Next Generation Digital Loop Carrier

WINTERGREEN RESEARCH, INC.

REPORT # SH29821299 360 PAGES 122 TABLES AND FIGURES 2003 $2,800

Next Generation Digital Loop Carrier Market

Opportunities, Strategies, and Forecasts, 2003 to 2008

Next Generation Digital Loop Carrier

Picture by Susie Eustis

MOUNTAINS OF OPPORTUNITY

WinterGreen Research, Inc. Lexington, Massachusetts www.wintergreenresearch.com



CHECK OUT THESE KEY TOPICS

DIGITAL LOOP CARRIER MARKET SHARES NEXT GENERATION DIGITAL LOOP CARRIER FORECASTS

DIGITAL LOOP INDUSTRY Market Segmentation

Carrier Requirements RBOC Use of Digital Loop Carriers and XDSL

DIGITAL LOOP CARRIER COMPETITIVE FORCES INTERNET IMPACT ON ACCESS NETWORKS

ADVANCED FIBER COMMUNICATIONS BROADBAND SERVICES

NETWORK LAYER SERVICE INTELLIGENCE MANAGEMENT OF ETHERNET IN THE FIRST MILE

EPON CONCEPT CIRCUIT NETWORKS VS. PACKET NETWORKS

REDUCED COMPLEXITY TECHNOLOGY CHALLENGES

OPPORTUNITY ABOUNDS WinterGreen Research, Inc. Lexington, Massachusetts

www.wintergreenresearch.com





The service provider converged voice and data network promises to be implemented as nodes in a neighborhood or remote switches in regional locations. Digital loop carriers are the base for broadband services delivery.

The Internet is poised to spin off thousands of specialized broadband services. The access network needs digital loop carriers (DLCs) that provide the platform for delivery of these services.

NGDLCs extend the reach of connections to remotely located subscribers and improve overall service quality. Over the past three decades, DLCs have evolved to next-generation digital loop carriers (NGDLCs) capable of simultaneously providing POTS and advanced broadband services, such as digital subscriber lines (DSL).

NGDLCs are economical and scalable vehicles to deliver POTS, narrowband, and broadband services. Lack of broadband capability in the majority of the DLC installed base is a factor prompting spending by carriers.

Broadband services shifts, regulation, and technology influence the pace of change in the access network. There is ongoing demand for broadband connections. Broadband will completely replace narrowband within ten years.

Any significant changes in broadband regulation could trigger growth in the access market by encouraging carriers to invest in upgrading neighborhood networks with new equipment that delivers broadband services. Congress’ enactment of the 1996 Telecommunications Act (the Act) created an environment in which carriers accelerated their offerings of voice, data and video services. In February 2003, the Federal Communications Commission (FCC) adopted new rules concerning incumbent local exchange carrier obligations for elements of their networks.

NGDLC technologies make broadband rollout economical for a higher percentage of the population. Six-circuit card NGDLCs are efficient. Innovative evolution helps drive down deployment costs. Over time, these three factors are expected to stimulate an increase in investment in the access network.

Micro-DLC solutions enable service providers to meet growing demands for additional phone, fax, and data lines in residential and business areas with limited copper deployment. Systems reduce equipment and labor costs associated with line installation. They provide a quick solution for filling held orders.

At of the end of 2002, 45% of the U.S. equipped lines and investment in the major telcos access networks was unused. Only 36%were unused in 1997. That is a 20%jump in unused local network capacity in 5 years. Stranded capacity is a significant aspect of broadband communications network planning. NDLCs are being combined with Metro DWDM platforms. Platforms promise to further increase the access capacity with the transport platforms taking on some access capability.



Growing market demand for high bandwidth services is forcing telecom providers

to reevaluate their network planning models and create new ones. Network planners and engineers responsible for this emerging network face a complex problem: how to effectively implement a network that optimizes diverse such as voice, video, and data services.

Overlay networks and discrete network elements are being replaced with integrated platforms. Existing investment needs to be protected while maintaining the design requirements for a packet, digital network.

An integrated multi-service access platform provides a foundation for multi-service deployment, with an evolutionary path to networks of the future.

