1. COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED The Coming TDM Sunset: A Balanced View of the Packet Technology Options Mark Madden – Vice President, North American Utilities mark.madden@alcatel-lucent.com Feb 14, 2015

2. 2 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED The What: Traditional Telephony Services Being Discontinued Telephone companies have begun to phase out circuit-switched telecommunications services that utilities have relied on to control substation assets for decades. ­ Includes Frame Relay, SONET, and E&M technologies with line rates from 64kb/s up to 2.488 gb/s (OC-48) AT&T filed a letter with the FCC in November 2012 requesting that it conduct trials to observe the transition to IP-based networks/services from legacy TDM-based networks/services. These filings explain that carriers seek to avoid the cost of operating and maintaining both the old TDM network, which is losing subscribers rapidly, and the new IP networks which they need to build out to satisfy consumer demand and compete with IP-only based competitors. Drawing on advice from its Technology Advisory Council (TAC) and in accordance with the goals of the National Broadband Plan, the FCC initiated targeted trials (“experiments”) to assess the impact of technology transitions on American’s access to communications services and sought proposals for service-based trials to examine in a geographically-limited area the impact of transitioning customers to IP-based services. The results of the trials will serve as a basis to inform policy decisions that will facilitate the Nation’s migration to IP-based services. The FCC has approved two service-based trials for AT&T, one in West Delray Beach, FL and one in Carbon Hill, AL. Both trial areas will seek to convert all customers to IP-based technologies.

3. 3 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED The What (continued) Major Telecom Equipment manufacturers servicing the carrier market have largely stopped manufacturing new TDM equipment and are focused on the IP market. Education for engineers has shifted from TDM to IP which in turn has led to increasing difficulty finding technical personnel familiar with TDM telecommunications technologies. Utilities reporting that network reliability (MTTR) is slipping as it is becoming harder to replace equipment and securing competent support personnel for the aging network. Utilities reporting they are now experiencing longer wait times to schedule service and in many cases carriers even refuse orders for new TDM circuits. Carriers also reducing their tariffed offerings, decreasing time and volume discount possibilities, and substantially increase prices to incentivize users to transition from these circuits as quickly as possible. Commercial land-line carriers started sending out letters to with deadlines as early as the end of 2014 for termination of some older data solutions like Frame Relay. ­ DS0 and other 4-wire circuits are close behind with DS1 and DS3 circuits a couple of years behind. Some have announced the sunset of SONET circuits up to OC-58. ­ Hundreds of thousands of utility circuits are affected within the next 5 years The schedule will vary by carrier and geography, but the end result will be the same – no more TDM service and it will be sooner than you think!

4. 4 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED The Why -- Consumer Demand for TDM is Declining Carrier Business and Eco-system for TDM Cannot Be Sustained by CII “Based on the FCC year-end 2013 data, including VoIP and mobile options, traditional landlines represented only 15 percent of connections. Based on trends, by the end of 2015, traditional landlines will represent only 11 percent of voice connections.” (Source: US Telecom, “Consumers Continue Shift Away From Landline – Regulations Are Behind”, Patrick Brogan, 11/25/2014) Retail Local Telephone Service Connections, 2010 - 2013 (In Thousands) Interconnected VoIP subscriptions are increasing at a compound annual growth rate of 15% Mobile telephony (cellular) subscriptions are increasing at a compound annual growth rate of 3% Retail switched access lines are declining at 10% a year. Source: U.S. Federal Communications Commission Local Telephone Competition: Status as of December 31, 2013

