1 CupraLux CupraLu x
2
Outline
• Introduction
• CupraLux Products and Technology
• Market Opportunity
• Customer Validation
3
Why CupraLux?
$1.50 per foot
Preexisting Buried Copper
ExorbitantTrenching Cost
($50 per ft)(500ft) = $25000
CupraLux Optimally Leverages Aerial Fiber
and Buried Copper
More Than 10x Price/Performance Advantage in the Delivery of Business Class Data Services and Triple
Play Residential Services
Distributed Access Node
4
Why is the Timing Right?
• CupraLux enhances the coverage and reach of 10 – 100 Mbps Business Class Services
– Growth currently limited by lack of fiber
• Access evolving to Ethernet– Ethernet is the cheapest and most common network Interface– More granular service offers (1Mbps increments)
• Phone Companies Want to get into Bundled Triple Play Services
– Voice Revenues Dwindling every quarter– Need to Bundle Voice, Video and Data services to compete with MSOs– HDTV services create a need for greater than 60Mbps– Fiber to the Premises Not economical in existing developments
• Enabler for both CLECs and ILECs
5
Value Proposition
• Product supports Metro Ethernet Services over Copper with Fiber Equivalent Bandwidths
– Ethernet over MPLS Architecture– CupraLux Augmented VDSL and higher speed Turbo-DSL modes
future proof Service Provider investment.
• Distributed/Hardened Micro-Node functionality facilitates very focused (and incremental) deployment for Triple Play Services
– Provides L2PE functionality that can be shared across buildings– Supports Functionality for Switched VOD and Broadcast TV services– Aligns Service Provider CAPEX with subscription revenues
• Extremely Low CAPEX solution with excellent price/performance advantage over competitive technologies
6
Outline
• Introduction
• CupraLux Products and Technology
• Market Opportunity
• Customer Validation
7
Triple Play Services Enabled by CupraLux Architecture
Metro Fiber Ring
CO/CEV
DAN
Folded GigERing
• Fits seamlessly into Deployed Network Architectures
• Distributed Access Node (DAN)
• Outdoor ruggedized unit (15”x8”x3”)
• Pole, Strand, or Pedestal mounted
• Two Optical Trunk and Eight Copper Drop Ports
• Business Class QoS
• High Availability via self-healing loop
• Premises based powering option enables easy deployment
• No impact on Operations Support Systems and CPE
Aug-VDSL
Aug-VDSL
Aug-VDSLDAN
DAN
Aug-VDSL
8
AccessNetwork
End to End Network Architecture – Conceptual View
CPE Aggregation Device
ISP/Corporate
CPE
Customer Premises Network
DAN
CupraLux Products
* Power Insertion Circuitry for premise based powering option
CoreNetwork
AccessNetwork
CustomerNetwork DAN
NID*
xDSL Modem
9
CupraLux Technology Provides Unprecedented Bandwidth Over Copper
VDSLAugmented-VDSL
PlannedTDSL
PlannedTDSL+
Loop Length (feet)
DataRate
(Mbps)
POTS
A-VDSL TDSL
1. 2 12 24 f (MHz)
ADSL
TDSL+ Spectrum > 2xVDSL Spectrum
TDSL+
Representative Speeds at 500 feet
200Mbps with A-VDSL, 300Mbps with TDSL and 600Mbps with TDSL+
Future proofs service provider investment
Proprietary MIMO Algorithms to virtually eliminate cross-talk
Distributed Architecture enables use of spectrum up to 30MHz on Copper Pair
11
Access to Copper Binder Groups for CLECs (Source – Verizon Operations)
• ILECs allow CLECs access to all SAC ( Subscriber Access Cabinets) points and all copper ( entire loops or sub-loops) in their plants including**– Remote Cabinets
– Green Risers outside a group of homes
– Points where binder groups split
• In addition, CLECs can petition for access to any unused dark fibers in the bundles. However, CLECs will be responsible for the maintenance of their leased fibers.