Functional Partitioning / NGDLC Platforms Embrace Access In Neighborhood Nodes

The metropolitan and the local access markets are changing simultaneously. This leads to the opportunity to build bradband services capability out to the neighborhood, replacing the narrowband circuit swith functions in the neighborhood instead of the central office to bring IP to homes and businesses. Switching and routing functions work from remote boxes in neighborhoods to implement converged systems.

The functional split between access, switching, and transmission is changing. Metro DWDM platforms are evolving access and application capability. The split in access, switching, and transmission functionality is a result of the fact that high-value service terminations are best concentrated in the network core.

High-value service terminations depend on use of expensive equipment and personnel. The network edge is more appropriately the place for access devices.

Bringing switching and routing functions to the access network goes against all past and current practices in functional partitioning. Field technicians are trained to deal with copper and fiber-transmission. Field technicians manage multiplexing issues. Complex functions including switching are left to the central office or network operations center.

Specially trained personnel are available. Some scenarios predict the separation of incumbent carriers into wholesale and retail entities. This market division is designed to facilitate loop unbundling. Access multiplexing and service processing become even more distinct and stratified if this occurs.

Disruptive Operations

Network equipment vendors tend to believe deeply in their product technologies, but this belief can blind innovators to a less attractive-but no less important-element of the network business equation: manageability.



A product that can be managed easily ultimately determines that it can be deployed successfully. Unless it is stationed in an entirely new network, a product best chance of success lies in its ability to fit the telco PMO. Converged systems NGDLC vendors leverage the value proposition of a product that can be placed in the neighborhood along with existing equipment.

Carriers that are incumbent cannot justify retooling an entire back office along with massive retraining of personnel. Vendors design interfaces and operations methods to fit existing technologies. This strategy supports the legacy software and interfaces for which legions of central office, NOC, and field personnel have been laboriously and expensively trained.

Digital loop carrier (DLC) market dollar shipments at $1.8 billion in 2000 declined to $945 million in 2002, and are expected to remain flat through 2005, reach $1 billion by 2006 and $1.4 billion by 2008.

Companies Profiled

Market Leaders Alcatel

Advanced Fibre Communication (AFC) Marconi

Lucent Technologies Zhone Technologies

Huawai Reactivity

Forum Systems

Other Market Participants Actelis Motorola Adtran Occam Calix Redback Networks Catena Siemens Cisco Systems Telstrat Entisphere UT Starcom Hatteras Valo



Next Generation Digital Loop Carrier Market Strategies and Forecasts, 2003-2008

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Table of Contents NEXT GENERATION DIGITAL LOOP CARRIER EXECUTIVE SUMMARY

NEXT GENERATION DIGITAL LOOP CARRIER (DLC) EXECUTIVE SUMMARY E-1 Converged Voice And Data Network E-1

Functional Partitioning / NGDLC Platforms Embrace Access In Neighborhood Nodes E-3 Disruptive Operations E-4

Next Generation Digital Loop Carrier (DLC) Industry E-5 Demand For Faster Speed And More Reliable Communications Services E-6

Digital Loop Carrier Market Shares E-7 Next Generation Digital Loop Carrier (NGDLC) Market Forecasts E-10 Accelerated Migration From Circuit-Based Networks E-13

NEXT GENERATION DIGITAL LOOP CARRIER MARKET DYNAMICS AND MARKET DESCRIPTION

1. NEXT GENERATION DIGITAL LOOP CARRIER (DLC) MARKET DYNAMICS AND MARKET DESCRIPTION1-1 1.1 Digital Loop Carrier (DLC) Network Nodes 1-1 1.2 Market Conditions 1-2

1.2.1 Broadband Connectivity In The Access Network 1-2 1.2.2 Substantial Restructuring Efforts 1-4 1.2.3 Market-Driven Organizations 1-4 1.2.4 Key Business Drivers 1-5 1.2.5 Telecommunications in the Context of the Global Economy 1-7 1.2.6 Telecommunications Market Situation 1-10

1.3 Telecom Markets 1-12 1.4 Telecommunications Industry Shifts 1-13 1.5 Point Of Presence 1-15 1.6 Carrier Requirements 1-16

