Challenges for Fibre-based Telecom Networks in Europe

Challenges for Fibre-based Telecom Networks in Europe Alf Henryk Wulf, CEO Alcatel-Lucent Deutschland AG wik International Conference, March 23, 2009

From Best-Effort High-Speed Internet to Blended Multimedia Services Triple Play bundle VoIP IPTV Blended voice, video & data services Enhanced Internet Services 2000 2005 today Near Future Services over the IP network are evolving from best-effort HSI to Enhanced HSI, VoIP and IPTV, with a blending of the services 4 wik FTTB/H Technology March 2009 All Rights Reserved Alcatel-Lucent 2009

Mass Market Shift from Broadcast TV to Personalized Entertainment Personalized, Multiscreen Entertainment Basic TV Service Personalized, Improved Quality TV Interactive TV Multiscreen Entertainment SDTV Linear TV VoD HDTV Multi-room PVR Pause Live TV Time Shift TV IP Comms on TV Targeted & Interactive ads Remote PVR Any media on any device User choice and control Digital home evolution Time Value drives loyalty and market share and there are a lot of moving parts 5 wik FTTB/H Technology March 2009 All Rights Reserved Alcatel-Lucent 2009

1 0 0 0 1 0 0 1 0 1 0.1 0.01 0 Long Term Bandwidth Evolution Peak BW Current BW Growth Rate 100 Mbps 24 Mbps 6 years Sustained BW 5-7 years 1.5 Mbps 6 Mbps 10x Long Term Trends (Infonetics) BW Life Cycles (Telecom Futures) Latest view also supported by (advertized) bandwidth of players in US and Japan Infonetics We are here! Global peak and average bandwidth have grown even faster than expected: 100Mbps is a reality! 6 wik FTTB/H Technology March 2009 All Rights Reserved Alcatel-Lucent 2009

Optimal mix of access technologies for 100% coverage Maximize CO investment with ADSL2+ and bonding Central Office Aggregation Network DSLAM ADSL OLT DSLAM/ OLT DSLAM/ OLT ADSL2+ Copper-centric Extend footprint with cost-effective Fiber-To-The-Node (FTTN) equipment VDSL2 Outdoor DSLAM Street Cabinet FTTN ADSL2+ Fiber-centric Unlimited reach and bandwidth Fiber To-The-Building (FTTB) Fiber-To-The-Home (FTTH) AE FTTH GPON LTE WiMAX LTE/ WiMAX as complementary access solution for low density areas and nomadic subscribers 7 wik FTTB/H Technology March 2009 All Rights Reserved Alcatel-Lucent 2009

FTTH Technologies Central Office Access Loop Home Point -to- Point IP More concentrated More distributed Ethernet switch Splicing Efficient Outside Plant Passive Outside Plant No remote powering Less maintenance, truck rolls, Cost-effective Fiber Feeder Active Ethernet IP Ethernet switch Ethernet switch Few fibers in feeder section Smaller duct sizes, Less RoW cost, Central office (CO) consolidation Best of Both Worlds GPON IP Passive Outside Plant CO scalability & Consol. (20+ km) PON OLT Optical splitter Fiber Cost & Management (P-to-MP) RoW = Right of Way P-to-MP = Point to Multi-Point 8 wik FTTB/H Technology March 2009 All Rights Reserved Alcatel-Lucent 2009

Business Case example A Network length calculation Digging Cable length Fiber length Number active length (km) (km) (km) Sites Point -to- Point Muffle 2,4 km 3,7 km 809,2 km 1 Active Ethernet EthN-Switch 2,4 km 3,7 km 89,3 km 21 GPON Splitter 2,4 km 3,7 km 89,3 km 1 Remark: For all variants 1 fiber per access interface! 10 wik FTTB/H Technology March 2009 All Rights Reserved Alcatel-Lucent 2009