** http://www22.verizon.com/wholesale/clecsupport/content/1,16835,clec_guide-une_subloops,00.html
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Barriers To Entry
• Patented DAN and Folded Ring Architecture• MIMO Crosstalk Cancellation and EoMPLS ASIC Design
– Receiver Equalization and Transmit Pre-Distortion (No CPE Impact)
DigitalPCB
Optical Trunk
Module
Modem Module
Optical Trunk
Module
Modem Module
• CWDM Design
• DSP/High Speed Modem Design
• Hardened Outdoor Plant Equipment
• Carrier Class Software
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Outline
• Introduction
• CupraLux Products and Technology
• Market Opportunity
• Customer Validation
15
Metro Ethernet ForecastsR
even
ue
(M)
0
200
400
600
800
1000
1200
1400
2004 2005 2006 2007 2008
Year
Busin
ess L
ines (
K)North America Europe Asia Pacific Global
Source: The Yankee Group, 2003 Source: Infonetics, 2003
Metro Ethernet Services Revenue Forecast (US)
Metro Ethernet Business Lines Forecast (Worldwide)
16
Market Opportunity Assessment - Assumptions
• Ethernet Port Forecasts developed by Infonetics 2003– Infonetics forecasts generally about 50-65% lower than those developed by IDC,
others.
• DAN port Forecasts derived from Ethernet Ports deployed at Provider Edge (PE).
– Does not include Ethernet CPE Ports
– Includes only Business Ethernet Ports in the range 10 Mbps – 1 Gbps
• Fiber penetration in buildings with more than 20 employees is 10% in 2003, increasing linearly to 30% in 2008.
– Cupralux market share is entirely a new opportunity, focusing on office buildings with > 20 employees that do not have fiber.
• Implied market share denoted as a percentage of all buildings with greater than 20 employees.
• Market opportunity does not include Provider Edge Residential Ethernet ports , i.e. Metro Ethernet Ports used for distribution to serve residential customers.
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Global Broadband Connection Forecast
0
40
80
120
160
200
2003 2004 2005 2006 2007 2008
(In
Mil
lio
ns) DSL
Cable
GigE
BBFW
Source: OVUM 2003
18
DSL Connection Forecast
0
20
40
60
80
2003 2003 2004 2005 2006 2007 2008
(In
Mil
lio
ns)
APAC
Europe
NA
Source: OVUM 2003
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Demand for High Speed (>50Mbps) DSL Connection Forecast
0
10
20
30
40
50
2003 2004 2005 2006 2007 2008
(In
Mil
lio
ns)
APAC
Europe
NA
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Service Provider Economics
Technology CAPEX Range/Speed Cost/Mbps
DS3 $24500 45Mbps; 1mile $272
Fast Ethernet $16500 100 Mbps shared; 1 mile $82.5
PON $1325 N/A – 20Mbps $13.25
VDSL $669 1Kft – 52 Mbps DS $12.86
ADSL2+ $197 3Kft – 16Mbps DS $12.31
HFC $425 NA – 30Mbps; Shared $6.75
Augm. VDSL $669 1Kft – 50Mbps symmetric $6.69
TDSL $669 500ft – 150Mbps symmetric $2.23
TDSL+ $669 500ft – 300Mbps symmetric $1.11
Less Than 1/3rd Payback Period!Assumptions
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Outline
• Introduction
• CupraLux Products and Technology
• Market Opportunity
• Customer Validation
22
Customer Validation – Key Topics
? Time frame for >10 Mbps service demand Now. Rapidly growing.
? Willingness to deliver services over hybrid fiber-copper Doing it now for <10 Mbps service. ADSL2, G.SHDSL.
? Deployment process Well documented process for getting copper sub-loops Existence proof – COVAD/SBC, Verizon
? Unit cost Extremely favorable. $500/port vs. $50/ft trenching cost of fiber.