1.6.1 Business Challenges 1-18 1.6.2 Excess Capacity 1-19 1.6.3 Reducing Operating Expenditures 1-21

1.7 Technology Challenges 1-22 1.7.1 Ethernet in the First Mile 1-23 1.7.2 Evolution of the First / Last Mile 1-25

1.8 Distinct Access Systems 1-26 1.9 Combined Voice And Data 1-27 1.10 Reduced Complexity 1-27

1.10.1 Broadband Implementation By Incumbent Service Providers 1-28



1.10.2 Upgrades to Existing DLCs 1-29 1.11 Integrated Multimedia Services 1-30 1.12 Integrated Video Services 1-30 1.13 Digital Loop Carrier Product Positioning 1-31 1.14 RBOC Use of Digital Loop Carriers and XDSL 1-32

1.14.1 Bundled Services 1-33 1.14.2 NGDLC Functions 1-33

1.15 Design Solutions 1-34 1.16 Coaxial Cable Internet Competition 1-35 1.17 Copper Loop Conditioning 1-36 NEXT GENERATION DIGITAL LOOP CARRIER MARKET SHARES AND MARKET FORECASTS

2. NEXT GENERATION DIGITAL LOOP CARRIER (DLC) MARKET SHARES AND MARKET FORECASTS 2-1 2.1 Next Generation Digital Loop Carrier (DLC) Industry 2-1

2.1.1 Disparity Between Bandwidth In The Fiber Optic Core And Bandwidth At Subscriber Premises 2-2 2.1.2 Demand For Faster Speed And More Reliable Communications Services 2-3 2.1.3 Access Networks 2-3 2.1.4 Cable Operators Aggressively Upgrading Facilities 2-4 2.1.5 Evolution of Multiple Access Networks 2-5 2.1.6 Next Generation Digital Loop Carrier (DLC) Functions 2-5

2.2 Next Generation Digital Loop Carrier NGDLC Market Driving Forces 2-6 2.3 Digital Loop Carrier Competitive Forces 2-7

2.3.1 Digital Loop Carrier Customer Demands 2-9 2.3.2 NGDLC Market Demands 2-12 2.3.3 FCC Rules Revisions 2-13

2.4 Digital Loop Carrier Market Shares 2-13 2.4.1 NGDLC Pricing 2-21 2.4.2 DLC Pricing Variables 2-22 2.4.3 Alcatel Pricing 2-22 2.4.4 AFC Pricing 2-23 2.4.5 Lucent Pricing 2-24 2.4.6 Vendor Broadband Digital Loop Carrier Positioning 2-24 2.4.7 Alcatel 2-26 2.4.8 Advanced Fibre Communications 2-28 2.4.9 Advanced Fiber Communications DMAX1120 2-28 2.4.10 Zhone 2-30 2.4.11 Marconi 2-31

2.5 Next Generation Digital Loop Carrier (NGDLC) Market Forecasts 2-32 2.5.1 Carrier Capital Spending Double Digit Decline 2-35 2.5.2 NGDLC Market Forecast Growth Depends on Economy 2-36 2.5.3 Emerging Growth Opportunities 2-37 2.5.4 Large Digital Loop Carriers 2-41 2.5.5 Small Digital Loop Carriers 2-47 2.5.6 Digital Loop Carrier Line Analysis Forecast 2-51 2.5.7 NGDLC Technology Advancements 2-58 2.5.8 Fiber-Fed Bonding Technologies 2-60

2.6 Digital Loop Carrier System Analysis Forecast 2-61 2.7 Digital Loop Carrier Analysis Forecast Dollars 2-64 2.8 Digital Loop Carrier Installed Base Analysis Forecast 2-68 2.9 Digital Loop Carriers Implement Broadband Services 2-75

2.9.1 Access Network As Door To All Services 2-76 2.9.2 Internet Services 2-77



2.9.3 Ethernet Services 2-77 2.9.4 Broadband Access 2-78 2.9.5 Unused Network Capacity 2-79 2.9.6 Transition To Broadband, Optical And Packet-Based Access Networks 2-79 2.9.7 RBOCs Single Market 2-81 2.9.8 1,200 Local Telcos In The US. 2-81 2.9.9 Replacement Market 2-83 2.9.10 NGDLC Penetration Analysis 2-86

