1 The Next Step In IP Telephony: Hosted PBX Services Scott Wharton, Vice President of Marketing

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 2 Agenda IP telephony roadmap Hosted PBX services Market/technology trends Value proposition Case studies Market projections Summary

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 3 IP Telephony Roadmap Value Bad Quality International Arbitrage Hosted Voice: e.g. Hosted PBX, Voice VPN, IP Centrex, Prepaid, UM, etc. 2003

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 4 Desktop Collaboration Messaging Corporate Voice Networking Corporate Voice Networking Enhanced Services Self Service Management Core PBX Functions in Network Hosted Voice Example: Hosted PBX PBX Functions in the network E.g., Connectivity, Call Forwarding, Conferencing, Voice Mail, Music on Hold, etc. Self Service Management Custom branded web portals (user, enterprise, reseller, carrier) Corporate voice networking Location-to-location calling Messaging Unified voice and fax messaging Enhanced Services Auto-attendant, IVR, conferencing, call centers, mobility, follow-me, one-number Desktop Collaboration Web conferencing, instant messaging and presence, document sharing, desktop video

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 5 Network Layout Large Business Small Business LA N Medium Business LA N PBX or Key System LA N IP Phones Line Gateway Router Switch Class 5 Switch PSTN Data Network Media Gateway Network Gateway Broadband Access DSL, T1, Ethernet, x SoftswitchMGCP SIP Application Server

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 6 Paradigm Shift

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 7 The Communications Challenge 1990’s Help! Today WWW

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 8 Market Trends: What’s Changed? Outsourcing more common Same model as web hosting and Companies under increasing pressure to outsource non-core functions (telecoms) Increasing technological complexity Increasing telecommuting and mobile worker population Require expensive remote support and communication services from company Companies subsidizing these costs Labor costs rising relative to equipment costs High cost of IT staffing Skilled employees hard to find and retain for non-core operations

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 9 Technology Shifts Ubiquitous CAT 5 wiring and IP technology Technology obsolescence accelerating PBXs lifecycle more like the PC market IP PBXs blazing the trail VoIP now considered mainstream Hosted voice services now available Meet and surpass CPE features End of product lifecycle for Class 5 switches

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 10 Hosted PBX Value: Enterprise Combine benefits of Centrex with PBX features + management control with capital savings Improved total cost of ownership Converged access Open, lower cost capex On-net Voice VPN calling Move technology risk to carrier Not locked into technology, move gear between sites Improved service assurance Carrier-grade performance, survivability & risk management Increased employee productivity Speed projects & reduce travel with collaboration Tele-worker/mobile support, find-me/follow-me Web-based self-service

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 11 The Case for IP over Legacy LegacyIP TDM Voice No end-user control Proprietary and closed Multiple networks Expensive MACs IP Voice Web-enabled control Open & standards-based Converged network Cheaper MACs

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 12 End User Benefit Comparison Network IP Tel. 24x7 support Maintenance costs Mixed tech Multi-location Capital cost Ongoing upgrades Scalability Simplicity Survivability Total cost of ownership IP PBX Distribution channel Equal MACs, CTI, Convergence

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 13 Hosted PBX Beats IP PBX Solution Cost $-0 $50,000 $100,000 $150,000 $200,000 $250,000 Year 1Year 2 Year 3 Traditional PBX IP - Enabled (New) IP - PBX Network IP Telephony Solution Cost 100 User IP and Convergence Total Cost of Ownership An Analysis of Three Alternatives $135,001 $60,192 $82,480 $219,229 $85,220 $109,434 $237,283 $105,724 $126,399 Source: Phillips-Infotech Oct. 2001

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 14 Case Studies

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 15 Case Study: Large Enterprise Background Large chemical company 13,000 employees 150 locations in 60 countries Building IT competency as competitive advantage Bundled voice/data package from service provider Problems Addressed Hybrid network, primarily comprised of 42 PBXs Multiple voic systems High cost of LD traffic –Only top 4 locations networked Sporadic use of unsecured IM Key Selling Points Uniform services for all employees Enterprise networking; click- to-dial anyone in company Personal mobility services Secure instant messaging Single internal phone list

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 16 Case Study: University Campus Background World-renowned university Serves 35,000 students, faculty, administration, etc. University recently merged telecom & data departments Chose hosted voice platform after full competitive evaluation vs. IP PBX Three year Centrex migration Problems Addressed Must be profit center by 2005; –Plan to sell service to local companies, other universities Dissatisfied with current Centrex offering Key Selling Points Convergence of voice/data Open platform, not proprietary Able to meet scalability needs –E.g., Solaris vs. Windows Ease of partitioning system & managing different sets of services between user groups Comprehensive service set from a single platform –E.g., voice, messaging, IM

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 17 Case Study: Government Background Major city government 15,000 employees 68 locations Problems Addressed Mixed use of PBX, Key Systems, and Centrex Proprietary phones not interchangeable between systems Some people without voic Limited features available across departments Key Selling Points Integration of voice/data Self-management Enterprise-wide dialing plan Disaster recovery for voice Openness of platform and variety of access alternatives, now and in the future

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 18 Market Projections

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 19 IP Voice & Legacy Projections Share between Hosted and PBX is up for grabs again Source: Gartner Dataquest, Gartner Consulting Enterprise Line Shipments (000’s)

©2003 BroadSoft ®, Inc. Proprietary and Confidential; Do Not Copy, Duplicate, or Distribute - 20 Summary Enhanced IP telephony services are next step in market Market and technology shifts favor outsourcing Hosted PBX offers enterprises better services with cost savings Solutions commercially deployed and available today For more information: Scott Wharton