11 Carrier Ethernet Wholesale Services & Interconnection Trends 31 October 2011

2 Wholesale Ethernet Access Services 2 Speakers Tadashi Egami, Vice President of Wholesale Marketing, MegaPath Wholesale Les Williams, Director of Ethernet Exchange Services, Telx Ralph Santitoro, Director of Carrier Ethernet Market Development, Fujitsu Moderator: Stan Hubbard, Senior Analyst & Ethernet Expo Chair, Heavy Reading

3 Wholesale Ethernet Access Services 3 Topics MEF update & key industry initiatives Wholesale market opportunity & business model evolution New Ethernet access service type Wholesale perspective on provider needs Provider interconnection Completing the picture with service OAM Audience Q&A

4 Wholesale Ethernet Access Services Education Standards Compliance Accelerating the Global Adoption of Carrier Ethernet Networks and Services MEF: Defining Body of Carrier Ethernet 186 Member Companies 91 Service Providers Global Representation

5 Wholesale Ethernet Access Services 5 MEF 14 ATS MBH OAM Frame -work Service Attributes ENNI SOAM CARRIER ETHERNET 31 Carrier Ethernet Specifications Service Defs MEF 9 ATS Archi- tecture Cloud, Backhaul On- Demand, Automation

6 New Services for Wholesale Access ENNI UNI Carrier Ethernet Access Network Carrier Ethernet Service Provider Many New Projects Including Carrier Ethernet for Mobile Backhaul Carrier Ethernet as Ethernet Cloud Carrier Cloud Provider(s) Ethernet Cloud Carrier Enterprise Cloud Consumers Secure, Deterministic QoS enabled Per application SLA No regulatory issues IT Manageable Optimizing the Backhaul

7 Wholesale Ethernet Access Services CAGR Wholesale Ethernet Service Revenue 48.2% 38.4% 29.8% >1G 1G - 100M 100M - 10M

8 Wholesale Ethernet Access Services 8 1 st Audience Poll Question For service providers on the webinar - Which services would you like to extend into new markets during the next two years? (select all that apply) –Ethernet Private Lines (EPL) –Ethernet Virtual Private Lines (EVPL) –E-LAN services –IP services –Cell Site Backhaul services

9 Wholesale Ethernet Access Services Accelerated MEF 26 interconnection of autonomous Carrier Ethernet networks Business Model for Wholesale Access: Before Market ConditionChallengesImplementation PlatformInterconnection Options Ubiquitous Carrier Ethernet  Off-net connectivity  Time-to-market  Disparate SLAs  Case-by-case provider agreements  Direct ENNIs MEF 26 - ENNI Standard Defined Emergence of Ethernet Exchanges – profitable & efficient scalability Standardized, streamlined delivery of Carrier Ethernet services over multiple provider networks. Carrier Ethernet services delivered to end-users connected at Off-Net locations while supporting service attributes and SLAs SLAs mostly limited to Network Service as ENNI to UNI remained undefined

10 Wholesale Ethernet Access Services Business Model for Wholesale Access: Today MEF E-Access Service Type Defined Standard Certified ENNI to UNI Carrier Ethernet Delivery Established industry standard for Deploying, buying and selling Ethernet Access Services True end-to-end service experience (Class of Service, Management & Protection) Retail Ethernet Provider able to offer seamless end-to-end SLA Ethernet Exchanges taking a critical role for efficient aggregation of wholesale access UNI Branch Office UNI Ethernet Access Services ENNI Buying Providers’ On-Net Network Enterprise HQ Enterprise mid size branch end-user UNI ENNI Ethernet Access Services Long Haul UNI SOHO, telecommuter, end-user Cloud ENNI Carrier Ethernet Exchange

11 Wholesale Ethernet Access Services Business Model for Wholesale Access: Emerging Dynamic Wholesale Market Service Provider-to-Communications Service Provider (non traditional Ethernet Network Provider)  Carrier Ethernet Exchanges playing lead broker in facilitating these services today  Business model still shaping up (private & hybrid cloud demands)  Large wholesale opportunity for E-Access providers  MEF actively reviewing the inner workings of these engagements UNI Branch Office UNI Ethernet Access Services ENNI Buyers Platform Network Enterprise HQ Enterprise mid size branch end-user UNI ENNI Ethernet Access Services Long Haul UNI SOHO, telecommuter, end-user Cloud ENNI Carrier Ethernet Exchange Cloud/ CSP

