Z H O N E T E C H N O L O G I E SMAKING TRIPLE PLAY MAINSTREAM BUSINESS

Luis HerediaCALA SE Manager

Zhone Technologies, Inc.

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Zhone Technologies

Zhone Technologies is a next-generation communications equipment provider dedicated to providing multi-service solutions for carriers and MSOs

• Founded 1999

• Focused on triple play (IPTV), VoIP, FTTx and metro-access transport solutions

• Over 300 customers worldwide

• Fifteen sales offices in eight countries

• Offering complete lifecycle customer service

Zhone Oakland Headquarters

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Over 100 CommercialOver 100 CommercialIPTV Deployments IPTV Deployments in North Americain North America

Over 100 CommercialOver 100 CommercialIPTV Deployments IPTV Deployments in North Americain North America

250+ IPTV250+ IPTVCommunitiesCommunities

250+ IPTV250+ IPTVCommunitiesCommunities

About 300,000 homes served……Over 1,500,000 homes passed

Commercially Available Technology Has Enabled GrowthYet more than 35 operators have less than 500 subscribers (scalability)

Substantial IPTV Traction Exists in North America Today…

Mostly IOC andMostly IOC andRural Telco’sRural Telco’s

Under 40K linesUnder 40K lines

Mostly IOC andMostly IOC andRural Telco’sRural Telco’s

Under 40K linesUnder 40K lines

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Service Models Vary Worldwide

Cable CompetitionVODIPTVMMS Services

CLEC Competition

Hong Kong: IPTV ‘giant’• 300K IPTV subscribers since 2003•1.5 M VOD subscribers since 2000

• 1M worldwide IPTV subscribers (2004)•500K in North America

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Services rapidly evolving…So is Capacity

Today -

Standard Definition MPEG2 Broadcast Limited HDTV programming VOD Personal PVR (Time shift TV)

Around the Corner -

Standard Definition MPEG4 Broadcast Broad HDTV programming – MPEG4 TV on Demand Network Time shifted broadcast Interactive TV programming MMS device to device video

““Push Based Content Programming”Push Based Content Programming”

““Pull Based Content Programming”Pull Based Content Programming”

IP EnabledIP Enabled

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15 million households will be accessing IPTV services by the end of 2007 Global revenues from the sector will exceed $7.5 billion in 2007

0

5

10

15

20

25

30

35

Mil

lio

ns

2002 2003 2004 2005 2006 2007

Worldwide

U.S.

Forecasted Households Accessing IPTV

Sources: Datamonitor (Global); Infonetics (U.S.)

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IPTV Market Set to Explode

0

2

4

6

8

10

12

14

16

18

20

2003 2004 2005 2006 2007 2008

IP STBS

Gateways

Millions

Source: Strategic Analytics Global IPTV Forecast (2003), Cahner’s In-Stat MDR

Worldwide Market: IPTV Set Top Devices

• Low Cost IP STB’s (Asia)• High End IP STB’s (RBOC)• Residential Gateways (multiple TV’s)• Telco Demand

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About Set Top Boxes

Only 20% of U.S. cable customers have STB’s today Most consumers not familiar Costly for initial boxes and replacements

$350

$300

$200

$150

$100

2001 2002 2003 2004 2005 2006Predicted price for standard

Definition basic IP STB (MPEG2)

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The Technology is HERE!!!

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5 Ingredients for Triple Play Success

Copper

video

Data

Voice

videovideo

IP

Fiber: Loop Fiber FTTc to FTTp

ADSL2+: Today technology Copper re-use

Pure Packet” Head end Internet Encoder to access Cost + integration

IGMP: Imbedded in access Distributed

In-Home Lower CPE costs Less wiring Easy installation

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Pure Packet Network - Middleware

Middleware

Set Top Box

Ported to API on STB

Operating System

Ported to API on STB

Operating System

Integrated to

Middleware

Conditional Access

System

VOD - PVRIntegrated to

Middleware

Considerations Thick or thin client Memory requirements Processing needs Box features Vs. middleware applications 3rd party vendors/applications supported

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What you should know about IGMP

IGMP was not originally intended for video/channel changing• For data Internet multicast• UDP static state: No means of authentication

IGMP standard requires a number of compromises Not all IGMP is implemented the same: therefore performance varies

• Full implementation IGMPv2 with DIM-PM (Routers)• Access IGMPv2 management with IGMP proxy• Access ‘pass-through’ with IGMP Snooping

IGMP involves no security for content• Does not identify or care what device sends a join

IGMP joins and leaves frequently get out of balance (dropped/overflows)• No automatic method in IGMP standard to “clean up” multicast

IGMP is to video what Dial Tone is to POTS

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MPEG2 and ADSL2+ Opportunities

ADSL2+

3.8 Mb/s

2.0 Mb/s

128 Kb/s

4.0 Mb/s

3.5 Mb/sSD Video

Data

VoIP

•14 Mb/s to 9 K/ft.•Current state of Technology•13.4 Mb/s bandwidth used•.6 Mb/s IP/ATM line overhead

ADSL2+Pair

Bonded

12.9 Mb/s

2.0 Mb/s

128 Kb/s

4.0 Mb/s

3.8Mb/s

SD Video

Data

VoIP

HD VideoMPEG2•26 Mb/s to 9 K/ft.

•2005 state of Technology•24.5 Mb/s bandwidth used•1.55 Mb/s overhead bandwidth

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MPEG4 and ADSL2+ Opportunities

ADSL2+MPEG4

1.6 Mb/s

2.0 Mb/s

128 Kb/s

1.5 Mb/s

1.4 Mb/sSD Video

Data

VoIP

•7.0 Mb/s to 13 K/ft.•Extending ADSL2+ reach•6.6 Mb/s bandwidth used•.4 Mb/s overhead bandwidth

ADSL2+

7.5 Mb/s

2.0 Mb/s

128 Kb/s

1.5 Mb/sSD Video

Data

VoIP

HD Video•14 Mb/s to 9 K/ft.•2005 state of Technology•12.9 Mb/s bandwidth used•1.1 Mb/s overhead bandwidth 1.8Mb/s

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STB Solutions

Do you want this?

RouterADSLModem

Ethernet

ATA

SubscriberLoop

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Zhone Residential Gateway – IPTV, Triple Play

All in one Solution

Complete CO to CPE solution

Uses existing home wiring

Eliminates Set-Top Boxes

• Supports 100Mbps of internet access

• Offers up to 4 phone lines

Supports FTTH and DSL

Outdoor or Indoor Deployment

ZRG 5xx Outdoor Unit

ZRG Indoor unit

Enable Triple Play Over Copper or Fiber

ZRG Outdoor unit

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Zhone Residential Gateways

Lowers the cost of deployment – No truck rollLowers the Cost of Operation – One point of entry to the Customer Premises

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Thank You