5. 5 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED What Does It Mean for Utilities: Doing Nothing is Not an Option Substantial risks with continuing to rely on carriers’ existing TDM circuits. ­ Carriers have been and will continue over the next few years to send discontinuance of service notices and file the required Section 214 applications with the FCC. Most recently, Cincinnati Bell. ­ Could force a transition to alternate services within as little as 90 days of receiving the notice. ­ Electric service reliability and operational efficiency will be dramatically affected when the circuits are eventually disconnected without a transition plan in place. ­ Upgrading to higher bandwidth IP-based solutions will significantly increase monthly O&M costs. 500% increase in O&M telephony costs is common. Private options require substantial capital investment. Suing the carrier to stop it is futile – it is organic and being driven by the consumer market’s wireless and VoIP substitution. If nothing else, market forces will cause the utilities’ costs to skyrocket, giving them significant incentive to move to newer technology The new carrier services are not a “like-for-like” swap with the older control systems, so utilities now face the situation of managing a dramatic transition to the new IP/Ethernet based network services. ­ This transition requires a thorough, carefully planned and executed migration strategy. ­ It will be expensive and disruptive to the utility The time to initiate efforts to manage the migration, if not already in motion, is now.

6. 6 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED There Is Some Good News: Utilities Do Not Have to Replace TDM-based Substation Equipment Packet-based communications technologies have been proven to be capable of replacing TDM network technologies in utility environments ­ Common protocols are Carrier Ethernet (not the same as carrier Ethernet service) and IP/MPLS ­ As a utility-owned network, they have the ability to transmit SCADA, Teleprotection, and nearly all other critical utility data currently supported by the TDM circuits ­ Simultaneously supports a variety of other utility applications, expanding flexibility, providing for future proofing, maintaining security, reducing complexity and potentially reducing future expansion and operations costs Packet networking technologies are common ­ Easier to find qualified staff ­ Opportunity for greater control of the telecom environment ­ Robust vendor eco-system Carriers use these same technologies in their networks ­ Replacement services, including wireless, will continue to provide adequate service for many utility applications ­ Could potentially provide packet services nearly equal to what a utility-owned packet network can provide IF they choose to ­ When? ­ What price point?

7. 7 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED. COMMON CARRIER PACKET SERVICES OFFER TYPES FOR CIRCUIT REPLACEMENT Layer 2 – Ethernet services ­ Point to Point (P2P) – (Ethernet circuit) Replaces TDM circuit, port based or service based. Popular due simplicity ­ Point to Multi-Point (P2MP)– hub and spoke, popular to emulate FR ­ Multi-Point Switched (virtual Ethernet switch) – Virtual Ethernet LANs, i.e. Corporate LAN; SCADA LAN) Layer 3 – IP services ­ Public IP – Internet connection ­ Private IP – Customer only VRF service ­ Wireless – Cellular service Label Switched services ­ Private Label switched services (emulate ATM or MPLS) – inner customer label is preserved and encapsulated by outer carrier label while being transported. Availability of any of these services is location dependant

8. 8 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED. PACKET TRANSPORT AND SERVICE OPTIONS IP VPN (IETF) –Connectionless Routing, Non-deterministic, Best Effort, SCALES WELL MPLS with IP (IETF) – Deterministic, Any Transport, Any Protocol, Any Service, with Traffic Engineering ­ Seamless MPLS – BGP optimized with label switching using MPLS ­ Segment Routing – IP optimized with label switching using IGP extensions Connection Oriented Ethernet (COE) – Deterministic, Ethernet Only Transport, Any Protocol, Flexible Services. Not a standard by itself. Different implementations. ­ Carrier Ethernet – (MEF) – consortium of over 200 organizations to promote interoperability, testing and adoption of COE networks and services. It standardizes specifications and test suites used by member vendors CE is mature at 13 years and well deployed by many industries. ­ MPLS-TP – (IETF, ITU-T) - reduces the IP/MPLS upper layer protocols and signaling for a simplified control plane designed for efficient COE transport. MPLS-TP is relatively young and promising but not well adopted for COE at the moment. ­ SPB/PBB – (IEEE) - is a less mature connection oriented MAC switching technology that can be utilized to implement COE. Not well adopted in Wide area networks today. Used heavily in Data Center and Enterprise solutions.