2.10 Next Generation Digital Loop Carrier Regional Market Shares 2-87 2.10.1 DLC Market Participant Regional Strengths 2-87 2.10.2 Next Generation Digital Loop Carrier (DLC) Regional Analysis 2-88

2.11 Small And Medium-Sized Business (SMBs) NGDLC Connections 2-94 2.11.1 Cost Comparision of Typical DLC vs. FTH Residential 2-95

2.12 Digital Loop Carrier Related Market Opportunities 2-96 2.13 Digital Loop Carrier Market Partnering Issues 2-98 2.14 Voice And Data Services Market 2-99 2.15 Market Segmentation 2-100

2.15.1 Business Markets 2-100 2.15.2 Residential Markets 2-100 2.15.3 Potential Customers / Target Market 2-101 2.15.4 Small Telco Target Markets 2-104

2.16 Internet Impact on Access Network 2-105 2.16.1 Complexity Of Overlay Networks 2-105 2.16.2 Improve Capital Efficiency 2-106 2.16.3 Location problems 2-106 2.16.4 Obsolescence And Inadequacy 2-106 2.16.5 Promise And Threat Of Converged Systems 2-107 2.16.6 Reliance on IP 2-108 2.16.7 Functional Partitioning / Metro DWDM Platforms Embrace Access 2-108 2.16.8 Disruptive Operations 2-109 2.16.9 Consolidated Platform Strategy 2-110 2.16.10 Designing For The Telecom Market 2-111

2.17 Internet And Digital Loop Carriers As A Market Force In Local Access 2-113 2.17.1 Global Economy 2-113 2.17.2 Intensifying Competition On A Global Scale 2-115 2.17.3 Business Forces Driving Change 2-117 2.17.4 Pace Of Technological Change 2-117 2.17.5 Response To Change 2-118

2.18 Circuit Networks Vs Packet Networks 2-119 2.18.1 Convergence Of Voice And Data 2-120 2.18.2 End-To-End Internet Solutions 2-120 2.18.3 Rapid, Flexible Deployments 2-121 2.18.4 E-Services 2-122 2.18.5 E-Services Partnering 2-123

2.19 Internet Market Driving Forces 2-125 2.19.1 Web Based Supply Chain Exchanges 2-127 2.19.2 Exchange Infrastructure Functionality 2-127 2.19.3 Internet Explosion 2-128

2.20 Internet Users 2-130 2.20.1 Need For Digital Loop Carriers 2-131 2.20.2 Web Lifestyle 2-132 2.20.3 Packet Networks 2-133



NEXT GENERATION DIGITAL LOOP CARRIER PRODUCT DESCRIPTIONS

3. DIGITAL LOOP CARRIER (DLC) PRODUCT DESCRIPTION 3-1 3.1 Alcatel 3-1

3.1.1 Alcatel Integration of DSL into Litespan 3-2 3.1.2 Alcatel Higher Density On Voice And DSL 3-2 3.1.3 Alcatel Derived Voice over DSL 3-3 3.1.4 Alcatel Litespan Access Gateway NGDLC to NWDLC 3-3 3.1.5 Alcatel Litespan Positioning 3-4 3.1.6 Alcatel Litespan-1540 3-5 3.1.7 Alcatel DLC Applications 3-8 3.1.8 Alcatel 7201 Litespan Next Generation Multiservice Access Platform 3-11 3.1.9 Alcatel 7201 Litespan Carrier Grade Redundancy and Reliability 3-14 3.1.10 Alcatel 7201 Litespan Concept 3-18 3.1.11 Alcatel 7201 Litespan NGN Access Platform 3-19 3.1.12 Alcatel 7201 Litespan NGN Access Platform Modular And Distributed Architecture 3-24