? Willingness to participate in field trials Yes
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Reference Customers
• XO – Feb/Mar ’04– “CupraLux is Unique in the 10-50 Mbps space”, Wil Tirado,
Director Access Transport
– “XO can capture 50% business customers with CupraLux” ”, Wil Tirado, Director Access Transport
• 10 – 50 Mbps symmetric• 4000 ft – 1000 ft
• Gridcom – Feb ’04– Evolving from an Fiber Provider to Service Provider
– “Acutely experiencing the problem of last 1000 feet”, Doug Wiest, CEO Gridcom
– Willing to field trial in 1+ year
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Customer Interaction Contd.
• AT&T– CupraLux complements Hatteras product in > 10 Mbps space, which they are very familiar with– AT&T own lots of fiber from Teleport acquisition– “Can complement existing fiber by buying copper loops on the cheap”, Scott Miner, Director
Business Data Services
• QWEST– Loves distributed architecture– Willing to be our Sponsor for standardizing TDSL.– Good growth customer in future.
• Bell Canada– “Looking for a solution to deliver interactive video services in urban and suburban areas -
Satellite delivery lacks a clean return channel” - Director of Access Network Technology Development Group
– Responded to D-FITL RFI
• COVAD– Currently focused on < 3 Mbps customers.– Stay on their radar screen, could become major opportunity in 18 months.
• MetNET, Broadview– Second tier customers.
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Market Introduction / Target Business Customers
1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06
Fastweb, BT, KPN,
DT, TI, BT, France Tel., Telefonica, Equant, Tiscali
Europe
Growth Customers
NAXO,TW Telecom,Gridcom
BellCanadaAT&T
SBC, Bell South, Sprint, Verizon, Qwest, Telmex.
Japan Tel., HKBNAPAC NTT, Chunghwa, Singtel, KDDI, Telstra, KT, China Unicom
Field Trials
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Roadmap
• Horizontal Expansion– Initial Target Market focused on CLECs for Business Services
– Drive to mainstream ILECs in North America and CLECs in APAC and EMEA
– Broaden focus into Residential Markets in APAC and EMEA as high speed applications become more ubiquitous
• HDTV, video/audio streaming, peer-to-peer applications
• Product Evolution– Initial Products Based on Augmented VDSL
– Second Phase products based on TDSL (CupraLux chip sets)
– Wireless Trunk and Drop ports
– Fiber Drop ports
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Customer Willingness to Pay
• Service Provider Choices currently driven by:– Installing Fiber to the Premises, supplemented by Gigabit Switch at
Premises (Metro Ethernet Service)– Legacy DS-3 infrastructure (Private Line, ATM)– Cascaded DANs (Metro Ethernet using CupraLux)
• Capital investment by Service Provider to connect an Office building 1000 feet away from fiber termination (Curb), for the above choices
– $1800 in equipment, $15K to $50K in Fiber costs – $ 9800 in equipment, $15k- $50K in Fiber costs – $ 575 in equipment
• Current Service Provider Economics for 50 Mbps Metro Ethernet Service
– Monthly Revenue $1000 => $12000 annual per line– Annual Opex budget ~ $4000 – One time Capex budget ~ $3000 - $4500 per line
• Implied Opex of $1200 to $1800 based on 3yr depreciation
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Customer Willingness to Pay
• The CupraLux Solution– Reduces the Payback Period for Capital investment by at least
66%, compared to alternatives
– Makes it possible to profitably reach Office Buildings that are stranded today due to economics
– Greatly improves Service Provider profitability for Metro Ethernet Services
– Is well within the willingness to pay for Service Providers
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Market Entry Strategy
• Initial trials and Deployments with key beachhead CLECs in North America offering Metro Ethernet/Internet Access services (XO, Time Warner Telecom, AT&T, etc.)
– Huge Opportunity to broaden reach of high speed services otherwise requiring fiber.