9. 9 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED. CARRIER ETHERNET FEATURES AND SERVICE TYPES Service features Low latency Low latency Predictable QoS Predictable QoS 1 Mbps to 10 Gbps 1 Mbps to 10 Gbps Standardized Standardized Reliable Reliable Manageable Manageable Optimal Line Usage Optimal Line Usage Low device cost Low device cost 2.E-LAN Service Type for Multipoint L2 VPNs Transparent LAN Service Multicast networks 3.E-Tree Service Type for Rooted multi-point L2 VPNs Traffic Segregation EP-Tree, EVP-Tree UNI Multi-point to Multi-point EVC Multi-point to Multi-point EVC UNI Point-to-Point EVC UNI 1.E-Line Service Type for Virtual Private Lines (EVPL) Ethernet Private Lines (EPL) Ethernet Internet Access 4.E- Access Service Type for Wholesale Access Services Access EPL Access EVPL ENNI UNI Point-to-Point EVC UNI Rooted Multipoint EVC Carrier Ethernet Access Network Carrier Ethernet Service Provider E-Access

10. 10 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED. CARRIER ETHERNET DELIVERED OVER WIDE VARIETY OF MEDIA AND TECHNOLOGIES Carrier Ethernet provides consistent services connected over a variety of access networks … and across a variety of transport technologies Bonded T1/E1 Ethernet Ethernet User to Network Interface (UNI) WDM Fiber Bonded Copper TDM Ethernet Direct Fiber 100Mbps/1Gbps/10 Gbps SONET/ SDH PON Fiber Ethernet Packet Microwave DS3/E3 Carrier Ethernet Network

11. 11 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED. MPLS – FEATURES AND SERVICE TYPES Standards-based IETF, ITU-T, IP/MPLS Forum Multi-vendor interoperability Deterministic behavior Connection Oriented approach Similar to ATM/TDM/SONET Resiliency 50ms Fast Re-Route Active/Standby path provisioning for high availability Protocol Independent Any Layer 1, Layer 2 or Layer 3 protocol runs over it Traffic Engineering More efficient use of network resources Provides service guarantees and resource reservation Supports multiple VPN schemes Emulation of private Layer 2 and Layer 3 networks Inherent Operation & Maintenance capabilities (OAM) Interoperable with other technologies PE A PE C PE B PE D MP-BGP Route Exchange For all Services VPRN Service Red RI-1 RI-2 VPRN Service Green IP / MPLS Network

12. COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED. 12 IP/MPLS: RELIABLE SECURE NETWORKING SERVICE AND MEDIA FLEXIBILITY HIGHLY ADAPTABLE AS THE NETWORK EVOLVES AND TRANSFORMS Layer 3 & 4 services IP VPN & IES, Multicast IPv4 & IPv6 Layer 1 services TDM & Serial data Voice & Relay interfaces Layer 2 services VPLS based E-LAN, E-LINE ATM, ML-PPP, Frame/HDLC

13. 13 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED. Leverage Carrier Ethernet in network access with simple topology (spur and ring) IP/MPLS in network aggregation and core with multi-path topology (mesh, necklace, multi-ring) Deploying technology for ‘best fit’ Core Aggregation IP/MPLS Carrier Ethernet Access End to End Services HYBRID TECHNOLOGY SOLUTION 1: CARRIER ETHERNET ACCESS OVER IP/MPLS TDM Ethernet IP ATM etc TDM Ethernet IP ATM etc ANY TRANSPORT (OPTICAL, MICROWAVE, COPPER)

14. 14 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED. Fully leverage IP/MPLS’s multi-service capability for end-point services. Supporting MEF2.0-compliant Carrier Ethernet services plus other layer 1 and layer 3 services Core Aggregation IP/MPLS SERVICES Access E2E Transport using Carrier Ethernet HYBRID TECHNOLOGY SOLUTION 2: MPLS-ENABLED CARRIER ETHERNET TDM Ethernet IP ATM etc TDM Ethernet IP ATM etc ANY TRANSPORT (OPTICAL, MICROWAVE, COPPER)

15. 15 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED. HYBRID DEPLOYMENT – UTILITY-OWNED + CARRIER

16. 16 COPYRIGHT © 2015 ALCATEL-LUCENT. ALL RIGHTS RESERVED Questions?

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