All Rights Reserved © Alcatel-Lucent 2007, ##### Alcatel-Lucent : Customer Focussed Testing (CFT)

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation 1 Intro

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Intro Alcatel-Lucent claims industry-first 200 milion DSL line shipments Paris, March 4, 2010 – Alcatel-Lucent (Euronext Paris and NYSE: ALU) today announced that Telef ó nica is receiving the 200 millionth digital subscriber line (DSL) shipped by Alcatel-Lucent – a unique and important milestone for the DSL industry, demonstrating the company ’ s ongoing leadership in this space. Alcatel-Lucent today announced that according to industry analyst firm Dell'Oro, it continues to lead the broadband access market with a DSL market share of 40%. With more than 180 customers having deployed the ISAM product portfolio (including 80% of the world's top 20 DSL service providers). Alcatel-Lucent continues to be the undisputed leader of the DSL market.

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Intro

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation 2 Product Evolution

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Product Evolution : PSTN PSTN POTS line 03/ S12 - Local S12 - Toll S12 - Local S12 - Toll POTS line 02/ PSTN = Public Switched Telephone Network POTS = Plain Old Telephony Services (including Fax & Modem)

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Product Evolution : Narrowband Internet Services PSTN Analogue modem (POTS line) S12 - Local S12 - Toll S12 - Local Internet DialIn Server (RAS) Narrowband Dial-In Internet Services (Speed <= 56kbps) Analogue modem (POTS line)

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Product Evolution : DSLAM (Digital subscriber Line Access Multiplexer) PSTN DSLAM Splitter DSL Modem Internet ATM BRAS PSTN Offload for Internet Traffic - Broadband Internet Services (ATM-based Access) ADSL = Asymmetric Digital Subscriber Line (e.g. 2Mbps downstream & 128 kbps upstream) 1996 : ADSL Technology introduced by Martin de Prycker (Alcatel) Narowband Broadband

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Product Evolution : IP-DSLAM PSTN Internet IP ISAM 7302 IP-DSLAM – Ethernet/IP-based Access Need for more bandwidth : ADSL2+, VDSL, VDSL2 (e.g. 100 Mbps) Need for more Services (Triple Play : HSI – Video – Voice) : 8 Traffic Queues Splitter Narowband Broadband

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Product Evolution : GPON ADSL ( < 6 KM ) < 8 Mbit/s ONT ADSL/VDSL ( < 1 KM ) < 26 Mbit/s VDSL ( < 300 M ) < 52 Mbit/s ONT IP ISAM 7302 Internet ONT Converged Platform for DSL (Copper Access) and GPON (Optical Access) PON = Passive Optical Network

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation 3 Equipment

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Equipment : Hardware

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Equipment : Hardware Network Termination 48-port DSL Line Termination Optical LT

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Equipment : Hardware Max size <= 18 * 72 DSL = DSL lines Max size <= 18 * 8 * 128 = ONTs

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Equipment : Software

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Equipment : Software

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation 4 Product Life Cycle

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Product Life Cycle

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Product Life Cycle – Decision Reviews The Product Life Cycle (PLC) defines Decision Reviews of a Release (from Opportunity Identification to End of Life) Pre-DR0 = Opportunity Review  Collect requirements from different customers. DR0 = Planning Readiness Review  Ready to initiate detailed project planning DR1 = Internal Commitment Review  commitment on contents, cost, schedule, quality, and required resources; Start of design and implementation DR2 = System Test Readiness Review  successful completion of design and implementation

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Product Life Cycle – Decision Reviews DR3 = Commercial Launch Review  commercial launch of the product to sales forces and externally to the market DR4 = Commercial Availability Readiness Review  Successful completion of internal validation; product becomes commercially available for limited deployment. DR5 = Volume Deployment Readiness Review  Readiness for volume deployment with fully deployed services DR6 = End of Life  Approves the end of life plan for manufacturing, service, customer communication

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Product Life Cycle – Development / Design & Implementation “ Design & Implementation ” runs between DR1 (Internal Commitment Review ) and DR2 (System Test Readiness Review ) It is including “ Subsystem Test “ and “ Feature Test" Aprox.4 months

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Product Life Cycle – System Test / Verification "System Test" or “ Verification ” is the phase between DR2 (System Test Readiness Review) and DR4 (Commercial Availability Readiness Review ) It is including Product Test, Product Validation & Customer Focussed Test Aprox.4 months

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation 5 Customer Focussed Testing

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Customer Focussed Testing – Why ? Region EMEA (Europe – Middle East – Africa) and CALA (Central & Latin America) : Many customers, all with large installed base with mixed technologies and very specific requirements related to end-user equipment, forwarding model, routing protocols, DSL profiles, Qos settings, Network layout, …. Acceptance Issues : in a very early phase, obvious issues popped up. Early Participation/Partnership in the customer validations changed the scene. Issues are now found before delivery. Software upgrades become a big effort because of large installed base; should be limited to bare minimum. Customers are careful/reluctant to introduce new SW in the field as a single issue can have enormous financial impact. As we were hitting long validation cycles, delivery of “emergency fixes” should be avoided. Conclusion : We changed from a feature-oriented to a customer-oriented organization.

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Customer Focussed Testing – How ? CFT customer selection 1 CFT customer is selected by PLM and R&D. Agree on network design Obtain configuration that customer will validate and deploy. Customer agreed CFT test list 100% test executio n at ALU Customer validatio n Execute CFT tests and provide test report to the customer. Onsite test support Facilitate customer validation = Win - Win Construct CFT test list and have it reviewed by the customer.

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Customer Focussed Testing - End-2-End Network

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation 6 Examples

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Example 1 : Triple Play

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Example 1 : Triple Play Customer Network ISAM 7302 Spirent TestCenter

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Example 1 : Triple Play Customer Network TCL environment Windows PC Operator actions User : Traffic actions User : CPE actions ISAM 7302 Spirent TestCenter

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Example 2 : VoIP PSTN Replacement – Voice over IP Softswitch required for Call Handling & Suppl. Services (SIP-based) Softswitch SIP INVITE SIP/ PSTN ISAM 7302

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Example 2 : VoIP Softswitch Abacus5000 SIP VOIP users VOICE Tool SIP Abacus Analogue lines PESQ Measurement ISAM 7302

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Alcatel-Lucent Network Example 2 : VoIP Third Party Softswitch Abacus Analogue lines PESQ Measurement Customer Network GRE Tunnel Public IP ISAM 7302

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation Example 3 : “Mobile Backhauling” Solution

All Rights Reserved © Alcatel-Lucent 2007, ##### R37v CFT presentation