3.2 Advanced Fiber Communications 3-31 3.2.1 Advanced Fiber Communications DMAX1120 3-31 3.2.2 Advanced Fiber Communications EMAXplus™ Equipment Maximization System 3-32 3.2.3 Advanced Fiber Communications EMAXplus Applications 3-33 3.2.4 Advanced Fiber Communications EMAXplus Components 3-37 3.2.5 Advanced Fiber Communications AccessMAX 3-37 3.2.6 Advanced Fiber Communications / Telliant 3-40 3.2.7 Advanced Fiber Communications PremMAX 3-41 3.2.8 Cisco Strategy 3-41 3.2.9 Cisco Systems 3-42

3.3 Lucent Digital Loop Carrier 3-43 3.3.1 Lucent AnyMedia® Access System 3-46 3.3.2 Lucent AnyMedia® Access System 3-47 3.3.3 Lucent Technologies AnyMedia Benefits 3-48 3.3.4 Lucent AnyMedia® Access System 800 3-53 3.3.5 Lucent AnyMedia Access System Fibre-to-the-Curb, Building, and Home 3-55 3.3.6 Lucent AnyMedia Full Service Access Network 3-56 3.3.7 AnyMedia Access System Application Packs 3-58 3.3.8 Lucent AnyMedia 3-59 3.3.9 Lucent PacketStar® PSAX Multiservice Media Gateway 3-60

3.4 Nortel Access Node and Switch Remotes 3-60 3.4.1 Nortel AccessNode and AccessNode Express 3-63 3.4.2 Nortel Access Node Key Benefits 3-63

3.5 Cisco Ethernet-over-VDSL (EoVDSL) Technology 3-66 3.5.1 Cisco Ethernet over Point-to-Point Optical Fiber 3-67 3.5.2 Cisco Optical EFM Point to Multipoint 3-69

3.6 ADC Telecommunications 3-70 3.7 Motorola / Next Level Communications BSAM Broadband Service Access Multiplexer 3-71 3.8 Redback Networks SMS 3-72

3.8.1 Redback SMS 1800 3-73 3.8.2 Redback SMS 500 3-73 3.8.3 Redback SMS 10000 3-73 3.8.4 Redback SMS 10000 System Architecture 3-75

3.9 Actelis Networks 3-76 3.10 Calix 3-77



3.11 Zhone 3-82 3.11.1 Zhone ISC-303 3-83

3.12 Hatteras 3-84 3.13 TelStrat 3-86 3.14 UTStarcom 3-87

3.14.1 UTStarcom mSwitch 3-88 3.14.2 UTStarcom Total Control 1000 Multi-Service Access Platform 3-88

3.15 Valo 3-89

NEXT GENERATION DIGITAL LOOP CARRIER TECHNOLOGY 4. NEXT GENERATION DIGITAL LOOP CARRIER (DLC) TECHNOLOGY 4-1 4.1 Technology Issues in the First Mile / Last Mile 4-1 4.2 Narrowband Services 4-3 4.3 Leased Line Services 4-4 4.4 Broadband Services 4-5

4.4.1 Network TDM Capacity Extension 4-6 4.4.2 ATM-Based Quality Of Service (QoS) 4-7 4.4.3 VPI Connections 4-8 4.4.4 Multiservice Market Access 4-8

4.5 Network Layer Service Intelligence 4-9 4.5.1 Service Intelligence Network Application Layer 4-10 4.5.2 Service Intelligence Network Service Control Layer 4-10 4.5.3 Service Intelligence Network Transport Layer 4-10

4.6 IEEE 802.3 Ethernet Standards 4-12 4.7 Ethernet over Point-to-Point Copper (EoVDSL) 4-13 4.8 Gigabit Ethernet Technology 4-14