12 Wholesale Ethernet Access Services MEF Retail Ethernet Services UNI-to-UNIUNI-to-UNI MEF Ethernet Service Types E-LAN Service Type Multipoint L2 VPNs Multicast networks Alternative to hub & spoke E-Tree Service Type Rooted multi-point L2 VPNs Broadcast networks Telemetry networks UNI Multi-point to Multi-point EVC Multi-point to Multi-point EVC UNI Point-to-Point EVC UNI E-Line Service Type Virtual Private Lines (EVPL) Ethernet Private Lines (EPL) Ethernet Internet Access E- Access Service Type* Access EPL Access EVPL Ethernet Access to IP services ENNI UNI Point-to-Point E-Access Rooted Multipoint EVC Ethernet Access Provider Ethernet or IP Service Provider New MEF Wholesale Ethernet Services UNI-to-ENNIUNI-to-ENNI *Technical Specifications targeted for ratification in 1/12.

13 Wholesale Ethernet Access Services New MEF Ethernet Access Services Establishes first industry* standard defining Ethernet Access Services –Standardizes first/last mile Ethernet access connections –Enables retail Ethernet service providers to reach off-net customer locations Defines point-to-point, UNI-to-ENNI Ethernet Access Services New MEF Certification accompanies new E-Access specification Service Type Port-Based Service (at the UNI) VLAN-Aware Service (at the UNI) E-Access Access EPL Ethernet Private Line Access EVPL Ethernet Virtual Private Line End-User UNI Ethernet Access Provider ENNI E-Access UNI Ethernet Service Providers and Ethernet Exchanges Ethernet Virtual Connection (EVC) End-User

14 Wholesale Ethernet Access Services Internet Access Service Example using Access EPLs ISP buys Access EPL 1 from Wholesale Ethernet Access Provider –To interconnect Subscriber A Site UNI to ENNI Retail Provider buys Access EPL 2 from Ethernet Access Provider –To interconnect Subscriber B Site UNI to ENNI ISP delivers Internet Access Service to Subscribers A and B E-NNI Ethernet Access Provider Internet Service Provider UNI Subscriber A Site ENNI Access EPL 1 Access EPL 2 Subscriber B Site Internet E-Access services transparently supports IPv4 and IPv6

15 Wholesale Ethernet Access Services EVPL example connecting off-net locations using Access EPLs Retail Provider buys Access EPL 1 from Access Provider –To interconnect Subscriber Site A UNI to ENNI Retail Service Provider sells EVPL 1 to Subscriber –To interconnect Subscriber Sites A and C Retail Provider buys Access EPL 2 from Access Provider –To interconnect Subscriber Site B UNI to ENNI Retail Service Provider sells EVPL 2 to Subscriber –To interconnect Subscriber Sites B and C E-NNI Ethernet Access Provider Retail Service Provider UNI Subscriber Site C Subscriber Site A ENNI Access EPL 1 Access EPL 2 EVPL 2 Subscriber Site B EVPL 1

16 Wholesale Ethernet Access Services EP-LAN service example connecting off-net locations using Access EPLs from two different Ethernet Access Providers Retail Provider buys Access EPL 1 from Access Provider 1 –To interconnect Subscriber Site A UNI to ENNI 1 Retail Provider buys Access EPL 2 from Access Provider 2 –To interconnect Subscriber Site B UNI to ENNI 2 Retail Service Provider sells EP-LAN service to Subscriber –To interconnect Subscriber Sites A, B and C Ethernet Access Provider 1 Retail Service Provider UNI Subscriber Site B Subscriber Site A E-NNI 1 Access EPL 1 Subscriber Site C P2P Access EPLs used to deliver a Multipoint EP-LAN Service Ethernet Access Provider 2 E-NNI 2 UNI Access EPL 2 EP-LAN

17 Wholesale Ethernet Access Services 17 Wholesale Ethernet Access Services Wholesale Ethernet Access Service Market Some things to consider… Ethernet preferred technology for inter-provider handoff –Retail Providers wants Layer 2 handoff to wholesale access provider Even if Retail Provider is delivering an IP service to its customers Ethernet services delivered over different L1 networks –SONET, T1s/T3s, Wavelengths, OTN, copper pairs, fiber (IEEE 802.3) –Need to unify Ethernet access services over these different networks –MEF Ethernet Access Services achieve this Diverse usage of Ethernet Access Services –Access to IP Services –Layer 2 site-to-site connectivity –Residential broadband backhaul to IP POP –Cell site backhaul to mobile switching center Broad usage of MEF E-Access services over a diverse set of access network technologies

18 Wholesale Ethernet Access Services Wholesale Ethernet Access Service Challenges Ethernet ENNI Ethernet UNI Video Service Provicer Ethernet Service Provider IP/MPLS VPN Provider Wireless Service Provider Cloud Service Provider Internet Service Provider Retail Service Provider Customer Premises SONET Ethernet rings DS-3s DS-1s SONET Ethernet PDH Access Network Copper Access Network WDM Access Networks How do you deliver MEF E-Access services over diverse access networks?

