beyond the demarc

1 © 2012 Calix – Proprietary and Confidential

The information contained in this presentation is not a commitment, promise, or legal obligationto deliver any material, code, or functionality. The development, release, and timing of any features or functionality described for our products remain at our sole discretion.

Beyond The Demarc

The Revenue Opportunities Inside the Digital Home



Evolution of the “Internet Service”


Historical Internet Use

ApplicationsEmail, banking, print news,

travel planning, file downloads…Sporadic use of Internet

connection

Service expectations“Ends at the demarc”“It just works”… on the computerHighly oversubscribed“All you can eat” data model

Wasn’t that a simpler world?Wasn’t that a simpler world?


Compass Software Business

ObjectivesComplement Calix systems offering with software products software products that

help our customers become successful market competitors focused on:

Being the enterprise IT service providerenterprise IT service provider to their customersDelivering outstanding customer servicecustomer service

Bring to market software applications that…Identify new SERVICESERVICE opportunitiesOptimize NETWORKNETWORK resourcesIncrease SUBSCRIBERSUBSCRIBER satisfactionReduce COSTCOST of delivering services

Product deliveryBusiness model: Software as a ServiceSoftware as a ServiceProduct delivery strategy: Cloud HostingCloud Hosting


Compass Flow Analyzer

Flow AnalyzerCollection of aggregated consumption data

Per Subscriber - Per Application - Over time

Presentation of consumption dataStandard, Open interfaces to Billing System

Independent of the access network equipmentField proven solution

80 CSPs monitoring more than 500,000 subscribers

Calix Data Center Service ProviderNOC

AccessNetwork

BillingSystem


The 20/2 rule of Internet usage

Unconventional Wisdom… Insight #1

0%

20%

40%

60%

80%

100%

120%

140%

Top 2%

Bottom 98

20% of traffic from 2% of subscribers

Average data downloaded per month

Top 2%: More than 100 GB“Bottom” 98%: Less than 10 GB

(*) Information is based on actual data collected using Compass Flow Analyzer in access networks from a variety of North American CSPs

> 100 GB per month

<10 GB per month


The Video Dominance

Unconventional Wisdom… Insight #2

Video Streaming: 45%

Video streaming represents 45% of all downstream data

Less than 10% of subscribers use video streaming applications

(*) Information is based on actual data collected using Compass Flow Analyzer in access networks from a variety of North American CSPs


What does this mean?

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

HD Movie SD Movie Gaming hour Photo Song Email

(GB) How much is 10 GB of data?Emails: 500,000Songs: 4,000Pictures: 2,000Gaming hours: 850SD movies: 6HD Movies: 3


What does this mean?

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

Top 2%

Bottom 98%

If video adoption doubles…Network capacity requirements DOUBLEDOUBLEEquivalent to 3 HD movies per monthThat’s still less than 20% of subscribers

We are only a few movies away from doubling network capacity!!We are only a few movies away from doubling network capacity!!


Today’s Internet Use

ApplicationsVideo streaming, conferencing,

telecommuting, gaming…Sustained use of Internet

connection


Today’s Internet Use

ApplicationsVideo streaming, conferencing,

telecommuting, gaming…Sustained use of Internet

connection

Service expectations“Starts on the device”“It just works”…on all devices

Computers, tablets, smart phones, game consoles, TVs…

App quality of experienceGaming, VPN, streaming…

… Oh, yes, and download speed

““All you can eat” service models do not meet subscribers’ expectationsAll you can eat” service models do not meet subscribers’ expectations



The Service Provider Opportunity



Change nothing…Unsustainable network costsInability to serve subscribers

needsInability to compete

Enhance your standing byUnderstanding what your

subscribers needDesigning services with tight

market fitTargeting the right services to

the right subscribersDelivering outstanding customer

service

Doing this right will require understanding your subscribers behaviorsDoing this right will require understanding your subscribers behaviors


Market Need: Internet Access

Understand drivers of Internet usageMost popular applications

How many subscribers use each application?

Application requirementsSpeed (bits per second)Usage (bytes)

Traffic pattern (*)Most active users (*)Most popular applications (*)

(*) Graphics generated using Compass Flow Analyzer in access networks from a variety of North American CSPs


Service Definition: Internet Access (I)

Develop acceptable use policies

Prevent use of the network for illegal purposes

Rationalize unintended (but abusive) bandwidth consumption behaviors

ExamplesMeter data usage for all subscribersBenchmark “acceptable” data usage

thresholdsDefine “all you can eat” data caps

Well above the average user

Define fee structure for data overages

0%

20%

40%

60%

80%

100%

120%

140%

Top 2%

Bottom 98






Examples:Meter data usage for all subscribersBenchmark “acceptable” data usage









Examples:Meter data usage for all subscribersBenchmark “acceptable” data usage




…More than 98 percent of high speed Internet users will not experience any changes…

…You will be charged $10 for every incremental 50 GB of usage beyond your plan…


Service Definition: Internet Access (2)

Application aware service attributesFavor specific application types

No content discrimination!!

Recognizable marketing attributesAnd, of course, speed

Consider data usage caps in service definition

ExamplesTelecommuter

High data usage capsHigh upstream speeds, low contentionScheduled high speed backup off loads

Video streamerHigh download speeds, low contentionHigh data usage caps

GamerModerate usage capsLow latency

0%

20%

40%

60%

80%

100%

120%

140%

Top 2%

Bottom 98


Overall Network Data - Conventional Wisdom

Some more data…

High speed service = High data consumptionMajority of top consumers also have higher speed services

78%

21.0%10.8% 3.1%

13.6%

34.0%

26.7%

14.5%

7.9%

44.9%62.6%

82.4%

0%10%20%30%40%50%60%70%80%90%

100%

Less than 100 GB Between 100 and 150 GB Between 150 GB and 250 GB More than 250 GB

More than 6 MbpsBetween 3 Mbps and 6 MbpsLess than 3 Mbps


Overall Network Data – Unconventional Wisdom

Some more data…

Same data consumption regardless of speedOverall DS GB consumption does not vary with DS speed

So what drives data consumption?

8

117

179

360

27

120

187

304

71

121

187

338

0

50

100

150

200

250

300

350

400

Less than 100 GB Between 100 and 150 GB Between 150 GB and 250 GB More than 250 GB

Less than 3 MbpsBetween 3 Mbps and 6 MbpsMore than 6 Mbps


OTT Video Subscriber Behavior

Subscriber Behavior Patterns

Subscriber 1Max rate: ~ 5 MbpsDominant use: OTT VideoData consumption: ~ 120GB

Subscriber 2Max rate: ~ 1.4 MbpsDominant use: OTT VideoData consumption: ~ 120GB

Are they having the same quality of experience?

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DS Speed (Mbps)US Speed (Mbps)

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Telecommuter Behavior

Subscriber Behavior Patterns

Subscriber 1Dominant use: VPNSustained US rate

Subscriber 2Dominant use: VPNSustained US rateDaily uploads at midnight

Are they having the right quality of experience?

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2

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DS Speed (Mbps)


Address Subscribers Needs

Behavior Based Services

Video Streamer serviceHigher DS speed serviceNo data capAdditional monthly charge

Telecommuter serviceHigher US speed serviceLive view into bandwdithw

consumptionAccess to premier support

systemAdditional monthly charge

1

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1

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DS Speed (Mbps)

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Behavior Based ServicesHarness The Power of the Access Network

Know your customerDevelop real time subscriber 360-dashboard

Account informationMonthly data consumption – (hourly breakdown)DS/US weekly rate charts (hourly breakdown)Dominant application useRelation of devices in the home

Make dashboard readily availableUse every engagement to sell the right service to each customer

Drive customer loyaltyOffer services that meet their needsMake all relevant information available to subscriberUse live and historical data to quickly troubleshoot service issues


Focused Marketing

Increase ARPU based on tight service market fitCorrelate behavior with actual service package

Speed – Application – Data Consumption

Identify customers with poor service experienceReach limits multiple times a month

Market and sell right services to right customers

0%

2%

4%

6%

8%

10%

12%

OTT CDN Gaming Google VPN Facebook Bit Torrent

% of Active Users

% of Active Users

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Deliver Outstanding Customer Service

Software tools: Flow AnalyzerComprehensive views of network utilization

Endpoints, services, ports, interfacesNon-intrusive: no hardware/software probes

Live data analysis and DVR capabilitiesAutomatic profiling of “normal” network activityAdvanced report generationSubscriber facing network monitoringIndependent of the access network equipment


Deliver Outstanding Customer Service

Instant visibility into subscriber activity

Comprehensive view of application activity on the network

Real-time visibility… to the second

Removes guesswork from problem solving

See the problems when they are occurring

Real time or scheduled recordings

File Sharing (*) Unsecured WiFi (*) Email Spammer (*)

Bit Torrent Multiple video streaming

Constantemail activity

(*) Graphics generated using Compass Flow Analyzer in access networks from a variety of North American CSPs



Summary


Summary

Subscribers’ use of the Internet is very sophisticatedMany applications and devicesVideo is the dominant applicationUnprecedented stress on network capacity

“All you can eat” services do not meet subscribers’ needsHigh quality of experience is expected for specific applicationsSpeed is no longer the only important attribute

You must know your customersSoftware applications harness all data from the access network

Collect, analyze, present

Develop behavior based servicesAddress subscribers needs

OTT video consumers - Remote workers - Online gamers

Deliver outstanding customer serviceLeverage software applications

beyond the demarc

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