Welcome and Industry Perspective

“The Broadband Rorschach Test”

Sandy Teger and Dave Waks

Copyright © 2001

System Dynamics Inc. brought to you by

pulver.com

Broadband Home Europe 2001

Slide 2

Welcome to BBH Europe Summit

•Thank you for coming!

•Broadband Home is global–Broadband Home Report subscribers

•85 countries

–Conference community•14 countries represented

•“Breaking Broadband Barriers”–Geographies: Learn from other’s successful business models

–Industries: Break down industry “silos” - all part of a common ecosystem

thebroadbandhome.com/report

Slide 3

For Newcomers

•BBH conference is –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–Connecting the pieces and the people

Slide 4

About Us

•Sandy– Early career in analog and digital programming– Product management for innovative telecomm products– Almost 20 years with AT&T, ending as strategy director for multimedia and video conferencing

•Dave– Early career in computer software and hardware– Developed many systems for telephony measurement and control

– Network architect and founder of Prodigy Services Company, directed R&D 1984-1994

•Together as System Dynamics– Consulting to broadband vendors, service providers– Technology, marketing, business analysis and planning– Projects have included cable modem rollout, VOD, interactive TV, digital cable, HFC and IP telephony

Slide 5

The “Broadband Home” Initiative•Joint effort of System Dynamics and pulver.com

– Web site– The Broadband Home Report– Conferences

•Broadband Home Conferences– Silicon Valley (twice), Miami, Amsterdam– >500 people, ~250 companies, 25 countries– All industry sectors– Industry perspectives and panel discussions– Visions, requirements, issues

•Future conferences– BBH Fall 2001: October 1-3, San Jose, California– BBH Spring 2002: March, California– BBH Europe Summit 2002: May

www.TheBroadbandHome.com

Slide 6

Goals of the conference

•Understand what’s happening –Today / tomorrow–In various markets–Impact on the ecosystem

•Surface issues to be worked on –Technical–Business development–Public policy

•Encourage collaboration across industry sectors

•Learn from each other–Ask us for introductions

Slide 7

Conference Themes

•Broadband is good for people and for countries

•Participants form a connected ecosystem–Global: technology–Local: content

•Specifics differ by market – the “Rorschach test”

•We’ll grow the pie faster by working together–It’s not a zero-sum game–It hurts us all if products and services don’t work together and disappoint the customer

Slide 8

Broadband: Good for People/Countries

•Logical progression of the Internet– All forms of content - including audio and video– Continuously available

•Potential to improve people’s lives– Access to entertainment, information, education, health care -- all from home

– Increased family connectedness

•Reduces geographical barriers

•Promotes equality and democracy

•Countries, areas and people without it will be economically disadvantaged

Slide 9

Broadband Becoming Mainstream

•Access penetration over 10% in some countries, over 5% in many –Korea–Hong Kong–Sweden–Canada–US–...

•Past inflection point of S-curve

Slide 10

“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

Slide 11

The Emerging Broadband Home

ISPServices

Cable ModemDSLFixed WirelessFiberSatellitePowerlineDigital Terrestrial

BroadbandAccess

HomeGateway

Slide 12

Vision of Broadband Evolution

•Convergence on broadband access

•Convergence on “IP for everything” –Voice/Data/Video over IP

•Heterogeneity in implementation–Access networks: Cable, DSL, wireless, satellite, fiber, powerline

–Home networking: Wired, wireless–Devices: PCs, TVs, phones, game consoles, e-books, Web tablets, other new appliances

–Functional distribution between network and home

•Different mix and path as appropriate to each country

Slide 13

Rorschach Test - Ink Blots

Slide 14

“Broadband” Rorschach Test

•Psychology –Analyze personality based on interpretation of abstract designs

•“Broadband”–Widely different interpretations of its meaning depending on culture, investment climate and public policy

Slide 15

“Broadband” Device

US

UK

Finland

Slide 16

“Broadband” Speed and Cost

•North America: “50 times faster than dial-up”–PC with cable modem or DSL–1.5 Mbps downstream, at least 256Kbps upstream

–$35 - $50 per month, flat rate

•Sweden: “Unlimited speed”–PC with Ethernet over fiber/copper–10 Mbps symmetric–$25 per month flat rate

•United Kingdom: “Mid-band for PCs”–DSL at 500 Kbps–$55/month (single PC), $140 for multiple PCs

Slide 17

“Broadband” Customer Experience

•“I’ll never go back to dial-up”

•“I wish I could see consistent performance“

•“I waited four months and it didn’t deliver what it promised”

•“It’s too pricey for what I get”

•“It’s very fast and affordable”

•“It’s only a little better than ISDN”

•“You’ll take it away only over my dead body!”