4.8.1 Ethernet over Point-to-Multipoint Optical Fiber (EPON) 4-16 4.9 EPON Concept 4-17

4.9.1 PON Topology 4-17 4.10 Management of Ethernet in the First Mile 4-18

4.10.1 Metro Access 4-21 4.10.2 Parallel Switch Fabric 4-21 4.10.3 Direct Processing Architecture 4-22

NEXT GENERATION DIGITAL LOOP CARRIER COMPANY PROFILES

5. NEXT GENERATION DIGITAL LOOP CARRIER (DLC) COMPANY PROFILES 5-1 5.1 Actelis 5-1 5.2 Adtran 5-2

5.2.1 Adtran Second Quarter 2003 Revenue 5-3 5.3 Advanced Fibre Communications 5-7

5.3.1 Advanced Fibre Communications (AFC) Customers 5-8 5.3.2 Advanced Fibre Communications Revenue 5-9 5.3.3 Advanced Fibre Communications Telecommunications Access Products 5-11 5.3.4 Advanced Fibre Communications AccessMAX(TM) Next -Generation Digital Loop Carrier (NGDLC) 5-12 5.3.5 Advanced Fibre Communications TransMAX 1500 Coarse Wavelength Division Multiplexing (CWDM) 5-12 5.3.6 Advanced Fibre Communications AccessMAX System 9 Native Asynchronous Transfer Mode (ATM) 5-13 5.3.7 Advanced Fibre Communications Video Market Applications 5-13

5.4 Alcatel 5-14



5.4.1 Alcatel VND Division Markets Digital Loop Carrier (DLC) Multi-Service Access Solutions 5-15 5.4.2 Alcatel Participation In Communications Network Equipment Markets 5-18 5.4.3 Alcatel Metro DWDM 5-18 5.4.4 Alcatel and Optics 5-22 5.4.5 Alcatel and Tellabs / Sprint DWDM Metro Equipment 5-23 5.4.6 Alcatel Fiber Optic Submarine Cable Repair 5-24

5.5 Calix 5-25 5.5.1 Calix C7 Simplified Services Platform 5-26

5.6 Entrisphere 5-28 5.7 Hatteras 5-29 5.8 Huawei 5-31

5.8.1 Huawei Global Operations 5-32 5.8.2 Huawei ADSL Positioning 5-32

5.9 Lucent Technologies 5-33 5.9.1 Lucent Service Provider Network Positioning 5-34 5.9.2 Lucent Technologies Strategic Positioning 5-35 5.9.3 Business Forces Driving Change For Lucent 5-36 5.9.4 Lucent Digital Loop Carrier 5-37 5.9.5 Lucent High Density Multi–Service Access Platform 5-40 5.9.6 Lucent AnyMedia® Access System 5-41

5.10 Motorola 5-43 5.10.1 Motorola Computer Group 5-43 5.10.2 Motorola / Next Level Communications 5-44 5.10.3 Next Level Products 5-45

5.11 Occam 5-45 5.11.1 Occam Networks Revenue 5-46

5.12 Redback Networks 5-47 5.12.1 Redback Networks Customers 5-48 5.12.2 Redback Targets Services Edge 5-49 5.12.3 Redback Business Edge 5-49 5.12.4 Redback Networks Revenue 5-50

5.13 Telstrat 5-50 5.14 UT Starcom 5-50

5.14.1 UTStarcom Total Control 1000 Multiservice Platform 5-52 5.15 Valo 5-55 5.16 Zhone Technologies 5-55

5.16.1 Zhone Strategy 5-57 5.16.2 Tellium / Zhone Merger 5-59 5.16.3 Tellium 5-60 5.16.4 Tellium Revenue 5-60 5.16.5 Zhone Second Quarter Revenue 5-61 5.16.6 Zhone / NEC 5-61 5.16.7 Eluminant 5-62 5.16.8 Zhone Technologies / NEC eLUMINANT 5-62 5.16.9 Zhone / Nortel Networks 5-63



List of Tables and Figures

NEXT GENERATION DIGITAL LOOP CARRIER EXECUTIVE SUMMARY Table ES-1 E-5 Applications Supporting Rapid Internet Growth Figure ES-2 E-9 Worldwide Next Generation Loop Carrier Equipment Market Shares, 2002 Figure ES-3 E-10 Worldwide Next Generation Loop Carrier Equipment Market Shares, First Half 2003 Figure ES-4 E-12 Worldwide Next Generation Loop Carrier Equipment Market Forecasts, Dollars, 2003-2008

NEXT GENERATION DIGITAL LOOP CARRIER MARKET DYNAMICS AND MARKET DESCRIPTION

Table 1-1 1-5 Key NGDLC Business Drivers Table 1-2 1-6 Key NGDLC Strategic Initiatives Table 1-3 1-9 Network Hardware Requirements Table 1-4 1-13



