Calix Confidential & Proprietary

Industry & Network Industry & Network TransformationTransformation

Robert F. BalsamoRobert F. BalsamoMarketing DirectorMarketing Director

CalixCalixPetaluma, CAPetaluma, CA

robert.balsamo@calix.com

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IP PACKET

ANY SERVICE

ANY MEDIA

IP: The Enabler of Dramatic Change

Profound industry ramificationsElimination of service boundaries

Elimination of network boundaries

New opportunitiesExpand into incremental services

Create new business models

New threatsNew competitors

Changing regulations

Changing revenue models

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A Necessary Services Transformation

Beyond voice, video, and data…

The integration of INFORMATION, COMMUNICATION, & ENTERTAINMENT (ICE) services at the consumer interface is the next step…

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Impending Business Transformation

Service diversificationInteractive ICE products

Integrated value-added services across products portfolio

Differentiation that leverages core competencies

New businessesEnables high margin direct marketing / advertising

Vehicle for access and commerce to subscribers

Leverage position as the gateway to subscribers

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Impending Business Transformation

Repositioning for increased valuation

MSO’s have materially higher “per-subscriber” market valuations

~ 70% of MSO valuation based on digital services

ICE providers should have a valuation advantage (100% digital)

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The Success Equation: The Most Services at the Lowest Initial/Ongoing Cost

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Overarching Industry Transformation

Service transformationExpand beyond voice and data

Integrated ICE services

Business transformationExpand business orientation beyond communications

New lines of business, new paths to profits

Network transformationSupport compelling new services Increase competitiveness of basic broadband access Expand into innovative ICE services

Accelerate service innovation to maximize revenues

Improve operational efficiency to maximize profit

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Simplifying Network Simplifying Network TransformationTransformation

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Dimensions of Network Transformation

Physical network transformationFrom ubiquitous narrowband to ubiquitous broadband

FTTP or DSL over reduced CSAs to support broadband requirements

Logical network transformationFrom circuit to multimedia over packet POTS to VOIP is the next critical service conversion

Key to operational efficiency and services integration

Operational network transformationIP based applications control and services integration Fixed-mobile convergence is driving an integration framework

Key to compelling services, accelerated services introduction and operational efficiency

Balance commitment to legacy considerations

Develop a Strategic Transformation Vision… Simplicity & Savings!

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“Physical” Transformation Drivers

Changing services demand increased broadband capacityIPTV – increased video stream counts, HDTV

HSD – Video and music downloads, gaming, video conferencing…

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Physical Network Transformation Ubiquitous Broadband

Push fiber deeper to support increased capacity and servicesFTTP – where economically viable

DSL with reduced loop length CSA designs, using FTTN overlay

CO, RT and FTTN (as close to sub as business case allows)

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Overlay DSL: Increased Cost & Complexity

More cross connect upgrades

Recurring truck rolls

Maintain parallel networks

Lacks POTS to VOIP plan

Avoids cross connect upgrades

Eliminates truck rolls

Retirement of legacy POTS

Every line VOIP configurable

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Physical Network Transformation POTS Termination – Network Simplicity

Combo DSL and POTS enables unified services, remote node

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POTS to VOIP - Network Implications

VOIP is the final stage of circuit to packet transformationSoftswitch migration requires media gateway POTS-VOIP conversion

Enables Class 5 switch collapse, preserves lifeline voice infrastructure

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Physical Network Transformation Network VOIP: Lower Cost, Lifeline

Complete the transformation of ICE services to packetSimplified access network, Class 5 CO collapse

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Operational Network Transformation Application Level Services Integration

IMS: founded in wireless, foundation for multimedia IP services and applications management

Enabling a common operations model for fully integrated ICE services

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Looking Beyond DSL…

A converged model: All services enabled POTS, HIS, VoIP ready, IPTV ready Copper and fiber access optimized for all broadband

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Complete Network Transformation All Packet, All Fiber – With Options

Phased or direct transformation flexibilityFreedom to manage investments and technology evolution

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Network Transformation Observations

Physical network transformationFTTP where justifiable

Reduced CSAs with VDSL2 for non-FTTP markets CO, RT and nodal solutions – access continuum

Logical network transformation (VOIP)Converged POTS & DSL cards – with VOIP conversion offer lowest cost approach to both IPTV and VOIP Further simplifies the network

Operational network transformationSeemingly independent wireless initiatives laying a foundation for converged IP services management

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The Book On… Network Transformation

Thought leadershipInsight and perspective on key emerging market trends and opportunities

Network Transformation

The Book On Video

Solutions, not just productsRegister for your copy at http://book.calix.com

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The Power of SimplicityThe Power of Simplicity