It’s 2015 What do you know about Passive Optical LAN? Luis Gamez Sales Manager, APAC +61 405 404 666 luis.gamez@tellabs.com

A lot has changed on the LAN, and nobody seemed to notice...

Steven Forbes on Copper vs Fiber “Before the car, came the horse and buggy; before computers, there were typewriters; and before wireless and fiber broadband networks, there was copper wire.” There aren’t many horse and buggies on the road and most of us don’t have typewriters sitting on our desks. So why are copper networks still so widely used although they have been rendered obsolete by next-generation technologies? The simple answer is that federal, state and local regulations are stuck in the past. http://www.foxnews.com/opinion/2013/04/11/copper-wire-technology-whose-time-has-passed/

LAN Evolution Then… Now… 80% of LAN traffic stayed local Core Switch Then… 80% of LAN traffic stayed local Served computer access to departmental servers Server access was occasional and generally non-time-critical Now… 90% of LAN traffic flows directly thru core router to the Cloud or Wide Area Network Today’s LAN serves: Internet traffic, virtual desktop, hosted/managed and cloud-based applications, voice, video, building automation, lighting, security systems, Wireless (WiFi and Cellular) Even employee personal traffic needs to be factored Security concerns exist from external and internal source LAN access is pervasive and time-critical

Legacy Copper vs. Fibre CAT3 • Voice only •Capacity in Kbps CAT5e • Data only • Capacity in Mbps

Mark Fabbi - VP Distinguished Analyst Much has changed in enterprise data networking in the last ten years Bandwidth requirements have gone up by orders of magnitude The numbers & types of devices have also increased dramatically Traffic patterns shifted to be more centralized– and now cloud-based All happening in an economic environment where there's less to spend And yet costly, workgroup switch-based LANs are built the same way The time is now to seek innovative, cost-effective solutions at the enterprise edge

LAN itself hasn’t changed Traditional Core/Distribution/Access designs are unnecessarily complex: Throwing more bandwidth at problems is often the only option Adding electronics in the “middle” of the LAN add costs, complexity, and reliability risks IDF’s are increasing in size, power/cooling requirements are exploding, and security risks are real. Network complexity contributes to downtime Misconfiguration of a single switch can affect the entire network Difficult troubleshooting made possible by Ethernet’s “Best Effort” nature Lack of true centralized control and management add to the frustrations Compounding problems for IT

Businesses will face further complexity in managing their fast-growing ICT operations whilst staying profitable.

* Passive OLAN directly impacts security & operational efficiencies Top 10 CIO Priorities Business Priorities Increasing enterprise growth Delivering operational results Reducing enterprise costs Attracting and retaining new customers Improving IT applications and infrastructure Creating new products and services (innovation) Improving efficiency Attracting and retaining workforce Implementing analytics & big data Expanding into new markets & geographies Technology Priorities Analytics and Business Intelligence Mobile technologies Cloud computing (SaaS, IaaS, PaaS) Collaboration technologies (workflow) Legacy modernization IT management CRM Virtualization Security ERP Applications Ops Soft ware Auto Secure * Passive OLAN directly impacts security & operational efficiencies

These are not just IT Problems. These are Business Problems. Compound Effect Outages and slow-downs don’t go unnoticed The always-connected nature of today does not allow for unnoticed downtime: Voice and Video calls require low-latency Security devices require constant, reliable data paths Internet access and Cloud services drives traffic bottlenecks to the WAN NetworkWorld Magazine article: “Our Bullet-proof LAN failed. Here is what we learned”: By Paul Whimpenny, Senior Officer for IT Architecture in the United Nations: Risk 1: The greater the complexity of failover, the greater the risk of failure Risk 2: The greater the reliability, the greater the risk of not having operational procedures Risk 3: The greater the reliability, the greater the risk of not having people ready Jan 26, 2015 CCIE traveling (knowing all aspects) when the super network failed – 300 active ports with dual Gbps uplinks = 4h outage! Remedy 1: Make the network no more complex than it needs to be. Remedy 2: Plan, document and test. Remedy 3: Get the right people in-house or outsource it. Gartner, for example, has identified five principles of organizational resilience, of which only one relates tightly to IT (Systems, with the other four being Leadership, Culture, People and Settings) http://www.networkworld.com/article/2875141/lan-wan/our-bullet-proof-lan-failed-here-s-what-we-learned.html These are not just IT Problems. These are Business Problems.