Telecommunications Industry Shifts Table 1-5 1-16 Significant Technological And Architectural Advances Table 1-6 1-27 Market Environment Driving Increased Use of DLCs Table 1-7 1-31 Digital Loop Carrier Product Positioning NEXT GENERATION DIGITAL LOOP CARRIER MARKET SHARES AND MARKET FORECASTS

Table 2-1 2-1 Applications Supporting Rapid Internet Growth Table 2-2 2-6 DLC Market Driving Forces Table 2-3 2-7 Principal Competitive Factors In Digital Loop Carrier Market Table 2-4 2-8 Competitive Product Positioning For Digital Loop Carrier Markets Table 2-5 2-9 Digital Loop Carrier Market Success Factors Table 2-6 2-10 Digital Loop Carrier Functions Table 2-7 2-11 Next Generation Digital Loop Carrier Market Positioning Table 2-8 2-12 NGDLC Market Demands Table 2-9 2-14 DLC Competitors Figure 2-10 2-17 Worldwide Next Generation Digital Loop Carrier NGDLC Equipment Market Shares, 2002 Table 2-11 2-18 Worldwide Next Generation Digital Loop Carrier Equipment Market Shares, 2002 Figure 2-12 2-19 Worldwide Next Generation Digital Loop Carrier Equipment Market Shares, First Half 2003 Table 2-13 2-20 Worldwide Next Generation Digital Loop Carrier NGDLC Market Shares, First Half 2003 Figure 2-14 2-34 Worldwide Next Generation Digital Loop Carrier Equipment Market Forecasts, Dollars, 2003-2008 Table 2-15 2-35 Worldwide Digital Loop Carrier (NGDLC) Market Shipment Forecasts, Dollars, 2003-2008 Figure 2-16 2-39 Worldwide Next Generation Digital Loop Carrier DLC Fiber Market Forecasts, Lines, 2003-2008 Figure 2-17 2-40 Worldwide Next Generation Digital Loop Carrier DLC Copper Market Forecasts, Lines, 2003-2008 Table 2-18 2-41 Worldwide Digital Loop Carrier Market Forecasts, Shipments, Lines, 2003-2008 Figure 2-19 2-42 Worldwide Next Generation Digital Loop Carrier Large POTs Equipment Forecasts, Dollars, 2003-2008 Figure 2-20 2-43 Worldwide Next Generation Digital Loop Carrier Large POTs Equipment Market Forecasts, Lines, 2003-2008



Figure 2-21 2-44 Worldwide Next Generation Digital Loop Carrier Large DSL Equipment Market Forecasts, Dollars, 2003-2008 Figure 2-22 2-45 Worldwide Next Generation Digital Loop Carrier Large DSL Equipment Market Forecasts, Lines, 2003-2008 Table 2-23 2-46 Worldwide Digital Loop Carrier Market Forecasts, Large Systems, Units and Dollars, 2003-2008 Figure 2-24 2-47 Worldwide Next Generation Digital Loop Carrier Small POTs Equipment Forecasts, Dollars, 2003-2008 Figure 2-25 2-48 Worldwide Next Generation Digital Loop Carrier Small POTs Equipment Forecasts, Lines, 2003-2008 Figure 2-26 2-49 Worldwide Next Generation Digital Loop Carrier Small DSL Equipment Market Forecasts, Dollars, 2003-2008 Figure 2-27 2-50 Worldwide Next Generation Digital Loop Carrier Small DSL Equipment Market Forecasts, Lines, 2003-2008 Table 2-28 2-51 Worldwide Digital Loop Carrier Market Forecasts, Small and Mid Size Systems, Units and Dollars, 2003-2008 Figure 2-29 2-52 Worldwide DLC POTs Market Forecasts, Lines, 2003-2008 Figure 2-30 2-53 Worldwide DLC DSL Market Forecasts, Lines, 2003-2008 Figure 2-31 2-54 Worldwide Small DLC Market Forecasts, Lines, 2003-2008 Figure 2-32 2-55 Worldwide DLC DSL Market Forecasts, Lines, 2003-2008 Figure 2-33 2-56 Worldwide Small DLC Market Forecasts, Lines, 2003-2008 Table 2-34 2-57 Worldwide Digital Loop Carrier Market Shipment Forecasts, NGDLC Lines, 2003-2008 Figure 2-35 2-61 Worldwide Small DLC Market Forecasts, Systems, 2003-2008 Figure 2-36 2-62 Worldwide Large DLC Market Forecasts, Systems, 2003-2008 Figure 2-37 2-63 Worldwide DLC Market Forecasts, Systems, 2003-2008 Table 2-38 2-64 Worldwide Digital Loop Carrier (NGDLC) Market Shipment Forecasts, Systems, 2003-2008 Figure 2-39 2-65 Worldwide Next Generation Digital Loop Carrier POTs Equipment Market Forecasts, Dollars, 2003-2008 Figure 2-40 2-66 Worldwide Next Generation Digital Loop Carrier DSL Equipment Market Forecasts, Dollars, 2003-2008 Figure 2-41 2-67 Worldwide Next Generation Digital Loop Carrier Equipment Market Forecasts, Dollars, 2003-2008 Table 2-42 2-68



