1. Voice over DSL Convergence where it counts. Jeff Jenkins Jetstream Communications IEEE - Bay Area Chapter Meeting June 9, 1999

2. "In my opinion, and not to be melodramatic here, it is the most important trend in the industry in the past 10 years, the coming together of voice and data networks" --Jonathan Haller, principal analyst covering network services for market researcher Current Analysis Inc., (Sterling, Va.). What the analysts say:

3. Agenda The True DSL OpportunityThe True DSL Opportunity CLEC ImplicationsCLEC Implications ILEC ImplicationsILEC Implications Subscribers BenefitsSubscribers Benefits

4. Yesterday’s DSL Opportunity DSL is ideally suited for delivering data services to this market... $4.2B $4.7B $8.9B Data Rev./Year 61%  25%  31M Internet Access Source: IDC

5. Today's DSL Opportunity Voice Rev./Year $30B $35B $65B …and DSL is ideal for delivering Voice as well! $4.2B $4.7B $8.9B Data Rev./Year 61%  25%  31M Internet Access Source: IDC

6. Small Business: Voice vs. Data The typical small business spent $6,645 on voice services and $568 on data in 1998The typical small business spent $6,645 on voice services and $568 on data in 1998 By 2002, data will represent nearly 10% of total landline expenditures. 90% of expenditures are on voice!By 2002, data will represent nearly 10% of total landline expenditures. 90% of expenditures are on voice! Average Annual Small Business Landline Expenditure per Business Source: IDC, January 1999

7. DSL Access Network DSL Rtr. Phone System LAN Internet DSLAM ISP Facilities xDSL Class 5 PSTN Regional Packet Network SubscriberILEC Wire Center Regional Switching Center

8. Voice over DSL Regional Switching Center Phone System LAN Internet DSLAM ISP Facilities xDSL Voice Gateway DS3/ OC3 303 Class 5 PSTN IAD Regional Packet Network SubscriberILEC Wire Center Supplied by Jetstream, FlowPoint, Efficient, Ramp, Netopia,... Integrated Access Device (IAD) Multiplexes multiple telephone lines and data onto single DSL circuit (single copper pair)

9. Voice over DSL Regional Switching Center Phone System LAN Internet DSLAM ISP Facilities xDSL Voice Gateway DS3/ OC3 303 Class 5 PSTN IAD Regional Packet Network SubscriberILEC Wire Center DSL Access Multiplexer (DSLAM) Multiplexes multiple subscribers onto a single back-haul facility Supplied by Nokia, Alcatel, Cisco, Copper Mountain, Nortel,...

10. Voice over DSL Regional Switching Center Phone System LAN Internet DSLAM ISP Facilities xDSL Voice Gateway DS3/ OC3 303 Class 5 PSTN IAD Regional Packet Network SubscriberILEC Wire Center Integrates subscriber voice traffic into Class 5 local switch Supplied by Voice Gateway (CPX-1000)

11. Voice over DSL Regional Switching Center Phone System LAN Internet DSLAM ISP Facilities xDSL Voice Gateway DS3/ OC3 303 Class 5 PSTN IAD Regional Packet Network SubscriberILEC Wire Center A carrier can deliver up to 16 telephone lines and data service over a single copper pair

12. VoDSL Advantages: Dynamic Bandwidth Allocation Average bandwidth available for data Average bandwidth used by telephony 8 lines serving 32 extensions at P.01 over a 768kbps SDSL line

13. On a fully utilized 768 SDSL line... Available Bandwidth during Busy Hour Dynamic Bandwidth 50% of bandwidth avail. 90% of the time 80% of bandwidth avail. 50% of the time

14. The CLEC VoDSL Opportunity To extend the reach of their already successful voice and data bundling strategy to the next big markets... Small Business, Home Office & High-end Residential

15. The CLEC VoDSL Opportunity Small Bus, HO and High-end Residential Large Business $34B $88B …which is also a significantly larger voice opportunity Source: IDC

16. The Current CLEC Opportunity Large/Mid-Size Businesses Phone System Router Phone System Router CLEC Regional Switching Center Voice Switch Data Switch PSTN Internet Run T1/T3s over Fiber, WLL, or Leased from ILEC

17. The Current CLEC Opportunity Large/Mid-Size Businesses Phone System Router Phone System Router CLEC Regional Switching Center Voice Switch Data Switch PSTN Run T1/T3s over Fiber, WLL, or Leased from ILEC PSTN Internet Cost of current TDM technology only permits profitable service delivery to subscribers with 14 or more telephone lines

18. The Current CLEC Opportunity Large/Mid-Size Businesses Phone System Router Phone System Router CLEC Regional Switching Center Voice Switch Data Switch PSTN Run T1/T3s over Fiber, WLL, or Leased from ILEC PSTN Internet 95% of Small Businesses and 99%+ of Residences use 12 or fewer telephone lines!

