2. Presentation Outline Charles Industries Background Product Lines
Manufacturing and Engineering Capabilities
Strategic Direction
HVDL 3.1 System Presentation
Overview
Value Proposition
System Configuration
Technology Highlights
Presentation Summary
Questions and Answers / Technical Discussion
Next Steps

3. Charles Industries Background
Founded in 1968 by Joseph T. Charles
Strategically focused on “Local Loop” solutions, including outside plant and access/transmission products
Headquarters in Rolling Meadows, IL
Four manufacturing facilities in Illinois and Missouri
Structured to provide full design, engineering, manufacturing, sales and support services

4. Charles’ History with SBC
Charles has providing SBC with reliable, field-proven solutions for over 25 years, including:
Pedlock® Buried Distribution Enclosures
Digital Pair-Gain Systems
STS Span Termination System
T1 Mini-Repeater Apparatus Cases
Load Coils - expanded contract awarded 2001
Cable Stubs - expanded contract awarded 2001
Last 5 Year Total Sales with SBC/Ameritech
$XXX,000,000

5. Business Units
Our sales and support teams are organized into 3 business units, allowing us to better serve our customers’ needs.
Access/Transmission Products
Business Unit
Outside Plant Products Business Unit
Business Development Unit

6. Product Lines Access/Transmission Products Business Unit
High-Speed Voice and Data Link 3.1 System
Digital Pair-Gain Systems
T1 Channel Banks
Transmission & Signaling Equipment
Mini-Repeaters
Outside Plant Products Business Unit
Pedlock® Non-Metallic Buried Distribution Enclosures
Apparatus Cases
Load Coils and Line Conditioning Equipment
Riser Pipes and Wire Guards
Cable Stubs

7. Vertically Integrated Manufacturing
Strong global purchasing resources
World-class inventory management systems
Advanced manufacturing capabilities
Supplier quality tracking systems

8. Charles’ Strategic Direction
Create New Strategic Alliances
Expand Partnerships
Evaluate Acquisition Opportunities
Introduce New Vertical Market Initiatives

9. Charles’ Product Strategies
Leverage Core Competencies
OSP Products
Access/Transmission Products
Hybridization of OSP and A/T
Placing passive and active network intelligence farther out from the traditional CO and DLC

10. HVDL 3.1
A Breakthrough in High-Speed Voice and Data Transmission

11. HVDL 3.1 — What Does It Do?
The High-Speed Voice and Data Link (HVDL) System transmits 3 POTS lines and 1 high-speed data line over a single copper pair on loops of up to 56,000 feet.

12. HVDL 3.1 — What Sparked the Idea?
Independent Telcos approached us with a
need for a high-speed data solution that would compliment ADSL efforts
Requirements were:
Utilize embedded copper base
Compatibility within ADSL bundles (no interference)
Instantly deployable architecture
Include POTS service on same line
Expand coverage footprint

13. HVDL 3.1 — What Opportunities Does It Create?
Brings service to customers outside of current ADSL deployment initiatives
Provisions high-speed Internet access to customers currently served by DAML
Overcomes majority of distance limitations
Avoids cost of DSLAM investment in new deployments

14. HVDL 3.1 — Value Proposition
Business Objectives
Customer Retention
Keeps current SBC customers from jumping ship to cable modem, satellite, wireless, VoIP, etc.
Customer Capture
Allows SBC to offer new services; expand high-speed data service into all its areas

15. HVDL 3.1 — Value Proposition
HVDL’s Competitive Advantages
Leverages installed copper resources (no new copper loop installations)
Eliminates need for new DSLAM installations and guesswork of investment costs vs. unknown take rate
DAML subscribers are qualified
Distance-constrained customers are qualified

16. HVDL 3.1 — Value Proposition
Market Conditions
High-value customers in underserved markets are growing more and more vocal (and regulators are listening)
Need for “granular” service provisioning in low-density applications (i.e., no DSLAM installation) has been unmet

17. Total U.S. DSL Subscriber Lines*
HVDL 3.1 — Value Proposition
Market Conditions (continued)
Total U.S. DSL Subscriber Lines*
Less than 3Kft 7.30M
3K-6Kft 25.8M
6K-9Kft 24.0M
9K-12Kft 23.1M
12K-15Kft 19.8M
15K-18Kft 10.5M
18K M
ADSL
“Underserved”
Customers
* Subscriber line data taken from DSL Forum

18. HVDL 3.1 — Value Proposition
Considerations
Pay-as-you-grow “granular” service provisioning (low up-front investment, quicker pay-back period)
Uses existing “300 shelf” infrastructure
20,000 ft. reach typical, 40,000 ft.+ with repeater
Spectrally compatible with ADSL (can be deployed in same cable bundle)

19. HVDL 3.1 — Value Proposition
Considerations (continued)
3 voice lines offer opportunity for added revenue
Data line is rate adaptive (128 kbps to 1.0 mbps), allowing for tiered pricing
Data rate is symmetric (ideal for video conferencing and web hosting)

20. HVDL 3.1 — System Components COT Line Card Remote Terminal (RT)
Fit 300 series COT shelves
Remote Terminal (RT)
Demarcation point at customer premise
Access Multiplexer
Aggregates data, provides
web-based management
Line Repeaters
Optional; extend distance

21. HVDL 3.1 — Configurations

22. HVDL 3.1 — Configurations

23. HVDL 3.1 — Configurations

24. HVDL 3.1 — Configurations

25. HVDL 3.1 — Configurations

26. HVDL 3.1 — Configurations

27. HVDL 3.1 — Configurations

28. HVDL 3.1 — TCPAM Line Coding
Trellis Coded Post Amplitude Modulation
The line coding standard for HVDL
Transmission scheme for G.shdsl
Increased distance with lower interference
Ensures HVDL’s compatibility with other DSL services such as ADSL

29. HVDL 3.1 — Signatures Line Testing Signatures
Used by central office mechanized testing to determine system status
Operate on voice lines
Do not interfere with normal voice operations
Available in MLT and 4TEL versions

30. HVDL 3.1 — Safety Features Micro-Interrupt and Life-Line POTS:
Resistant to surges caused by lightning, electric switching (large motor start-up), etc.
Software allows system to tolerate interruptions
Life-Line POTS in case of power failure

31. HVDL 3.1 — Opportunity Summary
HVDL offers an effective high-speed data solution that overcomes service provisioning obstacles:
Provisions service where distance precludes ADSL
Provisions service in areas of low density
Provisions service in pair-gain (DAML) served areas

32. HVDL 3.1 — Solution Summary
Extended-Reach Customers
Coverage with DSL
Coverage with HVDL 3.1
Central Office
DSL
HVDL

33. HVDL 3.1 — Solution Summary
Low Density Population
PAY-AS-YOU-GROW
ELIMINATE NEED
FOR DSLAM

34. HVDL 3.1 — Solution Summary
Pair-Gain Replacement
Existing DAML Service
Voice Switch
POTS
COT RT
Conversion to HVDL 3.1
POTS
Voice Switch RT
COT
DATA

35. Next Steps