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

2. Slide 2 Welcome to BBH Fall 2001 Thank you for coming! Belgium United StatesUnited Kingdom IsraelItaly Germany Sweden Netherlands Switzerland France Ireland Canada

3. Slide 3 BBH Community Is Global Leadership comes from many countries –US: number of broadband households –Korea: percentage of broadband households –Sweden and Italy: bandwidth –Italy: migration to digital services –UK & France: interactive TV Broadband Home Report subscribers –90+ countries thebroadbandhome.com/report

4. Slide 4 For Newcomers BBH conferences are –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 –All the pieces and how they fit –Networking and deal making Ask us for introductions!

5. Slide 5 About Us Sandy –18+ years with AT&T; strategy director for multimedia and video conferencing Dave –Founder of Prodigy Services Company; directed R&D 1984-1994 Together as System Dynamics –Consulting to broadband service providers, vendors –Technology, marketing, business analysis and planning –Cable modem rollout, VOD, interactive TV, digital cable, HFC and IP telephony

6. Slide 6 “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

7. Slide 7 Doom and Gloom Dot.com and telecom fallout Excite@Home bankruptcy Ideas ahead of their time: broadband content US public policy for access competition hasn’t worked Economy: rough and getting rougher Funding hard to find 9/11 tragedy added new uncertainties

8. Slide 8 So Why Are We Here? Residential broadband is inevitable –Will reach and then pass today’s PC and Internet penetration Profound impact on related businesses –Everyone from semiconductors to home developers Huge growth opportunity for some -- huge challenge for others Happening now, all over the world

9. Slide 9 Current US Situation >60% homes have PCs, more than 1/3 more than one >10% have broadband, more than half with multiple PCs New OSs from Apple and MS designed for broadband DOCSIS 1.1 products finally coming to market –Unlocks QoS application potential Lots of innovation and revenue –Cable and phone companies –Cable/DSL routers and home gateways –Home networking

10. Slide 10 Fulfilling The Promise: Themes Broadband provides the foundation for new products and services Much more than PCs and Web browsing A huge growth opportunity Needs coherent public policy to fulfill potential

11. Slide 11 The Promise of the Broadband Home Short term: All home PCs connected to broadband applications and content Longer term: Broadband for everything! –Communications –Information –Entertainment –Transactions –Security and control

12. Slide 12 The Promise of Broadband Work from home as easily as in the office Personal voice and video conferencing Digital radio 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

13. Slide 13 Broadband Soap - BLOKKS It’s More Than PCs! See www.blokks.com

14. Slide 14 Broadband Provides Foundation Broadband to and in the home provides the foundation for new products and services Home networkingGateways and client devicesApplications, content and services Broadband Access

15. Slide 15 Needs Strong Access Foundation Access foundation needs high bandwidth and quality to realize full potential of new applications and services “The true benefits of broadband will require that a critical mass of users have high-bandwidth broadband. Only then will we see the virtuous cycle of innovative applications, followed closely by increased broadband demand.” Intel filing before FCC, 9/25/2001

16. Slide 16 Strong Foundations In Europe E.Biscom /FastWeb doing it now in Milan –Running fiber to every building –All IP based : 100 Mbps to each apartment –High speed Internet at 10 Mbps –IP telephony: flat rate to all of Italy –IP television: full TV lineup, video on demand –CD pay per play Scandanavia too! –Bredbandsbolaget (“B2”) provides IP services over FTTH in Sweden, Norway, Denmark –Started in 2000, now in over 46,000 homes –Recent new funding: US$ 230 million Competitors responding –Incumbents and new entrants

17. Slide 17 How About the US? Incumbents have huge investment in existing plant built for analog services –Digital is an “add-on” Cable and telcos behaving like cozy duopoly –Restricted bandwidth and services –Rates going up rather than down –Early US cellular experience - new entrants required for real competition US at risk of falling behind What’s the path to fulfilling the promise? –Economic incentives? –Stronger regulatory hand?