19. The CLEC Challenge Finding a cost-effective access network architecture that leverages the ‘last mile’ copper network Deploying a single multi-service network that efficiently scales to deliver both VOICE and DATA. ILEC Wire Center Voice Switch Data Switch PSTN Internet CLEC Regional Switching Center Small Businesses & Residences LAN Phone System Phone System Phone System Phone System

20. LAN Phone System Phone System Phone System Phone System Regional Switching Center Class 5 PSTN Internet Small Businesses & Residences ILEC Wire Center ISP Facilities IAD VoDSL Access Network Voice Gateway 303 DSLAM xDSL DS-3 /OC-3 DSLAM Regional Packet Network

21. VoDSL Benefits to CLECs Solves the economic and operational challengesSolves the economic and operational challenges Single network for voice and data - “On Net”Single network for voice and data - “On Net” Single copper pairSingle copper pair Requires only a DSLAM in CORequires only a DSLAM in CO Single back-haul facilitySingle back-haul facility Solves the marketing challengesSolves the marketing challenges Increases customer acquisition and retention through bundled voice and data servicesIncreases customer acquisition and retention through bundled voice and data services Successfully penetrate the small business, home office and high-end residential markets

22. The ILEC VoDSL Opportunity Overcome Copper Exhaust ChallengesOvercome Copper Exhaust Challenges

23. ILEC Copper Exhaust ILEC CO Voice Switch Small Businesses & Residences Phone System LAN Phone System LAN PSTN Number of additional lines increasing

24. ILEC Copper Exhaust ILEC CO Voice Switch Small Businesses & Residences Phone System LAN Phone System LAN Data Switch Internet DSLAM PSTN New copper-based services - DSL

25. ILEC Copper Exhaust ILEC CO Voice Switch Small Businesses & Residences Phone System LAN Phone System LAN Data Switch Internet DSLAM PSTN New copper-based services - DSL

26. ILEC Copper Exhaust ILEC CO Voice Switch Small Businesses & Residences Phone System Phone System Data Switch DSLAM LAN Data Switch Internet DSLAM Voice Gateway IAD PSTN Where DSL is deployed... …utilize VoDSL to overcome exhaust

27. VoDSL Benefits to ILECs Overcome copper exhaustOvercome copper exhaust Generate additional voice and data revenueGenerate additional voice and data revenue Drive more lines through bundlingDrive more lines through bundling Faster return on DSL investmentFaster return on DSL investment Entrench customers before competition doesEntrench customers before competition does

28. Subscriber Benefits One-stop shopping for voice & dataOne-stop shopping for voice & data Consolidated billingConsolidated billing Competitive, compelling service offeringsCompetitive, compelling service offerings Bundled data if you switch dial-tone providerBundled data if you switch dial-tone provider Discounted telephone serviceDiscounted telephone service Bundled local and long distanceBundled local and long distance

29. In Summary DSL is not just for data anymoreDSL is not just for data anymore It’s about bundled services.It’s about bundled services. Data sells and voice pays. Not the other way around.Data sells and voice pays. Not the other way around. If in two years you’re only in the voice business or only in the data business, you should be nervous.If in two years you’re only in the voice business or only in the data business, you should be nervous. VoDSL is a Win-Win-WinVoDSL is a Win-Win-Win Carriers: Access to new markets and generate more $$$.Carriers: Access to new markets and generate more $$$. Subscribers: Receive compelling new services.Subscribers: Receive compelling new services. DSL equipment suppliers: DSL deployments increase.DSL equipment suppliers: DSL deployments increase.

30. xDSL Forecasts Current adoption estimates based on customer willingness to pay premium for faster data. An isolated data decision.Current adoption estimates based on customer willingness to pay premium for faster data. An isolated data decision. What if it were based on customers with at least a few phone lines that could use higher speed data?What if it were based on customers with at least a few phone lines that could use higher speed data?

31. The Leader in Voice over DSL Jeff Jenkins (408) 399-1300 jjenkins@jetstream.com www.jetstream.com