1. U.S. DC Power Market Brief
December, 2003
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2. Meet John Celentano 30 years in telecom
Involved with telecom power for 25 years
Broad experience in carrier, supplier, and consulting environments
Research/strategy consulting on public network infrastructure markets
Supported clients through campaigns worth billions in sales
Advises equipment manufacturers, service providers, and investor groups worldwide
Publishes research reports and articles on DC power, and quoted often in business and trade press
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3. Discussion Format Telecom Market Overview DC Power Application Drivers
Telecom DC Power Market Outlook
Strategic Considerations
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4. DC Power Systems skyline marketing Secondary Distribution -48VDC Loads
Primary
Distribution
-48 VDC out
Other DC
Loads
System
Control
DC/DC
Converter
Utility
AC in
DC/AC
Inverter AC
Loads
AC/DC
Rectifiers
Batteries
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5. U.S. Wireline/Wireless CapEx
Source: CapEx Report™_2003
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6. U.S. CapEx by Carrier Sector, 2002-2003e
-15%
-17%
-28%
-33%
-5%
-44%
Source: CapEx Report™_2003
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7. CapEx Concentration 2003 Aggregate CapEx = $52.5 B
Source: CapEx Report™_2003
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8. What We See … Flat capex in 2004
Telco response to cable/wireless threats
Receding network overcapacity
Carriers spending for ‘success-based’ demand
Consolidation happening slowly
Early stage of long-term technology shifts
Growth in telecom DC power
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9. End Equipment Bright Spots
Broadband Access
FTTP
C2P Migration
Wireless
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10. Broadband Access
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11. Access Network Infrastructure
Central Office
MTU or
MDU
Building
Entrance
Terminal
Class 5
Switch
F2 Service Terminal CO
Loop
Service Drop
DLC
(COT)
MDF
SAIC
F1 “Feeder” Plant
“Subscriber”
Tandem (via IOF)
F2 “Distribution” Plant
F2 Service Terminal
DLC
(RT)
T1 trunks on copper or fiber
Service Drop
~ 296 M “Equipped” Loops in Major Telcos
~ 167 M “Working” Loops in Major Telcos
“Subscriber”
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12. DLC Working Lines 24% 24% 25% 22% 18% 17%
% = penetration of Total Working Lines
Source: “An Excess of Access” report
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13. Growth ain’t what it used to be!
1997
1998
1999
2000
2001
2002
5.1%
4.4%
3.8%
2.1%
-3.1%
-3.7%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Annual Access Line Growth
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14. No More POTS Growth…Ever!
Source: Millennium-Skyline Project
POTS displaced by DSL
POTS lost to cable modem (and cable telephony!)
POTS lost to CLECs and wireless
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15. U.S. DLC Broadband Base 2002 Equipped DLC Lines = 85.2 million
Source: “An Excess of Access” report
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16. Deploying Broadband DSL over copper loops, and DLC
DLC designed for POTS, not Broadband
198,000 remote terminals (RTs) in RBOCs
Average RT_ ~200 Working Lines
Must replace ~50% of DLC installed base to add broadband
Adding mini-DSLAMs in RTs means upgrading/replacing DC power
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17. Fiber-to-the-Premise (FTTP)
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18. FTTP Architecture Small Office/ Home Office skyline marketing
Circuit/Packet
Switch
Optical
Network
Terminal
(ONT)
Residential
Optical Line
Terminal (OLT)
ONT
Splitter
Central Office
Ethernet
N x POTS
Upstream Data Rate = 155 Mbps
Downstream Data Rate = 622 Mbps
Separate Wavelength for Video = 1550 nm
Small Office/
Home Office
ONT
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19. Circuit-to-Packet (C2P) Migration
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20. A LEC’s Network skyline marketing RLC REO HEO Host Switch (HEO)
Data
Host Switch (HEO)
Full Call Processing
OAM&P for Host & Remotes
Access Line Terminations
Remote Switch (REO)
ESA capability
Stand-Alone Switch (SEO)
Remote Line Concentrator (RLC)
No ESA
Intra-switching (option)
Proprietary interface to switch
CO (or OSP) environment
Digital Loop Carrier (DLC)
CO or OSP environment
Open (TR-57/TR-08/ GR-303) interfaces to switch
Either copper-fed (CuDLC) or fiber-fed (FoDLC)
Proprietary
REO
IMT
CuDLC T1
GR-303
COT
Data
HEO
RDT/RT
Data
FoDLC
GR-303
COT
Data
RDT/RT
CuBB
POTS CO
OSP
CPE
DSL
Data
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21. Soft Switching Class 4 or 5 Class 4 or 5 Fully-meshed, hard-wired
circuit-switched network
Logical star IP network
C2P Media Gateway
DC Power System
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22. C2P Drivers IP traffic doubling every year
Better network utilization for multimedia traffic with “voice-over” technologies, e.g. VoIP, VoATM
Lower operating cost per bit (Moore’s Law)
High-speed transport_SONET, DWDM
Multiple Access technologies_Ethernet, IP, ATM, TDM
Long migration period_10-15 years
Different migration paths
DC power adds/upgrades needed at every EO
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23. déjà vu…All Over Again! Line Size Type 1984 (%) 2002 (%)
Small EOs SXS ,200 (47) (0)
XB (3) (0)
ESS ,600 (17) , (0)
Large EOs SXS (2) (0)
XB ,300 (11) (0)
ESS ,300 (20) , (30)
Total , ,500
US telcos replaced ~16,500 switches from 1984 to 2002
Switch replacements drove 2x or 3x software and service revenue…and most of the profits!
