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Leading Market Drivers for Cable Telephony: Opportunities for Operators

Brett Azuma – SVP Marketing

May 2003

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Outline

• State of the Market

• Components of the Consumer Offering

• Evolution of the Bundle

• Bundles and the Triple Play

• Going Beyond The Here and Now

• Realizing the Opportunity

3

State of the Market: The Market Awakens

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Challenges in the Consumer Market

• Basic Transport Services rapidly being commoditized– Decline in second lines– Dropping MOU rates

• Customer churn is increasing• Services from different modes require the user to change

behaviors based on the mode and device used making adoption more challenging

• Differentiation continues to be a challenge– Legacy infrastructures continue to limit new service alternatives

and require massive adoption in order to be profitable

• Alternatives continue to proliferate and consumers are left with the integration task

5

Components of the Consumer Bundle

Local Services • Caller ID• Call Waiting• Home Voicemail• Home Unified Messaging• Intelligent Call Screening• Personal Privacy Screening

Long Distance Services • Family and Friends Audio/Web Conferencing• Family and Friends Video Conferencing• Prepaid Services

Mobile Services • Intelligent Call Screening• Multimedia Messaging• Personal Privacy Screening• Personal Unified Messaging• Personal Voice Mail• Prepaid Services• Text Messaging• Voice Activated Voice Mail

Entertainment Services • Interactive Gaming

High Speed Internet Services

• Web Mail

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Evolution of the Bundle1st generation

Volume Discounts

• One product• Lower price based on

volume purchase• Key Customer Motivator:

Price

3rd generationIntegrated

Product Offers

• Multiple products• Key Customer

motivator: Ease of Use

• Service Provider Benefits:

• Lower customer acquisition cost

• Lower provisioning cost

• Lower churn

4th generationIntegrated

Offers

• Product elements blend into one unified offering

• Key Customer motivator: Ease of use and ease in ordering.

• Service Provider Benefits:

• Lower customer acquistion costs

• Lower provisioning costs

• Much lower churn

2nd generationCross Product

Discounts

• Multiple products• Lower price based on

purchase of the basket of services

• Key Customer Motivator: Price

• Service Provider Benefit: • Lower customer

acquisition cost • Lower provisioning

costs

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Fax

IP Telephone

PC

Wireline Telephone

Messaging: The Cornerstone • Unified Messaging enables the

bonding of a web presence, high speed access, and telephony service into one integrated package

• Messaging will be the key attractor to service provider portals

• By bonding the experiences and user touchpoints together, customer switching costs increase dramatically, thus reducing churn

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Going Beyond the Here and NowVideo

Presentation Mgr*Video

Presentation Mgr*

Video Connection Manager*

Video Connection Manager*

• Entertainment• Network Tivo• Gaming• Video Clips

• Managed Service • Video Conference• Video Mail

• VM, UM, Conference, IVR, Prepaid

Voice/WebApplicationsVoice/Web

Applications

Voice Media ApplicationsVoice Media Applications

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Realizing the Opportunity

• Traditional Circuit Switched Infrastructures are not up to the task of enabling networks for consumer’s choice

• By integrating packet based technologies for data, voice, and ultimately video, service providers will be able to build true fourth generation bundles– These architectures must be designed as multi-vendor networks

from the start using standard interfaces

• The opportunity is to offer higher value service, not increasingly lower cost service

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Traditional Infrastructures: Huge Footprint, High Cost, Poor Scale

Class 5Switch

CallingCard

OtherAps

Web Conferencing

UnifiedMessaging

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A New Approach: Small Footprint, Low Cost, Highly Scalable

Media Resources

Media Resources

MTA

CMTS

CMS

UnifiedMessaging

UnifiedMessaging

Web Conferencing

Web Conferencing

Calling CardCalling Card

Other ApsOther Aps

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Harmony6000 Media Server Platform

Vo

ice

Mai

l

Grow Your Offering with One Platform

Au

to A

tten

dan

t

Au

dio

/Web

C

on

fere

ncin

g

Pre

pai

d S

ervi

ces

Pri

vacy

Scr

een

ing

Un

ifie

d M

essa

gin

g

Build from VM Now

Cal

l Cen

ter

Inte

ract

ive

Gam

ing

Mu

ltim

edia

Mes

sag

ing

Vo

ice

Act

ivat

ed S

ervi

ces

Vo

ice

Po

rtal

s

Vid

eo C

on

fere

nci

ng

Expand in the Future

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Scalable

Reliable

Future proof:

Multi-vendor support

Many services on one platform

Open standards

ROI in months

Low Cost of Entry

Intuitive user interface

Real-time Billing

Web enabled

Partitioning

Enable Service Expansion

Position for future technologies

Fast time to market

IP Application Solutions Checklist

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Conclusion

• The market is starting to move

• The opportunity lies not in offering cheap commodity service, but to differentiate the offerings and to build on value not price

• A Packet Cable based services architecture lays the foundation for a highly differentiable network

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Backup

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IP Unity: The Commercial BundleVoice Services

Audio/Web Conferencing

Auto Attendant

Business Voicemail

Call Center

Intelligent Call Screening

IP Centrex

Prepaid Services

Presence based Unified Messaging

Privacy Call Screening

Unified Messaging

Voice Activated Voice Mail

Audio/Web Conferencing

Auto Attendant

Business Voicemail

Call Center

Intelligent Call Screening

IP Centrex

Prepaid Services

Presence based Unified Messaging

Privacy Call Screening

Unified Messaging

Voice Activated Voice Mail

Audio/Web Conferencing

Auto Attendant

Business Voicemail

CALEA

Call Center

IP Centrex

Persistence Messaging

Prepaid Services

Presence based Unified Messaging

Privacy Call Screening

Unified Messaging

Voice Activated Voice Mail

Voice VPNs, Deep Packet Inspection

Mobile Services Intelligent Call Screening

Multimedia Messaging

Personal Privacy Screening

Personal Voice Mail

Prepaid Services

Text Messaging

Unified Messaging

Voice Activated Voice Mail

Voice Portals

Intelligent Call Screening

Multimedia Messaging

Personal Privacy Screening

Personal Voice Mail

Prepaid Services

Text Messaging

Unified Messaging

Voice Activated Voice Mail

Voice Portals

Intelligent Call Screening

Multimedia Messaging

Personal Privacy Screening

Personal Voice Mail

Prepaid Services

Text Messaging

Unified Messaging

Voice Activated Voice Mail

Voice Portals

Video Services Video Conferencing Video Conferencing Video Conferencing

Data Services Web Mail Web Mail Web Mail

Small/Med Business Enterprise Government

Legend Current Products Partner Products Future Products