May 1, 2002

RPR and Ethernet : Strategic Options in Metro

Networks

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NA Metro Market

> Metro Ethernet Service• $0.5 Billion in 2002 to $4.1 Billion in 2006

– CAGR – 70%

> T1 Circuits for Datacom• 2.3 Million in 2002 to 4.8 Million in 2006

– Cannibalization of T1 market – 2%

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Carrier Challenge

0

500

1000

1500

2000 2001 2002 2003 2004

% of Base

Data Demand @ 100% CAGR

Revenues @ 20% CAGR

Voice Demand @ 0% CAGR

Source: RHK

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Carrier Service Mix

> All the growth is in data• 50% of traffic• 24% of ILEC revenues*• 95% of traffic growth

> Must optimize for packets

> But can’t ignore voice• 76% of ILEC revenues• Even greater % of profits!

> Must provide TDM services

0%

20%

40%

60%

80%

100%

1990 2000

Traffic Mix

VoiceData

0%

50%

100%

1990

Revenue Mix

VoiceData

*Source: Morgan Stanley 2002

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Metro Services> Data

• Virtual Private Wire Service (VPWS)• Virtual Private LAN Service (VPLS)• Direct Internet Access

> TDM• Voice• Private Line

> Video• Broadcast Video• Video on Demand

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What about SONET/SDH

OAMP: Protection, Monitoringand Troubleshooting

TDM Multiplexing

Ethernet

SONET/SDH

10M 100M 1Gb

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Where RPR Fits

OAMP: Protection, Monitoringand Troubleshooting

Ethernet

SONET/SDH

10M 100M 1Gb

RPR

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BEAF1AF2AF3Other EFTDM

Statistical Multiplexing

OAMP: Protection, Monitoringand Troubleshooting

Ethernet

SONET/SDH

10M 100M 1Gb

RPR

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Resilient Packet Rings

> Layer 2 Protocol for Shared Packet Rings> Optimized for packets over any optical

infrastructure> Enables new converged services> Compelling economics> Carrier class and scalable network> Resilient> Supports Guaranteed and Non-Guaranteed

Services

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Why RPR

Optical Transmission Choice(Ethernet, SONET,…new ones)

RPRForwarding, QoS and Guarantees

Service Intelligence & Adaptation (MPLS, IP, MPEG,….etc)

TDMData Video

RPR ring operationPHY layer independent

RPR provides service enabling mechanisms

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SONET/SDH

Ethernet

T1/E1/DS3

Video

RPRMACX

RPRMAC

X

RPRMAC

X

RPRMAC

X

Payload agnostic:

RPR is a Layer 2 protocol

RPR Architecture

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Ethernet

> Universal Interface for Packet Services> Provision End-to-End Service > Scalable : 10M, 100M, 1G and 10G> Low cost> Statistical Multiplexing

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Why Ethernet

End to End Ethernet Services

Allocate Transport resources

Ethernet

Optical Transmission Choice(Ethernet, SONET, GFP…new ones)

RPRForwarding, QoS and Guarantees

Service Port

Ethernet

Optical Transmission Choice(Ethernet, SONET, GFP…new ones)

RPRForwarding, QoS and Guarantees

Service PortClassificationRate Limiting

Service Provisioning,Monitoring and SLAs

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MPLS, Ethernet and RPR

> Ethernet• Universal Service interface• No service guarantees or bandwidth management

> RPR• Metro Network• Convergence of services• Service enabling mechanisms

> MPLS• End-to-End path set up • Service creation• Adaptation layer• Traffic engineering

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End to End Data Service

RPR RPR802.3 802.3

Metro Network

MPLS

Core

Ethernet Service

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End to End Data Service

RPR RPR802.3 802.3

Metro Network

IP

Core

Ethernet Service

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Financial Pressure

>Reduce Capex>Reduce IT costs $$>Accelerate revenue

Stop building overlay networks !!

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Summary

> Optimize for packets> Converge!> Add New Services > Generate More Revenues> Simplify management> Don’t Sacrifice Circuits

Evolution, not Revolution

Network

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Traditional Approach

> IP

> ATM (or GE)

> SONET

> DWDM

Multiple Boxes. Multiple layers to manage. Multiple management systems. Multiple organizations!

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Legacy Transport: SONET/SDH> SONET/SDH is…

• Time Slotted TDM Hierarchical Multiplexing– Grooming TDM circuits

• OAMP– Performance Monitoring & Troubleshooting– Protection : APS, UPSR, BLSR– Flow Through Provisioning

> Good Physical Layer Transmission Technology but…• Not a Layer 2 Technology: No Switching• Inefficient for Data: Stranded Bandwidth