Mobile and Broadband Contents and IPTV IP Transformation Eshwar Pittampalli, Ph.D., P.E. July 15, 2008

Mobile and Broadband Contentsand IPTVIP Transformation

Eshwar Pittampalli, Ph.D., P.E.

July 15, 2008

Outline

1. Introduction

2. Service and Business Drivers

3. IP Transformation Considerations

4. Raising the Top Line

5. What Makes the Difference?

6. Conclusion

3 | IP Transformation | July 2008All Rights Reserved © Alcatel-Lucent 2008 —

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Transformation:Beyond business as usual

“IP transformation”

= “IP” + “Transformation”


CMO2913080701

Transformation:Beyond business as usual

“IP transformation”

= “IP” + “Transformation”

Service and Business Drivers2


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Service drivers: Anywhere, any device, any service,

Single IP network for all access methods and applications

Wide variety of linkages between services and terminals

VoD on mobile devices

Video telephony via computers

Internet access, telephony and IM via TV sets

Gaming on everythingValue of linkage between services and

networkinfrastructure remains

End-to-end QoS per service type

Close coupling between service delivery and content storage


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Technology enablers

IP everywhere

Small, low-cost consumer devices support advanced IP functions

Switches and routers in access and aggregation network support session-based QoS — under control of policy management

Access nodes are becoming (and must be) increasingly intelligent

Wireline access nodes support intelligent video handling for IPTV

Wireless base stations support radio scheduling, encryption, header compression and IP QoS awareness

Application nodes are becoming (and must be) increasingly access independent

IMS for fixed and mobile

Multi-rate live and VoD video coding


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Service drivers and technology enablers lead to IP networks

Any where, any service on any

device

Any where, any service on any

device

IP-aware access nodes

IP-aware access nodes

Application nodes becoming

access independent

Application nodes becoming

access independent

IP networks will have:

Aggregation network supporting multiple access technology - both user and access aware

Minimized number of nodes to improve latency (VoIP, gaming…)

Policy-driven QoS enforcement, activated based on user location, or device choice


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All-IP requires a considerable investment to ensure long term business sustainability — without all-IP carriers business is at substantial risk

Revenue and spend: baseline vs. all-IP

The target architecture of the fixed network operator is composed of a common service layer and a core network connected via broadband access to the client site

Revenue increase is mainly driven by broadband subscriptions and value-added services (e.g. IPTV)

All-IP OPEX increases due to the higher efforts for broadband services — all-IP OPEX per revenue decrease compared to the baseline

All-IP CAPEX substantiates over 7 years — then it is assumed to fall back to baseline CAPEX

All-IP revenue

Baseline rev.

All-IP OPEX

Baseline OPEX

All-IP CAPEX

Baseline CAPEX

Higher revenues

Slightly higherOPEX

Heavy initial investment

Revenue and spend: baseline vs. all-IP

Example — top line


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All-IP requires a considerable investment to ensure long term business sustainability — without all-IP carriers business is at substantial risk

Resulting cash flow analysis

The baseline will drop on zero or lower cash flow putting carriers at substantial risk

The all-IP cash flow becomes largely positive due to highly favourable revenue – cost relation

The all-IP investment is significant and has to be aggressively put through which represents the basic business risk

Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14

Baseline

All-IP

CLIENT EXAMPLEILLUSTRATIVE

Resulting Cash Flow

Example — top line

3IP Transformation Considerations


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IP transformation occurs at multiple layers of the technology system

Mobile video

SDP/SDE

IMS

IN/AIN telephonyapplications

Gateway MSC

Fixed mobile convergence

IP Core / R4

Backhaul

High-speed aaccess

IPTV

SDP/SDE

IMS

Voice

IN and telephony applications

Legacy data services

CL5/CL4

Core

High-speed access

Focus for wireless

operators

Focus for wireline

operators

Technology system

Applications

Contentservices

VideoData

Voice

PSTN

Call/session control

Internet

Applicationlayer

IP/MPLScoreIP multiservice

edge

Sessioncontrollayer

Optical transportDWDM

3G mobile

SONET/SDH ULH

Access networks Datacenter

EnterpriseDSLAMOLT

CMTSDSLAMOLT

CMTS

Consumer

Media andendpointlayer

Accesslayer


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Transformation program models: Examples of big bang vs. incremental vs. mobile

Technology Program

Access VDSL and FTTN

Core IP/MPLS

Consumer voice NGN voice now >

IMS

Business voiceIP Centrex (Broadsoft)