18. Slide 18 Open Issues For US Public Policy Should policy favor approaches that provide higher speed? How to make broadband available and affordable? –Rural –Economically disadvantaged Whether and how to encourage new entrants? How to rationalize the different regulatory regimes as “cable” and “telephone” services blur? Who speaks for the consumer?

19. Slide 19 What’s The Priority? Clearly lower than combatting terrorism Industries involved represent big chunk of the US (and world) economy –Telephone companiesCable companies –Movie industryNewspaper publishers –RadioTelevision –MusicSemiconductors –Consumer electronicsComputers –SoftwareHome security –MDU landlordsHome builders –EducationShopping –Medicine All impacted by public policy decisions

20. Slide 20 So Where’s the Money? Voice and multimedia apps are key –People spend real money for communications, video rentals, home security, advertising, shopping,... –Most still physical or analog today Broadband enables massive shift to digital delivery –Likely to be disruptive –Changes old money flows, adds new ones Needs smarter business models –Not “free” telephony, music,...

21. Slide 21 What’s the Investment Climate? Despite negatives, some companies getting funding –Bredband AB: $230 million –DragonWave Inc. $14 million –Metabyte Networks: 10 million –Bandspeed Inc.: $15 million –BroadJump: $22 million –Integral Access: $45 million –iVAST: $25 million

22. Slide 22 Not All Ideas Merit Investment The Cadeau2000™ Ironphone-- The world’s only combination iron and fully-functional PCS mobile telephone. Because nobody has everything yet. www.ironphone.com

23. Slide 23 What Can We All Do? Work together to grow the pie Help formulate coherent public policies for broadband –Organized effort to focus on opportunities and public impact Remember that this is about real people –What they want –What they can use –What they can afford

24. Slide 24 At BBH: Foundations Industry Perspectives –Bernd Lutz, CableLabs CableHome –Ron Willis, Cisco –Mike Toutonghi, Microsoft eHome –Radu Craioveanu, Narad Networks –Christine Sanborn, Pacific Bell/Nevada Bell –Donald Fowler, TechNet –Joe Crupi, Texas Instruments Sessions –“Broadband Access Evolution” (general session) –“Focus on Fiber to the Home” –“Foundations of the New TV” –“Futureproofing New Homes and Communities” –“Home Networking - Technical Needs for The Home” –“Whole Home Distribution Solutions”

25. Slide 25 At BBH: Applications Industry Perspectives –William Glasgow, @Security Broadband Corp. –Stephen Ste. Marie, Intertainer Sessions: –“Broadband TV - The New Entertainment Platform” –“Broadband Voice - New Applications and Devices” –“Home Automation and Control” –“Interactive Games” –“Sharing Your Audio and Video” –“Webpads and Web Tablets”

26. Slide 26 At BBH: Business Perspectives Industry Perspectives –Guy Kawasaki - Garage Technology Ventures –Gary Lauder - Lauder Partners Sessions –“Investor’s View - Is There Still Money for Broadband?” –“Linking The Value Chain - Making Broadband Succeed” –“Money and More - Consumer’s Money, Time and Attention Budgets” –“Voice Over Broadband: Who Will Survive?” (general session)

27. Slide 27 Conference Logistics Schedule –Industry perspectives –Roundtable discussions –Speaker changes “Internet lounge” in Redwood Room –Email, Web access Wireless network - see Darwin Cellphones and pagers –Please set to off or vibrate

28. Slide 28 Conference Logistics (ctd) Conference presentations –Speakers: please provide them! –During conference: Local server, ask Darwin –After conference: slides.pulver.com –pulver.com staff can help you Community list Feedback Please! –Dave, Sandy, pulver.com staff –Questionnaires

29. Slide 29 Networking Opportunities Breakfast, lunch - Gold Room Breaks - Crystal Room Monday night: Reception –6:00 to 7:30 –Empire room Tuesday night: All-conference party –Reception and dinner –6:30 to 10:00 –Gold room Ask us for introductions!

30. Slide 30 Hope We’ll See You Again Soon! BBH Spring 2002 –Seattle, Washington –April 8-11 At VON Europe 2002 –Helsinki, Finland –June 10-13 For more details: www.theBroadbandHome.com

31. 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.