Implications of the Status Quo LAN complexity is growing exponentially Advancements in cloud, mobility, social, analytics, M2M and Internet of Things United Nations – Our bullet-proof LAN failed! January 2015 LANs face increasing security threats Infonetics says security is #1 concern for enterprise networks Ponemon - cost for data breach in USA is $5.85M per incident LAN supports real- time, critical services and commerce LAN impacts labor productivity, data center connectivity and ecommerce Infonetics – LAN downtime cost businesses ~3.6% annual revenue 50B things will connect to internet by 2020 Acceleration of connectivity with M2M, BYOD and Internet of Things Forrester - 80% of global firms say IoT will be the most strategic technology initiative Wi-Fi 802.3ac moving to 2G per WAP Ubiquitous access for 3G/4G cell thru DAS is expected Netgear – 67% business customers will not return to hotel with poor wireless Rip and Replace electronics & infrastructure Forrester – 81% repeat business when expectations are exceeded

Passive Optical LAN The path forward to better serve modern LAN traffic patterns Direct traffic management capabilities allow you to allocate guaranteed bandwidth Single point of configuration and monitoring Native encryption and optical network enhances security Fewer devices to Manage Fewer moving parts mean less to buy, rack, stack, power, A/C, ventilate, provision, operate Fewer things to break Fewer latency concerns Less conversions: electrical-to-electrical and optical-to-electrical To improve energy consumption the industry can reduce these conversions (3) And, gain benefit of reduced latency (4) Passive-middle infrastructure eliminates or reduces IDF closet requirements (3) http://www.f5.com/pdf/white-papers/bandwidth-myth-wp.pdf (4) http://www1.eere.energy.gov/manufacturing/datacenters/pdfs/vision_and_roadmap.pdf (5) http://www.salesforce.com/uk/socialsuccess/cloud-computing/why-move-to-cloud-10-benefits-cloud-computing.jsp Flexibility Disaster Recovery Automatic s/w updates Saves money (minimal day-1 capital expenses costs and predictable lower “pay as you grow” operating expenses) Increased Collaboration Work from anywhere Document control Security Competitiveness Environmentally friendly (this includes space and energy savings) Core Switch GPON OLT Core Switch © 2015 Tellabs Inc. All rights reserved. Tellabs Internal and Confidential.

Legacy Copper Based LAN LAN Evolution Legacy Copper Based LAN Passive Optical LAN Complex Architecture Simple Architecture Built for Internal Traffic Built for Cloud-based Traffic Distributed Intelligence Centralized Intelligence Distance = up to 30Kms between electronics Distance Limited = 100m copper & 550m MMF Passive Distribution Layer = Less Resources Active Distribution Layer(s) = More Resources Space, Power, Cooling, etc Defense rated Security; Carrier-class Availability Corporate Grade Security & Availability Software Defined Bandwidth Fixed Dedicated Bandwidth Locally Managed at disparate equipment locations Centrally Managed Capped for the future (cat7, cat8, etc) Future-proof fibre (Tbps) © 2015 Tellabs Inc. All rights reserved. Tellabs Internal and Confidential.

Architecture Evolution Legacy copper-based LAN Data Center / MDF Campus / Building / IDF Closet / IDF / Zone Access Wireless Voice, Video Data Aggregation Distribution Local Provisioning and Management Distance Limited MMF 550m /Copper 100m Distance Limited MMF 550m /Copper 100m Optical LAN Data Center / MDF Campus / Building / IDF Closet / IDF / Zone Access Building Automation OLT Voice, Video Data Single Mode Fibre Passive Optical Splitter Security Surveillance Centralized Provisioning and Management Passive Network Up to 30km/18mi Distance 300x Greater Reach Wireless

Operational Efficiencies Legacy Copper-based LAN Passive Optical LAN Complex distributed network impacts policy and process consistency Centralized Software fortifies processes & policies A A OLT Local management and more humans touches wastes time & resources Centralized management (M2M) speeds MACs & reduces human errors B B Less reliable network negatively impacts operational efficiencies Simple Architecture improves operational efficiencies C C More stressful and less productive work environment for IT staff Consistency helps handle IT skill-set & head-count reductions D D Deep network devices add complexity and vulnerable access points Building Automation Advanced security reduces threat and downtime E WAP E Security With centralized intelligence & management Optical LAN drives automation thru M2M actions © 2015 Tellabs Inc. All rights reserved. Tellabs Internal and Confidential.

Operational Efficiencies Quantifiable Saving for 2,000 User/Employee Operational Savings Operational Efficiencies Quantifiable Saving for 2,000 User/Employee 700 users employees served by Deltek OLAN installation 50 hours per week amount of time saved by Deltek with OLAN’s centralized intelligence & Tellabs PON Manager $56 per hour Dunn & Bradstreet = average employee cost From $145,600 50 x $56 x 52 = annual savings in IT staff productivity 2,000 users mid-range size deployment for OLT1134 Up to $415,999 Savings for Tellabs’ Optical LAN (x 2,000) Deltek’s 700 employee installation saves 50 hours a week in MACs due to Optical LAN architecture, Tellabs PON Manager and Advanced Operations features 50 hours times $56* = $2,800 times 52 weeks = $145,600 $145,600 saved annually How about OLT1150E serving 3,000 employee facility? 50/700 = .07 average hours saved per employee .07 x 3,000 x $56* x 52 weeks = $611,500 saved annually How about OLT1134AC serving 1,500 employee facility? .07 x 1,500 x $56* x 52 weeks = $305,760 saved annually * Dunn & Bradstreet estimates $56 per hour average employee cost Optical LAN can improve IT productivity and ultimately business productivity! © 2015 Tellabs Inc. All rights reserved. Tellabs Internal and Confidential.

