1. The Broadband Home: It’s Hard to Make It Easy Sandy Teger and David Waks Co-Founders, BroadbandHomeCentral.com Broadband World Forum September 10, 2003 Copyright © 2003

2. Slide 2 About Us: Professionally Sandy –18+ years with AT&T; multimedia strategy director Dave –Founder and R&D director, Prodigy Services Company Together as System Dynamics Inc. –Specialists in residential broadband –Consult for companies affected by residential broadband Projects included strategy, business economics, competitive analysis –Operate www.BroadbandHomeCentral.com as industry resourcewww.BroadbandHomeCentral.com –Free monthly Report on the Broadband Home www.bbhreport.com Subscribers in ~103 countries Global coverage--but must confess to somewhat US-biased outlook

3. Copyright © 2003 Slide 3 About Us: Personally

4. Copyright © 2003 Slide 4 “Broadband Home” Our name for “connected home”, “smart home”, “digital home” Broadband access and in-home distribution network –Any kind of access (DSL, cable, wireless, fiber,…) –Any kind(s) of home networking (Wi-Fi, Ethernet, PLC, …) Multiple broadband devices –PCs, TVs, phones, game consoles, … and emerging appliances 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, and to the home from the outside “The Extended Home” –Includes the back yard, the garage, the car,… –Starting to encompass the town, the hotel, …

5. Copyright © 2003 Slide 5 The Promise of Broadband Work from home as easily as in the office Voice and video conferencing Music and TV everywhere in the home Share photos and videos with friends and family Untethered access Big jukeboxes of music, movies, TV and games Control VCRs, AC, lights from anywhere Telemedicine

6. Copyright © 2003 Slide 6 Our Broadband Home Movie Sandy and Dave’s Broadband Home www.bbhcentral.com/presentations.html#lws2003movie

7. Copyright © 2003 Slide 7 Our Broadband Applications – “Walk the Talk” Professional –Maintain client contacts, produce work products, communicate with colleagues Family and Friends –Maintain closeness despite geographical separation Entertainment –Music, TV, movies: what we want, where and when we want it Telemetry and Control –Heating and lighting control

8. Devices and Wiring in Our Home TV A/V System Cable Gateway/firewall Cable Modem Internet TV Audio System Loudspeakers Speaker wiring Audio “Island” TV “Island” X10 PLC Lighting Lighting “Island” PC “Island” Analog Lines Analog Phone Analog Phone Phone “Island” CE “Island” Digital Camera Digital Camcorder LV wiring Heating Air Conditioning Controls HVAC “Island” Replay DVR TiVo DVR PRISMIQ AudioTron HomePlug PLC Cisco MTA USBSerial SIP Phone Legend - Devices - Ethernet wiring and networking - Other wiring and networking Notebook PCs Smart displays 802.11b/g Wi-Fi AP and adapters Ethernet switches and NICs CAT5 structured wiring Server Desktop PCs

9. Copyright © 2003 Slide 9 Issues With Our Home Devices and Wiring “Islands” communicate poorly -- or not at all –No way to move baseband video and audio (e.g., DVD player output) from one room to another –DVRs can’t talk with each other –Camera and camcorder plugged into a single PC at a time –Weak control over lighting –No connection to HVAC Many things we wish we could do but can’t –Record movie on one DVR and play in another room (could do it if they were same brand) -- needs both media and control solution –Monitor and control lighting and HVAC from outside house –… Lacks ease of use and ease of administration –Incredible level of complexity both in trouble shooting and whenever we want to do something “a little different” See our IEEE Communications article on home networking: www.bbhcentral.com/presentations.html#ieeecomm0204 www.bbhcentral.com/presentations.html#ieeecomm0204

10. Copyright © 2003 Slide 10 Applications Driving Broadband Usage ApplicationCE DeviceBB and Home Networking Issues Photo sharing (Shutterfly): Upload many photos; create projects Digital cameraNone Music (Rhapsody): Always-on streaming downloads Multimedia PCNetworking of speakers Digital movies (Videowave): Create videos to load on Website Digital camcorderFiles too big to share Internet on TV : When TV is closest device Networked media player, (e.g. Prismiq) Box needed for each TV; Quality TV on demand (DVR capabilities): TV programs we want, when we want DVRs with big hard drives (e.g., TiVo, ReplayTV) Need DVR for each TV; sharing only with DVR from same manufacturer Broadband telephony : Inexpensive phone calls, new capabilities MTA+Analog phones (e.g. Cisco 186 for Vonage) SIP phones Quality; Vonage/186 only supports one line; weak service support for SIP phones

11. Copyright © 2003 Slide 11 What’s The Problem For Service Providers? Providing broadband access is only the starting point Broadband connected in the home to multiple flavors of –Personal computers –Home wiring/networks –CE devices, e.g. TVs, phones, digital cameras and camcorders –and more … Mix of legacy analog and new digital devices All affect the ability to address consumer’s home CE and PC industries jockeying to leverage broadband to their advantage –Who gets what part of the consumer revenues? –Both creating software/devices to supply (IP) telephony Challenges –Dizzying rate of change from CE & PC industries –Complexity of home environment –Cooperation/competition with other industries –Threat to traditional voice revenues

12. Copyright © 2003 Slide 12 What Will the Home Architecture Be? Simple environments may be addressed by a centralized solution –Example: Computers, home networking, connecting digital camera to one computer More typical complex home environments better addressed through distribution of function –Every attempt to put many complex functions in single centralized unit has failed due to Moore’s law (cost and rapid obsolescence) –Leverage, don’t fight the efforts of PC and CE industries –Take advantage of the PC -- biggest source of horsepower and flexibility in the home Example of distribution of function –“Gateway” device including router for connection to broadband –Use resources of PCs (control, storage, communications) when present –Use PVRs (standalone or set-tops) to store media content –Network PC and CE devices with IP, Ethernet and UPnP

13. Copyright © 2003 Slide 13 Different Users, Different Needs User TypeLikely Solution “Techie”DIY (do it yourself) High-incomeHigh-end equipment Professional/custom installer All OtherMiddle-market solutions Broadband Provider Friend Electronics/Computer Retailer

14. Copyright © 2003 Slide 14 Our Conclusions For Service Providers Try to solve manageable pieces –Risk of doing too much: all-in-one solution likely to be late to market, overly expensive, quickly obsolescent –Risk of doing too little: contending forces dominate and BSP becomes dumb pipe; core voice business continually eroded as VoIP develops Find the right balance: what provides best value for customer and best value add for service provider –“Attempting the impossible is not good strategy; it is just a waste of resources.” (Bruce Henderson, BCG) CableHome is MSO attempt to find this balance –Goal: “extend high-quality, managed, value-added broadband services to subscribers over any available home network” –Although video is MSO core business, first versions address the “simpler” data environment –CableHome 1.0 starts with basics: Firewall management, address translation, gateway management, device visibility Learn from/cooperate with other industry efforts –DHWG and CEA’s DENi (The Digital Entertainment Network Initiative -- CEA-2008).

15. www.BroadbandHomeCentral.com sandy @ bb-home.com dave @ bb-home.com Phone 973.644.4739 For More Information: