Bridges You To Tomorrows Technology.Technology and Service Offering for VoIP Serice

Mega TrendConvergence of voice, data, and video using IPWide availability of the InternetLow cost of the InternetUnified protocols and transportE-Commerce creates new business value (B2B, B2C, C2c)Emergence of information and web appliancesVoice-enable

Bridges To Tomorrow Technology Copyright 2000

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Converging on IP as Common Currency

IP

IP

High speed

High-speed

services

services

WidebandServices

Personalservices

VoiceVoice over IPCircuit switching to packet switchingBroadband data

DataInternet accessIntranet access/ERPE-mailE-commerce

VideoVideo entertainmentBroadband data

data Internet , , . , ERP(enterprise Resources Planning), E-mail, (E-Commerce) digital data, , circuit switching packet switching , video entertainment . IP base .. IP (Internet protocol) .

Bridges To Tomorrow Technology Copyright 2000

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Rising Demand in ConnectivityInternet Users Worldwide

100

1,000

10,000

100,000

1,000,000

10,000,000

100,000,000

1,000,000,000

1980

1985

1990

1995

2000

2005

2010

Internet Users

The Internet will be used to communicate: people to people people to devices, and devices to devices

Source: Network Wizards,Motorola, Microsoft, The State of the Net

Bridges To Tomorrows Technology Copyright 2000

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Why We Care Rapid Internet Adoption

Source - Morgan Stanley Technology Research

Chart2

5

10

13

14

38

Years to 50 Million Subscribers

Years

Years to 50 Million Subscribers - USA

Sheet1

10.715.72331.745.159.373.8europe

11.915.720.724.530.23744.9Asia/PacInternet

38.751.766.780.292.4104.7123.3NoramOnline users

2.32.52.93.444.75.5other

63.685.7113.3139.7171.6205.7247.6World

Consumer Internet revenue by type 1997 and 2002

1014Adv

12direct marketing

2868online shopping

42content fees

5714access fees

15.121.527.53234.838.944.4dial up

000.20.61.72.53.4adsl

00.20.50.91.410.7isdnOnline households by access technology

00.10.20.40.81.21.8Sat/wirelessUS

00.10.312.24.16.7cable modem

15.221.828.734.940.847.757total

14.624.535.848.562.478.295.8117Total world online households

2.33.44.96.58.31013.316.4asia/pacrim

2.33.75.88.612.316.529.737.5europeonline households by region

9.615.422.328.734.638.250.660.5north america1995 - 2002

51515651997Online household distribution worldwide 1997 and 2002

32515572002

0.5312.60.0650.1140.0251996Asia/Pacific Online households millions

311.60.2821.10.3232002

3.84.44.74.643.42.9ISPs/AOL

0.550.91.52.22.92.92.7Cable Co.Online Access Revenues by Industry

0.010.030.150.420.891.41.7Telco

0.0060.080.110.20.340.470.56Other

99.598.395.891.885.381.777.9dial up

0.10.21.12.75.48.511.7Cable Modem

00.10.71.845.16ADSL

0.30.71.72.63.42.13.2ISDN

0.10.60.71.11.82.53.2Satellite/Wireless

422332203036237217361557133214.4Online Households by access speed

108591438210719883452304282310833.6/28.2and technology

03864137552081127864330923996456

1950311951220040676663Cable Modem

020202645165024533420ADSL

4015750090014001000700isdn

1013418837575012001800Satellite/Wireless

385

1410

1313

1014

538

Sheet1

0

0

0

0

0

1997

Sheet2

0

0

0

0

0

2002

Sheet3

000000

000000

000000

000000

000000

000000

000000

Dial Up

ADSL

ISDN

Satellite/Wireless

Cable Modem

Total Households

Millions of Households

Online Households by Access Technology - US

0

0

0

0

0

0

0

0

Total World Online Households

Millions of Households

000

000

000

000

000

000

000

000

Asia/Pacific Rim

Europe

North America

Millions of Households

Online Households by Region

0

0

0

0

1997

0

0

0

0

2002

00000

00000

Australia/NZ

Japan

Hong Kong

South Korea

Taiwan

Millions of Households

Asia/Pacific Rim Online Households

0000

0000

0000

0000

0000

0000

0000

ISPs/AOL

Cable Companies

Telephone

Other

$ Billions

Online Access Revenues by Industry

00000

00000

00000

00000

00000

00000

00000

Europe

Asia/Pacific Rim

North America

Other

World Total

Millions

World Internet Online Users by region

00000

00000

00000

00000

00000

00000

00000

Dial Up

Cable Modem

ADSL

ISDN

Satellite/Wireless

Percent

Internet Access Distribution

0000000

0000000

0000000

0000000

0000000

0000000

0000000

14.4

33.6/28.8

56

Cable Modem

ADSL

ISDN

Sattelite/Wireless

ooo's Households

Online Households by Access Speed

0

0

0

0

0

Years to 50 Million Subscribers

Years

Converging on IP IPIPHigh-speedservicesPersonalservicesVoiceVoice over IPCircuit switching to packet switchingBroadband dataDataInternet accessIntranet access/ERPE-mailE-commerce

VideoVideo entertainmentBroadband dataWideband Services

These Trends Are Coming TogetherEvolution of technologies (VoIP, ASR, TTS, VXML, SIP)Using voice to request info from the web (vertical & horizontal)Pervasive accessMore natural human interfaceCONVERGENCEImportance of MobilityOne billion people, or one out of every six people on Earth will own mobile phones by 2003 (Wall Street Journal)Breadth of Internet ContentPervasiveness of the Telephone2 billion telephone users in the next three years (Dataquest)350 million Internet users worldwide, 1 billion in 2004 (The Economist)

Services: Content & Devices Drive CommunicationsContentWebCorporatePersonalCommunicationsReal time Voice and DataNon Real time Voice and DataDevicesPCPDAIADCell PhoneNew DevicesService Convergence

- Applications - Voice Telephony CTI, IVR Unified Messaging Streaming A/V Call Center MulticastPacketised VoiceOver ATMOver Frame RelayThe InternetIntranetsExtranetsIP-Based NetworksIP-Based NetworksPhone to PhonePC to PhonePC to PCPacketised VoicesOver IP

Voice over IP NetworksNetMeetingorOther H.323 ClientStandardTelephoneStandardTelephoneFaxIPIPFrame / ATMCore NetworkVoIPGatewaysVoIP GatewayVoIP GatewayFaxSoftSwitchSS7

H.323 Gatekeeper

Why Offer VoIP - Market Drivers Regulatory cost avoidance Lower start-up and operating costs Differentiated services Improved compression techniques Improved silence suppression Enhanced prioritization schemes Lower cost voice service MultiMedia services SimplificationEnd-user DemandsCarrier DemandsTechnology

EarlyAdoptersOpportunistAdvancedServices1995-19972000-20042004+Infrastructure1998-1999Voice over ...Interoperability, ScalabilityLimited Scope,Toll ArbitrageAdvancedServiceDeploymentInfrastructureBuildout Start Today

VOIP ForecastSource: IDC

LBR Vocoders

64321685.3

G.711

G.726

G.728

G.729AB

G.723

Voice CODEC

Bandwidth

Channel Density

25612832

51225664

76838496

G.711

G.726

G.729

Voice Channels

Downstream/Upstream Bandwidth Required

VOIP minutes

0.33

1.16

7.19

15.58

33.19

60

VOIP Minutes

YEAR

Billions of Minutes

VOIP Minutes for Business Users

data

G.71164

G.72632

G.72816

G.729AB8

G.7235.3

G.711256512768

G.726128256384

G.729326496

4812

VOIP Minutes

199920002001200220032004

0.331.167.1915.5833.1960

Sheet2

Sheet3

Traditional Internet TelephonyBusiness-to-ConsumerConsumers and business travelers looking for cheap international phone calls

Compete in a wild west market of discount telecommunications servicesCalling cards, pre-paid cards, call back services,

Billions of MinutesPer Year

IP Telephony will drive the Open Communications MarketSource: US Bancorp Piper Jaffray, Sept 1999Market size will reach $14.7 Billion in 2003

VoIP Market Forecasting 1999 6 2003 35 210 1999: 1,600 ( 100% )2000: 2005: 20%

1998 : 182 2001 : 3,000 : 10%~25% 19970.9219982.4419996.03200013.22200131.62200260.66 2003210.69

VoIP Market EvolutionTimeConsumerEnterpriseService ProviderMicrosoftNetMeeting1996Net2PhoneDialpadPagooIP-PBXLAN TelephonyToll Bypass (long distance)ConvergenceCall Centers, CRM, Click to TalkE-commerceWebsite StickinessITSPsWholesale CarriersVoIP ClearinghousesGlobal VoIP CoverageASPsOutsourcingApplicationsVoCaltecInternetphone1995

Internet Call Waiting (ICW) Redirect on Busy Call Screening & Selection Take VoIP Call Transfer to Voice MailPersonal VoIP Phone Number Virtual Second (PSTN) Line Inbound & Outbound Calling Voice Mail Redirect on Busy to Alternate Phone Number

What Have We Learned?VoIP Evolution:Technology & Business Models are changing the market for enhanced communications

The integration of all Internet services is the killer applicationUnleashing the Killer Applications:[digital strategies for market dominance]By Larray Downes

Market & Competitive TrendsEnhanced Services are critical for carriers to increase revenue and for differentiation Carrier/operatorsInnovative, mass market capable servicesIncreased competition /market share Usage and penetration keyGoal: differentiation and lower costInternet, IP, convergenceArbitrage is a limited marketNew applications are requiredNew web/Internet services emerging

IP Telephony ChallengesQOS (Quality Of Services)StandardsQuality of voiceTo compete with PSTNInterconnectionBetween Internet Telephony companiesInteroperabilityBetween public network and InternetScalabilityTo fully compete with long distance network

QoS OptimizationPacketizationJitter BufferingPacket CompensationDelayThroughput

Echo CancellationDTMF HandlingVolume ControlQuality Implementation QoS (RSVP, DiffServ, MPLS)Signaling: DTMFSignaling: SetupVoice: InteractionVoice: IntelligibilityVoice: EchoVoice: VolumeCall QualityPacket LossJitter

ENHANCEDBASICTELEPHONYDATAVoIPWan connectivityRemote AccessUnified MessagingConferencingElectronic WhiteboardMultimediaIPVPNIPPBXManaged Application HostingFull service portfolio

Applications and Performance RequirementsNarrowbandMiddlebandBroadbandIP TelephonyStreamingAudioE-CommerceWeb PageHi- FiStreamingAudioLow QualityFull screenvideoBroadbandEnhancedMultimedia CollaborationInteractive GamesVideo ConferencingVideo PhoneVOD (MPEG2)Content/media insertionLive Multicast VideoTele-surgeryBroadbandEnabledApplicationTimeSensitivity

Not SensitiveVery SensitiveBandwidth RequirementsCommercial ApplicationPrototypesConceptual

Web to PhoneStandardsH.323/SIPMGCP/MEGACOVoice-enables Web SiteCapabilitiesClick to talkInteractive e-CommerceWeb PushCollaborative ApplicationsSharing documents ex. Escort browsingCollaborative formsReal time customer supportDecrease shopping cart abandonmentAllows advertisement

Web Talk ConvergenceBusiness ModelWeb-centricTalk ServicesFree to users

Click-to-XAudio,Video,Document/File SharingPC-to-PCPC-to-phonePhone-to-PCFax-to-emailVmail-to-emailInstant MessagingBuddy ListsWebMessagingTelephonyWebConferencingVoice-Enablement

The Intersection of the Internet &TelephonyNew DeviceWeb Content ServersIP POPsIP POPsIP NetworkVoIP Client Server ServicesPeer to Peer VoIP Services

Voice Enabling the WebEnd UsersService ProvidersNew DeviceDirectory ServersMedia StoreVoice Server Dialog Engine Text to Speech Speech Rec. Personalization TranslationApplication Servers

Many Types of Enhanced ServicesMessagingVoice messagingUnified messagingStore and forward faxFax messagingVoice/fax maileCommerce supportAuthentificationBilling /paymentPrepaid/debit callingEase of use featuresVoice dialingOne-touch call returnCall completionInternet call waitingVirtual assistantFollow me/one-numberNotification servicesIP voice centric servicesCustom on-hold ads & infoWeb/Internet voice Information servicesE-messaging, web-talkE-commerce enablersFor PSTN, IP and Converging Networks

Application ServerPlatform that allows you to mix 1 or many capabilities such as: Sessions (voice, video, other)WebPresenceInstant messagingEmailApplication development environment that mirrors web application development

The Killer App for VoIP Lives WithinThese Combined Services

Market Size:IP Telephony ServicesSource: International Data Corporation, 8/99- LD Voice-Voice-enabled ecommerce-Enhanced ServicesRevenue ($ B)WORLD WIDE IP TELEPHONY SERVICES REVENUE

Quality of VoiceDetermining factors Jitter If packets arrive with lots of jitter, delay can be increased Packet Loss More than 10 % packet loss is noticeable. Latency A delay of over 100 ms is noticeable. CODEC More compression usually offers lower quality of voice Network Factors More utilization usually means more collisions Tunable factors Adaptive echo cancellation Tone detection and generation Voice activity detection Silence suppression Forward error correction Tunable latency Dynamic jitter buffer Bad frame interpolation Less bandwidth utilization Network priority (Prioritize voice over data)

VoIP (IP-Phone 2) VoIP(IP . 2) PC, PDA , , PC 10 m PNA (2001 10 )

VoDSL ArchitectureCorporate OfficeRemote OfficeIP PhoneIntegrated Access DeviceSOHOIntegrated Access DeviceIP PhoneDSLAMVoice GatewayCorporate GatewayCorporate RouterIP PhoneIP PhoneIP Phone

Class 5ATM/IPGR303IADDSLAMData = AAL5 ABRVoDSL System

ATM/xDSLDS-3/OC-3CLEC RSCATMDS-3/OC-3 VoDSL

VoDSL (1999~2003) (1998~2003)Source: Cahners In-Stat Group

Sheet1

19992000200120022003

( )471171417474509022

(%)23952567821

( )2.461.0224.0415.8670.4

(%)24452688661

Sheet2

199819992000200120022003

5~95,5725,5985,6635,6075,5765,632

10~195,2255,2415,2635,2475,2305,283

20~497,4167,4517,4947,4537,4057,405

50~993,1923,2173,2483,2193,1853,217

21,40621,50721,63821,52621,39821,538

(%)0.50.6-0.5-0.60.7

Sheet3

Sheet1

19992000200120022003

( )471171417474509022

(%)23952567821

( )2.461.0224.0415.8670.4

(%)24452688661

Sheet2

199819992000200120022003

5~95,5725,5985,6635,6075,5765,632

10~195,2255,2415,2635,2475,2305,283

20~497,4167,4517,4947,4537,4057,405

50~993,1923,2173,2483,2193,1853,217

21,40621,50721,63821,52621,39821,538

(%)0.50.6-0.5-0.60.7

Sheet3

BroadbandConnecting Standard telephone lineADSL, SDSL, VDSL, etc.FiberWirelessfixed wirelessmobile (up to128Kbps)Cable shared bandwidth, variable ratesSatelliteTerminating Modems/Routers/IADs Cable Modems Set top Boxes Wireless Equipment Gateways (Residential, Trunk, etc)

Global Broadband Customers by Technology (1998-2007)1998 Pioneer Consulting, Cambridge, MASatellite - Projected to Have 30% Share

Chart2

00.030.570.2

0.070.071.520.69

0.260.24.242.2

0.850.658.545.32

1.541.913.729.93

2.564.5819.9915.57

410.4926.8621.45

5.9518.4834.3327.2

8.3427.644133

11.1639.6246.7838.49

LMDS

Satellite

Cable Modem

xDSL

LMDS

Satellite

Cable Modem

xDSL

Millions

Sheet1

160

140

120

100

80

60

40

20

0

1998199920002001200220032004200520062007

LMDS00.070.260.851.542.5645.958.3411.16

Satellite0.030.070.20.651.94.5810.4918.4827.6439.62

Cable Modem0.571.524.248.5413.7219.9926.8634.334146.78

xDSL0.20.692.25.329.9315.5721.4527.23338.49

Chart1

00.030.570.2

0.070.071.520.69

0.260.24.242.2

0.850.658.545.32

1.541.913.729.93

2.564.5819.9915.57

410.4926.8621.45

5.9518.4834.3327.2

8.3427.644133

11.1639.6246.7838.49

xDSL

Cable Modem

Satellite

LMDS

LMDS

Satellite

Cable Modem

xDSL

Millions

Global Broadband Access Subscribers by Technology 1998-2007

Sheet2

Sheet3

STB Plus InternetThe STB is not just at the convergence point between consumer electronics and computing, but also communications. The STB will in most cases serve three primary roles:A broadcast transmission receiverA computing complement or substituteA media device for home entertainmentKey IssuesRegulations and standardsIntegrated circuitsOptimized configurationsBroadband and interactive servicesApplicationsStreaming videoHigh definition imagesInteractive TVWeb TVMovies on demand

STB Market ForcastSource: Allied Business Intelligence, Inc

Installed Base of Digital Set-Top Boxes By RegionModerate Forecast: World, 1998 to 2004Source: Allied Business Intelligence, Inc.

Sheet1

NorthNorthRest ofRest of

TotalAmericaAmericaEuropeEuropeAsiaAsiaWorldWorld

Year(millions)(millions)(share)(millions)(share)(millions)(share)(millions)(share)

199825.917.166%5.320%1.66%1.97%

199936.621.559%10.128%2.67%2.46%

200052.027.453%16.532%5.010%3.06%

200176.235.947%26.334%9.913%4.15%

2002108.448.244%37.935%17.016%5.45%

2003146.864.744%49.133%25.918%7.15%

2004196.588.645%60.431%38.320%9.35%

CAAG40%31%50%70%31%

Sheet2

NorthNorthRest ofRest of

TotalAmericaAmericaEuropeEuropeAsiaAsiaWorldWorld

Year(millions)(millions)(share)(millions)(share)(millions)(share)(millions)(share)

199825.917.166%5.320%1.66%1.97%

199939.022.758%10.828%2.77%2.87%

200058.629.751%18.131%7.112%3.76%

200187.239.846%29.334%13.115%5.06%

2002128.155.443%44.034%21.817%7.05%

2003184.481.444%60.933%32.618%9.55%

2004252.2112.745%78.031%48.919%12.65%

CAAG46%37%57%78%37%

Sheet3

DigitalRFVideoAudioBroadcast

TerrestrialModulationCompressionCompressionHDTVBandwidth

ATSC8-VSBMPEG-2Dolby AC-3Yes6MHz

DVB-TCOFDMMPEG-2MPEG-2Yes8MHz

ISDB-TCOFDMMPEG-2Dolby AC-3Yes5.6MHz

Sheet4

TV

HouseholdsTV SetsTV Sets

Region(million)(million)Per HH

North America1403082.20

Europe2743551.30

Asia4325311.23

RoW2042251.11

Totals1,0491,420

Sheet5

TerrestrialCableSatellite

ViewingTerrestrialViewingCableViewingSatellite

TV SetsTV SetsPlatformTV SetsPlatformTV SetsPlatform

Region(millions)(millions)Share(millions)Share(millions)Share

North America3088929%18560%3411%

Europe35521159%10429%4011%

Asia53142079%9518%173%

RoW22517980%3415%125%

Totals1420900417102

Sheet6

Sheet7

Set-Top Box

STB + Telephony + Internet

Home NetworkPowerlineAccessNetworksPC NetworkingGamingConsumer ElectronicsIP TelephonyBridgesto other Home NetworksResidentialGatewayDSLT-1ISDNSatelliteCablePowerline WirelessPhonelineStructured Wiring

Service Convergence connected home

Interoperability - Telephony & Fax Challenges

Routers PBXs

ATM Switches ATM Access Frame Relay xDSL DSU/CSU Multiplexers Fax Machines Cable Modem/Set Top Box IP Terminals Integration of Voice/DataVoice Over Packet TechnologyTechnoloy ApplicationsVoIP GatewayVoCableIP-PhoneVoDSLVoCableVoSTB

Deployment IssuesInteroperabilityDSLAM/Gateway/SoftswitchQuality of ServiceLoop LengthsManagementProvisioningStandards

Next Gen ArchitectureSoftswitchServicesOpen, Distributed SystemsServicesDataNetwork(IP, ATM)SignalingBearerPSTNMedia Gateway

VoIP Network Topology

data Internet , , . , ERP(enterprise Resources Planning), E-mail, (E-Commerce) digital data, , circuit switching packet switching , video entertainment . IP base .. IP (Internet protocol) .

In the future services we envision, network content drives communications flow, and communications flow becomes network content true integration.The richness & ubiquitous availability of the network content enhances the communications experience; this leads to the demand for new communications services, which in turn drives network content. These services create new user value that enhances work and life.Home pages, customized portals, the explosion of instant messaging are all examples of this market trend.