Slide 18

Implications

•Can’t assume “broadband” means the same thing to everyone

•“Broadband” isn’t very “broad” in lots of places

•Public policy can have a significant influence on broadband deployment

•Worth learning from the business models of others...

•…but business models may not cross borders

Slide 19

Different Visions or Different Paths?

•Differing “centricities”–PC centric–TV centric –Mobile wireless/cellphone centric –Internet appliance centric

•Is our vision only applicable to countries with high PC penetration?

•Do we differ on the endpoint or only on the path?

Slide 20

Connected Ecosystem

Applications and services

Supporting technologies:hardware and software

AccessContent Home

Slide 21

Access Enables Everything

•Everything else depends on access availability, performance, pricing and penetration

•Original content and applications have to wait until there are enough broadband users– Until then, it’s new uses of existing content or delivering “the same thing faster”

•Access providers have more to gain than lose by finding areas of cooperation– Enable innovation in the home– Enable original content– Enable new revenue from services providers

•Public policy makers can influence access

Slide 22

A Few Realities

•Cable operators and telcos tend to form cozy duopolies– Dominant broadband access providers in most countries– Speed and pricing generally comparable

•Both cable and DSL capable of megabits– Typically asymmetric today, faster downstream– Good fit to typical usage patterns

•Other competitive technologies – Fixed wireless– Power line– Fiber to or near the home

•Full vision needs fiber/copper solution with small node size– Today’s cable and DSL fall short

Slide 23

Realities (2)

•While flat-rate pricing generally prevails, costs are related to usage– Single user can use more than she pays for– Heavy upstream user is worst

•Capping costs by capping speed limits services and undercuts the promise – Better to offer tiered services with guarantees– Provide “best efforts” on lowest tier

•Cable costs less than DSL– Optimized for high penetration– Farther along in standardization and self-install

Slide 24

Public Policies To Fulfill Vision

•Favor full realization of megabit broadband– Technologies all starting to come on stream– Investment in applications and content depends on what consumers can get at a reasonable price

•Encourage disaggregated model– As with the Internet, applications and content flourish when there are minimal technical and economic barriers between the provider and the consumer

– Companies which own physical access should make bandwidth available to others at a fair price

– Access providers should not be only ISP or content aggregator

– Customer purchase of equipment encourages diversity and choice

Slide 25

Public Policies (2)

•Beware of premature or unrealistic unbundling models– Service provider may need to provide content and conduit early in life cycle to “jump start” market

– US CLEC/DLEC experience

•Encourage true access competition– May be only route to widespread fiber/copper– Probably requires viable alternatives to incumbent monopolies

•Favor broad access availability– Including rural and economically disadvantaged

Slide 26

Conference Logistics

•Schedule–Industry perspectives–Roundtable discussions–Schedule and speaker changes

•“Internet lounge” in Orion–Email, Web access

•Breakfast, lunch and breaks - Network!!–Stargate

•Cellphones and pagers–Please set to off or vibrate

Slide 27

Conference Logistics (ctd)

•Conference presentations –During conference: Ask Keith or Darwin–After conference: slides.pulver.com–Speakers: please provide them!–pulver.com staff can help you

•M-TEC WIRELESS demos - Next room–During breaks and lunch–Starting Monday afternoon

•Community list

•Feedback Please!–Dave, Sandy, pulver.com staff–Questionnaires

Slide 28

All-Conference Party

•Monday night–Tulip fields at Frans Roozen–Reception and dinner–Great place to meet people

•Sponsored by pulver.com

•Buses operating from hotel –Leave 6:30 –Return 10:00 and 11:00

Slide 29

Hope We’ll See You Again Soon!

•BBH Fall 2001–San Jose, California–October 1-3

•BBH Spring 2002

•BBH Europe Summit 2002

•Broadband sessions at VON–Fall VON - Atlanta–VON Asia – Hong Kong

•For more details: www.theBroadbandHome.com

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.