1. Welcome and Industry Perspective “The Broadband Rorschach Test” Sandy Teger and Dave Waks Copyright © 2001 System Dynamics Inc. brought to you by pulver.com Broadband Home Europe 2001

2. Slide 2 Welcome to BBH Europe Summit Thank you for coming! Broadband Home is global –Broadband Home Report subscribers 85 countries –Conference community 14 countries represented “Breaking Broadband Barriers” –Geographies: Learn from other’s successful business models –Industries: Break down industry “silos” - all part of a common ecosystem thebroadbandhome.com/report

3. Slide 3 For Newcomers BBH conference is –dedicated to speeding the reality of broadband TO and IN the home –and the applications and content it makes possible Advocates working together to grow the pie Content and contact rich –Connecting the pieces and the people

4. Slide 4 About Us Sandy –Early career in analog and digital programming –Product management for innovative telecomm products –Almost 20 years with AT&T, ending as strategy director for multimedia and video conferencing Dave –Early career in computer software and hardware –Developed many systems for telephony measurement and control –Network architect and founder of Prodigy Services Company, directed R&D 1984-1994 Together as System Dynamics –Consulting to broadband vendors, service providers –Technology, marketing, business analysis and planning –Projects have included cable modem rollout, VOD, interactive TV, digital cable, HFC and IP telephony

5. Slide 5 The “Broadband Home” Initiative Joint effort of System Dynamics and pulver.com –Web site –The Broadband Home Report –Conferences Broadband Home Conferences –Silicon Valley (twice), Miami, Amsterdam –>500 people, ~250 companies, 25 countries –All industry sectors –Industry perspectives and panel discussions –Visions, requirements, issues Future conferences –BBH Fall 2001: October 1-3, San Jose, California –BBH Spring 2002: March, California –BBH Europe Summit 2002: May www.TheBroadbandHome.com

6. Slide 6 Goals of the conference Understand what’s happening –Today / tomorrow –In various markets –Impact on the ecosystem Surface issues to be worked on –Technical –Business development –Public policy Encourage collaboration across industry sectors Learn from each other –Ask us for introductions

7. Slide 7 Conference Themes Broadband is good for people and for countries Participants form a connected ecosystem –Global: technology –Local: content Specifics differ by market – the “Rorschach test” We’ll grow the pie faster by working together –It’s not a zero-sum game –It hurts us all if products and services don’t work together and disappoint the customer

8. Slide 8 Broadband: Good for People/Countries Logical progression of the Internet –All forms of content - including audio and video –Continuously available Potential to improve people’s lives –Access to entertainment, information, education, health care -- all from home –Increased family connectedness Reduces geographical barriers Promotes equality and democracy Countries, areas and people without it will be economically disadvantaged

9. Slide 9 Broadband Becoming Mainstream Access penetration over 10% in some countries, over 5% in many –Korea –Hong Kong –Sweden –Canada –US –... Past inflection point of S-curve

10. Slide 10 “Broadband Home” Broadband access and in-home distribution Multiple broadband devices High speed –Megabits: Millions of bits per second –To the home, in the home and from the home “Always on” connection –Continuous connection –From the home to the outside world –To the home from the outside - can “see” the home from the outside

11. Slide 11 The Emerging Broadband Home ISP Services Cable Modem DSL Fixed Wireless Fiber Satellite Powerline Digital Terrestrial Broadband Access Home Gateway

12. Slide 12 Vision of Broadband Evolution Convergence on broadband access Convergence on “IP for everything” –Voice/Data/Video over IP Heterogeneity in implementation –Access networks: Cable, DSL, wireless, satellite, fiber, powerline –Home networking: Wired, wireless –Devices: PCs, TVs, phones, game consoles, e-books, Web tablets, other new appliances –Functional distribution between network and home Different mix and path as appropriate to each country

13. Slide 13 Rorschach Test - Ink Blots

14. Slide 14 “Broadband” Rorschach Test Psychology –Analyze personality based on interpretation of abstract designs “Broadband” –Widely different interpretations of its meaning depending on culture, investment climate and public policy

15. Slide 15 “Broadband” Device US UK Finland

16. Slide 16 “Broadband” Speed and Cost North America: “50 times faster than dial-up” –PC with cable modem or DSL –1.5 Mbps downstream, at least 256Kbps upstream –$35 - $50 per month, flat rate Sweden: “Unlimited speed” –PC with Ethernet over fiber/copper –10 Mbps symmetric –$25 per month flat rate United Kingdom: “Mid-band for PCs” –DSL at 500 Kbps –$55/month (single PC), $140 for multiple PCs

17. Slide 17 “Broadband” Customer Experience “I’ll never go back to dial-up” “I wish I could see consistent performance“ “I waited four months and it didn’t deliver what it promised” “It’s too pricey for what I get” “It’s very fast and affordable” “It’s only a little better than ISDN” “You’ll take it away only over my dead body!”