Business Case example B Results for Large City - CAPEX CAPEX CAPEX-Vergleich - Comparison Cost Kosten [in [ ] ] 130.000.000 120.000.000 110.000.000 100.000.000 90.000.000 80.000.000 70.000.000 60.000.000 50.000.000 40.000.000 30.000.000 20.000.000 10.000.000 0 GPON AE P2P Technology chnologie POP Floor Space POP Optical Equipment OSP Horizontal OSP Vertical HOME POP Optical Equipment OSP Horizontal OSP Vertical HOME * No budgetary cost for Floor Space applied 11 wik FTTB/H Technology March 2009 All Rights Reserved Alcatel-Lucent 2009

Business Case example B Results for Large City - OPEX Kosten pro Jahr [ ] Cost [in ] 3.000.000 2.750.000 2.500.000 2.250.000 2.000.000 1.750.000 1.500.000 1.250.000 1.000.000 750.000 500.000 250.000 0 OPEX OPEX-Vergleich - Comparison GPON AE P2P Technology Technologie Maintenance fibre cable Maintenance ducts Maintenance (PON, EN- Switch) Maintenance fibre cable Power consumption & AC Maintenance ducts Floor Space Maintenance (PON, EN- Switch) Power consumption & AC No budgetary cost for Floor Space applied 12 wik FTTB/H Technology March 2009 All Rights Reserved Alcatel-Lucent 2009

GPON compared to Point to Point Direct impact on Central Office spacing and powering GPON 16 000 subs Central Office P2P 16 000 subs Central Office 4 HW racks 1 Fiber rack () 1440 appearances 1 fiber = 32 users 24 Fiber racks 1440 appearances per rack 1 fiber = 1 user 16 HW racks 1K subs/rack PON PON PON PON SwitchSwitch Switch Switch Switch Switch Switch Switch Switch Switch Switch Switch SwitchSwitch SwitchSwitch Switch CO < 20 sqm 9 600 watts CO > 100 sqm 67 000 watts Note: 4 GPON & 48 ports P2P line cards 13 wik FTTB/H Technology March 2009 All Rights Reserved Alcatel-Lucent 2009

GPON compared to Point to Point in the context of permanent technology improvement [Mbps per subscribers] 10 000 1 000 P2P GE NG PON 500 Fix GPON 100 24 10 8 ADSL2 ADSL2+ P2P - FE VDSL2 HSPA+ WiMAX LTE WiMAX 4 1 ADSL GPRS UMTS HSPA Mobile 2000 2002 2004 2006 2008 2010 2012 14 wik FTTB/H Technology March 2009 All Rights Reserved Alcatel-Lucent 2009

Top carriers have defined their FTT strategy Public announcements in top BB countries epon / GPON FTTN N/A or TBD Source: public announcements P2P / AE FTTAmplifier for HFC 70% top carriers: GPON 50% countries with at least two operators with GPON GPON in volumes initially in the USA Countries Australia Belgium China Denmark France Germany Hong Kong Iceland Ireland Italy Japan Korea New Zealand Norway Singapore Spain Sweden Switzerland The Netherlands UK USA and Canada Incumbent Alternative Munis/util. Cable Cable Cable Cable Cable Cable Cable 16 wik FTTB/H Technology March 2009 All Rights Reserved Alcatel-Lucent 2009

FTTx Evolution - Subscribers Worldwide CAGR 2004-2008 50 50% 100% 150% FTTx Subs WW [M] 40 30 20 10 PON in Asia VDSL PON outside Asia As % of fixed BB subscribers 0 2004 2005 2006 2007 2008 3,4% 4,7% 6,5% 9,5% 13,6% P2P Source: Infonetics / Analyse Alcatel-Lucent PON in North America and EMAI showing strong size and highest growth 17 wik FTTB/H Technology March 2009 All Rights Reserved Alcatel-Lucent 2009

GPON evolution : It is all about Capacity, Reach & Split, and Operational Excellence 10 Gb/s GPON Approximately 2011/2012 Extended 10 Gb/s PON More bandwidth for FTTB and backhaul 10 Gb/s RE Increased split ratio More bandwidth and symmetry per subscriber 2.5 Gb/s GPON B+ Today GPON C+ 2009 RE Extended GPON 2009 Reach 10km 20 km 60 km Split 64 64 128 Less dense areas addressed and central office consolidation 19 wik FTTB/H Technology March 2009 All Rights Reserved Alcatel-Lucent 2009