19 Wholesale Ethernet Access Services MEF-compliant E-Access Services over a wide range of Layer 1 access networks SONET GbE/10GbE NxDS-3 NxDS-1 OC-n EoX Aggregation GbE/10GbE Retail Service Provider GbE PDH Access Network EoSEoS EoCuEoCu EoPDHEoPDH EoFEoF ENNI Video Service Provider Ethernet Exchange Provider IP/MPLS VPN Provider Ethernet Exchange Provider Copper Access Network Access Network EoX Access UNI IP DSLAM Internet Service Provider Customer Premises MSPP EoX Gateway EoX Gateway enables MEF E-Access Services over diverse Access Networks xDSL CPE EoPDH NID Ethernet NID Packet Optical Networking Platform ENNI Ethernet Service Provider Wireless Service Provider Cloud Service Provider Connect directly with Retail Providers Connect indirectly to Retail Providers through Ethernet Exchange EoPDH NID EoX Gateway EoX Gateway makes different Layer 1 access networks look like an Ethernet Access Network Ethernet in, Ethernet out

20 Wholesale Ethernet Access Services 20 Wholesale Ethernet Access Services 2 nd Audience Poll Question What do you believe is the biggest challenge in introducing or selling Ethernet services? (select one) –Availability (lack of footprint) –Qualifying process for the service –Installation turnaround –Quality of service –Not enough service features –Non-standard interconnects

21 Wholesale Ethernet Access Services Provider MP Wholesale Perspective on Provider Needs

22 Wholesale Ethernet Access Services Access Large Business Devices Medium Business Branch Offices Transitioning to Ethernet ATM NNI (DS3, OC3) IP BACKHAUL/ L3 NNI (GigE) DSLAM ATM DSLAM Ethernet DSLAM IWG ASBR PE EoC Retail Provider ATM Retail Provider Ethernet Retail Provider MPLS Retail Provider IP MPLS MPLS ICI (GigE) Internet XDSL EoDS0 EoDS3 T1/BT1 DS3 ENNI (GigE) X-changes

23 Wholesale Ethernet Access Services 23 Wholesale Ethernet Access Services Nationwide EoC – Capitalize on Demand Delivered Initial EoC Footprint Build in Top Markets to Reach Additional 1.5 million businesses Build Additional EoC COs to Reach Another 1 million businesses 100 COs in LA Traction with Wholesale partners in LA region Turn up 300+ COs in 2011 Key markets covered:  East: New York, Washington DC, Philadelphia, Baltimore, Boston  West: San Fran, Seattle, San Diego  Mid-west/ Mountain: Chicago, Denver, Dallas, Phoenix  Southeast: Miami, Atlanta 250+ COs Ready for Service in 2012 Fill out existing key markets +:  Houston  Austin  Detroit  Etc. Introduce higher speeds (>20M) 2011 – Build Out Top Markets 2012 – Expand Further 2010  Symmetric data rates of 2.0, 3.0, 5.0, 8.0, 10.0, 12.0, 15.0 and 20.0M GA  Multiple Ethernet Class Of Service packages  Strong SLAs: latency, availability, packet delivery  Compelling price points Updated Sept, 2011

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25 Wholesale Ethernet Access Services 25 Wholesale Ethernet Access Services Ethernet Exchange Fundamentals A Ethernet Exchange must facilitate all 5 attributes of Carrier Ethernet Services – must support Translation of MEF EVPL, E-Line, E-LAN service types and profiles with multiple CoS Scalability – the key cost saving and revenue growth driver behind the development of Carrier Ethernet Exchanges Scalability – Scalability. Must support and access millions of EVCs and worldwide locations with scalable processes Quality of Service – Service Monitoring Must support enforceable, measurable, end-to-end service (frame delay, delay variation, availability). Quality of Service – Service Monitoring Must support enforceable, measurable, end-to-end service (frame delay, delay variation, availability). Service Management – Process Integration Must support normalized process human and system for process transactions Reliability – Protection. Must provide protection: carrier class with geographical diversity

ENNI UNI Service Provider End User

27 Q&A