18. Slide 18 Implications Can’t assume “broadband” means the same thing to everyone “Broadband” isn’t very “broad” in lots of places Public policy can have a significant influence on broadband deployment Worth learning from the business models of others... …but business models may not cross borders

19. Slide 19 Different Visions or Different Paths? Differing “centricities” –PC centric –TV centric –Mobile wireless/cellphone centric –Internet appliance centric Is our vision only applicable to countries with high PC penetration? Do we differ on the endpoint or only on the path?

20. Slide 20 Connected Ecosystem Applications and services Supporting technologies: hardware and software AccessContent Home

21. Slide 21 Access Enables Everything Everything else depends on access availability, performance, pricing and penetration Original content and applications have to wait until there are enough broadband users –Until then, it’s new uses of existing content or delivering “the same thing faster” Access providers have more to gain than lose by finding areas of cooperation –Enable innovation in the home –Enable original content –Enable new revenue from services providers Public policy makers can influence access

22. Slide 22 A Few Realities Cable operators and telcos tend to form cozy duopolies –Dominant broadband access providers in most countries –Speed and pricing generally comparable Both cable and DSL capable of megabits –Typically asymmetric today, faster downstream –Good fit to typical usage patterns Other competitive technologies –Fixed wireless –Power line –Fiber to or near the home Full vision needs fiber/copper solution with small node size –Today’s cable and DSL fall short

23. Slide 23 Realities (2) While flat-rate pricing generally prevails, costs are related to usage –Single user can use more than she pays for –Heavy upstream user is worst Capping costs by capping speed limits services and undercuts the promise –Better to offer tiered services with guarantees –Provide “best efforts” on lowest tier Cable costs less than DSL –Optimized for high penetration –Farther along in standardization and self-install

24. Slide 24 Public Policies To Fulfill Vision Favor full realization of megabit broadband –Technologies all starting to come on stream –Investment in applications and content depends on what consumers can get at a reasonable price Encourage disaggregated model –As with the Internet, applications and content flourish when there are minimal technical and economic barriers between the provider and the consumer –Companies which own physical access should make bandwidth available to others at a fair price –Access providers should not be only ISP or content aggregator –Customer purchase of equipment encourages diversity and choice

25. Slide 25 Public Policies (2) Beware of premature or unrealistic unbundling models –Service provider may need to provide content and conduit early in life cycle to “jump start” market –US CLEC/DLEC experience Encourage true access competition –May be only route to widespread fiber/copper –Probably requires viable alternatives to incumbent monopolies Favor broad access availability –Including rural and economically disadvantaged

26. Slide 26 Conference Logistics Schedule –Industry perspectives –Roundtable discussions –Schedule and speaker changes “Internet lounge” in Orion –Email, Web access Breakfast, lunch and breaks - Network!! –Stargate Cellphones and pagers –Please set to off or vibrate

27. Slide 27 Conference Logistics (ctd) Conference presentations –During conference: Ask Keith or Darwin –After conference: slides.pulver.com –Speakers: please provide them! –pulver.com staff can help you M-TEC WIRELESS demos - Next room –During breaks and lunch –Starting Monday afternoon Community list Feedback Please! –Dave, Sandy, pulver.com staff –Questionnaires

28. Slide 28 All-Conference Party Monday night –Tulip fields at Frans Roozen –Reception and dinner –Great place to meet people Sponsored by pulver.com Buses operating from hotel –Leave 6:30 –Return 10:00 and 11:00

29. Slide 29 Hope We’ll See You Again Soon! BBH Fall 2001 –San Jose, California –October 1-3 BBH Spring 2002 BBH Europe Summit 2002 Broadband sessions at VON –Fall VON - Atlanta –VON Asia – Hong Kong For more details: www.theBroadbandHome.com

30. 18 Beaver Ridge Road, Morris Plains, NJ 07950-1901 (973) 644-4739 Fax (973) 538-6003 dave @ bb-home.com sandy @ bb-home.com www.thebroadbandhome.com www.system-dynamics.com For More Information: System Dynamics Inc.