems • Video on demand • Community/member web site • Video doorman and camera integration

32. Closing remarks • ICT Infrastructures are best delivered with GPON and FTTH technologies

33. The Power of Simplicity