Switch replacement drove purchase of >200,000 DLCs, RLCs
Source: “A Switch to Packet” report
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24. EO Switch Market Segments
Line Size EOs (%) Lines (%) Lines/EO
0-5, ,100 (69) M (10) ,400
5-10, ,100 (10) M (7) ,400
>10, ,300 (21) M (83) ,000
Total , M ,100
70% of CO switches are “small”
56% of “small” COs are in IOCs
18% of small COs in VZ_GTE
RBOCs account for the rest
Nortel, Lucent dominant suppliers
Several secondary suppliers
Source: “A Switch to Packet” report
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25. Major Telco Comparisons
10,500
3,820
14,796
13,148
22,142
9,258
11,729
14,022
5,000
10,000
15,000
20,000
25,000
Access Lines/Switch
3.4
3.2
3.6
3.3
3.1
4.7
2.9
2.7
0.0
1.0
2.0
3.0
4.0
5.0
BLS Q
SBC_SWB
SBC_PT
SBC_AIT
VZ_BA
VZ_GTE
Avg
Host:Remotes Ratio
No homogeneous market
SBC_PT switches > 2X national avg
VZ_GTE switches <40% national avg
SBC_SWB +38% more REOs/HEO than national avg
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Source: “A Switch to Packet” report

26. Hosts/Remotes Dominate
54% of all switches are remotes
>3 remotes for each host
70% of all switches are in host/remote associations
Source: “A Switch to Packet” report
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27. Wireless
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28. Global Wireless Penetration
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Source: RCR, at 2Q03

29. Minutes of Use (MOUs) Source: CTIA, Nortel Networks, Skyline est.
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30. 3G Deployment Patterns In-building Picocells Neighborhood/ Pedestrian
Microcells
Vehicular Macrocells
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31. U.S. Cell Sites & Towers
Source: CTIA, Skyline est.
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32. DC Power Market
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33. Small System Market Customer Macro/Micro Power Plant (5-100 A)
Serving Area
Small Power Plant
( A)
CO/Hub
Large Power Plant
(2,000-10,000 A)
ONTs,
Fiber Nodes,
Micro/picocells
CEVs,
Huts,
Cell Sites
“Power plant on a pole;
power plant in a cabinet.”
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34. U.S. Telecom DC Power Market
e CAGR = 5%
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35. Power Product/System Features
Energy efficiency_90-92+%
Power density_small size, weight
Ease of handling_installation, maintenance
Improved system intelligence
Short-interval provisioning/maintenance
Growing interest in alternate energy gear
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36. Key Decision Factors Criteria
High availability_“It just has to work”
Help improve financials_reduce CapEx/OpEx
Competitive first costs
Low maintenance costs
Low operating costs
Power system management imperative
Remote, hands-off operation
Supplier knowledge/experience dependency
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37. Strategic Considerations
Telecom/IT recovery showing signs of life
Follow the money
DC power is a replacement business
Focus on small/micro power plant “sweet spot”
Support moves to “Lights out network”
Offer Total Power Solutions = Equipment + Services
Sell on a “carrier-by-carrier” basis
Every carrier is different
Help carriers’ achieve their operating goals
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38. Skyline Marketing Group www.skylinemarketing.com
We help you make your numbers!!
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