Business Security Impact CIO priorities & high profile worse case scenarios: Google, Yahoo and other Silicon Valley companies, stolen intellectual property (2009) NASDAQ, sensitive communications of senior executives accessed (2011) SONY, major cyber security breach – Customer Sensitive Information (2014) Gartner Research: Security is a Top 10 technology priority for CIOs Infonetics Study: Security is #1 concern for enterprise access networks As companies harden the application layers against security threats, the network layer becomes next target. Improving the physical LAN defensibility, enabling consistent protection policies is the new priority.

Enhanced Security Passive Optical LAN A A B B C C D D E E Legacy Copper-based LAN Passive Optical LAN Complex distributed network impacts policy and process consistency Centralized Software secures processes & polices A A More humans touches increases configurations and MAC errors OLT Centralized Management reduces human errors B B Less reliable network contributes to loss of data, files and records Fibre is inherently more secure than copper cabling C C Copper cabling introduces security weakness Deep network devices store no configuration nor user information D D Deep network devices add complexity & venerable access points Building Automation Deep network devices provide no physical management access E WAP E Security © 2015 Tellabs Inc. All rights reserved. Tellabs Internal and Confidential.

Security Comparison Enhanced Security Quantifiable Saving for less than 500 User/Employee LAN Less than 500 users Realistic deployment size for enterprise LAN served by OLT1134 $99,944 2014 Symantec data breach calculator cost for “service only” company with only employee/company info at risk 29% 2014 Ponemon Institute, root cause = 42% malicious/criminal, 30% human error and 29% system glitch. -$28,983 $99,944 x .29 = Percentage of responsibility for secure LAN infrastructure $28,983 Proportional savings for Passive Optical LAN Enhanced Security Quantifiable Saving for 1,001 to 5,000 User/Employee LAN 1,001 to 5,000 users Realistic deployment size for enterprise LAN served by OLT1150E $1,500,000 2014 Symantec data breach calculator cost for “service only” company with only employee/company info at risk 29% The industries for which the costs were the highest are Healthcare ($358 per file) and Education ($294 per file). -$435,000 $1,500,000 x .29 = Percentage of responsibility for secure LAN infrastructure $435,000 Proportional savings for Passive Optical LAN In 2014, a Ponemon Institute study concluded that the average cost of a data breach to a company in the United States (U.S.) was $5.85 million per incident. (10) Symantec (using Ponemon Institute information) - http://databreachcalculator.com/ (11) Ponemon Institute - http://public.dhe.ibm.com/common/ssi/ecm/en/sel03027usen/SEL03027USEN.PDF © 2015 Tellabs Inc. All rights reserved. Tellabs Internal and Confidential.

Tellabs Optical LAN Tellabs® Advanced Availability Software Package Goal is to build LANs that experience on average less than 5 minutes (or 99.999% uptime) and even 30 seconds (or 99.9999% uptime) of annual network downtime, while lowering costs, reducing human error and improving security! Fortifies the modern LAN that now supports critical, commerce and real-time services Tellabs® Advanced Operations Software Package Goal is to improve IT efficiencies by increasing speed of LAN installations, configurations, monitoring, troubleshooting and MACs, while reducing human error and security risks Key being less human touches and more machine-to-machine actions through automation Tellabs® Advanced Security Software Package Goal is to improve the physical LAN defensibility, enabling consistent protection policies that are centrally managed, while reducing human error and increasing network stability Delivers mechanisms needed for hardening LAN for demanding Industry Standards. STIGS, FIPS, PCI and HIPAA © 2015 Tellabs Inc. All rights reserved. Tellabs Internal and Confidential.

Key takeaways With Passive Optical LAN, you can: Eliminate complexity in the middle of the network Have complete visibility into the network with Centralize management of the LAN Future-proof your network with a modern optical infrastructure designed for upgradeability with native encryption, Secure PON and no EMI, Improve you security Manage unique bandwidth requirements that each device on the network requires Stop having to throw bandwidth at problems Core Switch (3) http://www.f5.com/pdf/white-papers/bandwidth-myth-wp.pdf (4) http://www1.eere.energy.gov/manufacturing/datacenters/pdfs/vision_and_roadmap.pdf (5) http://www.salesforce.com/uk/socialsuccess/cloud-computing/why-move-to-cloud-10-benefits-cloud-computing.jsp Flexibility Disaster Recovery Automatic s/w updates Saves money (minimal day-1 capital expenses costs and predictable lower “pay as you grow” operating expenses) Increased Collaboration Work from anywhere Document control Security Competitiveness Environmentally friendly (this includes space and energy savings) GPON OLT Core Switch © 2015 Tellabs Inc. All rights reserved. Tellabs Internal and Confidential.