• Broaden Focus to mainstream ILECs in North America as well as key CLECs in APAC and Europe
– Broadened coverage for Business Services (All ILECs)– Accelerate FTTP vision by leveraging FTTC (BellSouth, SBC, Qwest)– Key CLECs in APAC and EMEA offering High Speed Data Services (Japan Tel,
HKBN, Fastweb, Equant, etc.)
• Eventual entry to Residential markets in APAC, Europe and North America through mainstream ILECs/PTTs and Residential Telecom Service Providers
– Alternate Providers such as Yahoo!Broadband in Japan– Mainstream ILECs such as NTT, Chunghwa, KT, Hanaro, Singtel, Telstra in
APAC– PTTs in EMEA : DT, BT, France Telecom.
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End to End Network Architecture – Conceptual View
HomeNetwork
AccessNetwork
CoreNetwork
CPE Aggregation Device
ISP/Corporate
CPE
STB
AccessNetwork
Home Network
DAN
DAN
NID
CupraLux Products
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DAN Facilitated Ethernet Private Line (EPL) Service Architecture
CE1
CE2
PE1 PE2
CE1
CE2
P P
IP/MPLS
L2 PDUPseudo Wire LSP
Tunnel LSP
EthernetPacket
100
8
100
5
100
EthernetPacket
Pseudo Wire LabelTunnel Label
L2 PDUMPLS PDUPseudo Wire LSP
DANCE2 PE1
DAN enables “D-FITL + Copper Drop” combination to be treated as FTTP for delivering Ethernet Services.
xDSL Modem
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Virtual Private LAN Service (VPLS) Architecture
PE1 PE2
MPLS PDU
Pseudo Wire LSP
Tunnel LSP
VPLS A
VPLS B
L2PE
VPLS A
VPLS B
L2PE
VPLS A
L2PE
L2PE Functions
Behave as a switch and support MPLS tags.
MAC learning — Learning MAC addresses from customers in the MTU and from other L2PEs across the metro
STP — Building a loop-free topology on the both the LAN side and the metro side
L2PE-to-PE Protocol — To learn other VPLSs discovered by the PE
PE Functions
Discovery — Discovering other L2PEs connected to the metro
L2 PDU
MTU – Site 1 MTU – Site 2
Site 3
IP/MPLS
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DAN Facilitated VPLS Architecture: Shared DAN serves as L2PE
PE1VPLS A
VPLS B
L2PE
L2 PDU
MTU – Site 1
MPLS PDU/FE-GigE MPLS PDU/FE-GigE
PE1
L2 PDU/FE-GigE
DANxDSL ModemVPLS A
L2 PDU/FE-GigE/xDSL
MPLS PDU/FE-GigE
IP/MPLS
Pseudo Wire LSP
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Role of DAN in Metro Ethernet Services
• Solves the last mile fiber problem by reusing copper• Highly Cost Effective Solution• For E-Line and E-LAN Services
– Category 1,2 or 3 twisted pair can be used to deliver Fast Ethernet Speeds
– No need for a fiber riser or a CAT5 riser in the basement of the building
• For E-LAN Services– DAN provides the L2PE functionality– DAN based L2PE is shared across multiple customers and even
multiple buildings– DAN is an outdoor device that does not require real estate
• DAN is a carrier class device– Redundant Power Supplies– Redundant Line Cards– Five 9s availability
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OpticalTransceiver
OpticalTransceiver
Switching ASIC
Drop ModemOption-1(VDSL)
Drop ModemOption-2(TDSL)
Drop ModemOption-3(OFDM)
FTTPDrop
Option
Splitter/Power Splitter/Power T/R Module Optical Tx/Rx
CPU MemoryPowerSupply
Passive Optical Bypass (Fault Conditions)
DropAntenna
CuDrop
CuDrop
DropFiber
POTS
WestTrunkFiber
EastTrunkFiber
Opt MUX
Opt MUX
Distributed Access Node (DAN) Architecture
DigitalTV
Processing
CWDM
DigitalTV
Processing
CWDM