CL5Subs-driven migration

CL4 Long term

IN and telephony apps

Still working portfolio

Legacy data services

Still working portfolio

IMS Long term

SDP/SDEPartial deployment

now

IPTV In progress

Carrier 1 – Big bang

Technology Program

Access HSDPA in progress

Core IP/MPLS

Distributed Rf Already deployed

FMC Post IMS deployment

CL4/Tandem No plans

IN/AIN Long term

IMS In Trial

SDP/SDE In planning

Mobile video Evaluating

Carrier 2 – Incremental

Carrier 3 – Mobile

Technology Program

Access FTTH

Core IP/MPLS

Consumer voice VoIP

Business voice IP Centrex

CL5 Future

CL4 Future

IN and telephony apps

Future

Legacy Data Services

Future

IMS Long term

SDP/SDE In development

IPTV In progress

Raising the Top Line4


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Unlock the value of your intangible assetsBlending the best attributes of all domains

Telephony domain QoS Trust Reliability Mobility

Content management High-

bandwidthcontent

Brokering

Web domain Advertising Fulfillment UGC (social networking)

IT domain Simplicity Reuse Operations

agility m-

Commerce

Cross-domain services

IP transformation business models


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Tactical moves and long-term strategy AT&T is implementing a common architecture for real-time services (CARTS)

Roadmap:2007 2008 and BeyondAT&T video share: one-way video streaming (live or recorded) with simultaneous audioUtilizes IMS to initiate the video session during a voice call

Continue building new IMS-enabled services for consumer, wireless and enterprise markets

IMS-enabled U-VerseSM Voice Managed VoIP Service Complete evolution of wireline and wireless networks to CARTS unified network

VoIP IMS-enabled services and applications for enterprise

Snapshot of possible future services:Consumer convergence applicationsVideo services and sharingSocial networkingMusicLocation-based service enablerTV - voicemail, talking caller ID, wireless Caller ID

Source: AT&T website Jan 2008

North American example — top line

AT&T is pursuing a “true” three-screen strategyStock performance has seen a 57% increase since 2004 when U-Verse was first

announced


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Focus on investing in growth services

Broadband share in CAPEX mix

27%64%

Success at several service providers confirms level of improvement possible

Streamlining processes and IT systems

Number of OSS/BSS systems

1252

~50

Simplifying the product portfolio and the

‘customer experience’

Products in portfolio

~100~50

Source: service providers reports and analyst presentations

Integration of networks

to allow cost synergies

$1.1B>$3B

Cost synergies from integration and transformation

>$5B

Optimization of the network and operations

Cumulative OPEX savings

€150M€450M

€850M

2011200620072006 2008 20072005 2009

2005200020062005

TelefonicaBell Canada

TelstraKPNAT&T

What Makes the Difference? Experience, Experienceand Experience5


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Ability to optimize cost structures for legacy and NGN networks with network support and operations practices

Designing and implementing flexible IP networks

Service delivery environment expertise — applying network expertise to the IT domain

Managing external expectations and

relationships

IP transformation methodology detailing the end-to-end process

…the most experience, proven methods, cross-domain expertise

Field-proven experience in holistically managing cross-domain interdependencies

StakeholderengagementStakeholderengagement

ServicestransformationServicestransformation

Network transformation

Network transformation

Business transformation

Business transformation

Program management

1

4

3

2


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IPTCs offer enhanced expertiseMultivendor integration and transformation projects worldwide

TNZ - Juniper, Broadsoft, AXIOM, Micromuse, Motive, Cramer, Genesys, … Telstra – Tellabs, Juniper, Convedia, ACME, Cisco, Cramer, MicroMuse, Clarify, …

KPN - Juniper, Cisco, Cramer, Remedy, Siemens, Ericsson, Broadsoft, … Wind - Cisco, Microsoft, Convedia, Sylantro, Harmonics, Thomson, Syndesis, … BT - Motorola, Ericsson, Inventel, Colubris, Microsoft, …

AT&T – Microsoft, 2wire, ScientificAtlanta, HP, IBM, Cisco, Amdocs, …

Murray Hill,New Jersey &Plano, Texas

Antwerp,Belgium

Singapore

Partnering for change

Alcatel-LucentIPTC

ICBrazil

Conclusion6


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Key messages

Service providers are moving from telephony domain to cross-domains based on IP (SP to FSP)*

IP transformation results in converged service delivery environment that separates network access from services access

Service providers have to move into content partner management, security and context aware service environment

Short-term complexity versus long-term simplicity

Maintain both legacy and IP networks

Adopt third party innovations

Reposition as content and solution provider instead of telephony carrier

* Service providers to full service providers

Thank you!

Documents

Mobile and Broadband Contents and IPTV IP Transformation Eshwar Pittampalli, Ph.D., P.E. July 15, 2008