Worldwide Digital Loop Carrier (NGDLC) Market Shipment Forecasts, Dollars, 2003-2008 Figure 2-43 2-69 Worldwide DLC Installed Fiber Lines Market Forecasts, Lines, 2003-2008 Figure 2-44 2-70 Worldwide DLC Installed Copper Lines Market Forecasts, Lines, 2003-2008 Table 2-45 2-71 Worldwide Digital Loop Carrier Market Forecasts, Penetration of Access Lines, Installed Base of Lines, 2003-2008 Table 2-46 2-72 Total RBOC Access Lines, First Half 2002 Figure 2-47 2-73 U.S. DLC Installed Copper Lines Market Forecasts, Lines, 2003-2008 Figure 2-48 2-74 U.S. DLC Installed Fiber Lines Market Forecasts, Lines, 2003-2008 Table 2-49 2-75 U.S. Digital Loop Carrier Market Forecasts, Systems Penetration of RBOC Access Lines, 2003-2008 Figure 2-50 2-83 Worldwide Next Generation Digital Loop Carrier Percent Replacement Equipment Market Forecasts, 2003-2008 Figure 2-51 2-84 Worldwide Next Generation Digital Loop Carrier Percent New Equipment Market Forecasts, 2003-2008 Table 2-52 285 Worldwide Digital Loop Carrier Market Forecasts, System Shipments, Lines, 2003-2008 Figure 2-53 2-90 Worldwide Next Generation Digital Loop Carrier Regional Market Shares, 2002 Figure 2-54 2-91 Worldwide Next Generation Digital Loop Carrier Regional Market Shares, 2008 Table 2-55 2-92 Worldwide Digital Loop Carrier Market Forecasts, Percent, By Region, 2003-2008 Table 2-56 2-92 Worldwide Digital Loop Carrier Market Forecasts, Dollars, By Region, 2003-2008 Table 2-57 2-96 Digital Loop Carrier Related Market Opportunities Table 2-58 2-98 Digital Loop Carrier Market Partnering Issues Table 2-59 2-114 Market Forces For Global Economy Table 2-60 2-115 Factors Impacting The Level Of Price And Product Competition Table 2-61 2-116 Response To Competition Table 2-62 2-117 Business Forces Driving Change Table 2-63 2-119 Digital Loop Carrier Provider Response To Change Table 2-64 2-125 E-Services Partnering Strategy Table 2-65 2-126 Internet Market Driving Forces Table 2-66 2-128 Web Based Supply Chain Exchanges



Table 2-67 2-130 Major Factors Driving Local Access Value Added Services Markets Table 2-68 2-131 Key Strategies Of The Internet Digital Loop Carrier Providers Table 2-69 2-134 Packet System Market Impact

NEXT GENERATION DIGITAL LOOP CARRIER PRODUCT DESCRIPTIONS Table 3-1 3-6 Alcatel DLC Benefits Table 3-2 3-9 Alcatel DLC Applications Features Table 3-3 3-12 Alcatel 7201 Litespan Array Of Applications Table 3-4 3-15 Alcatel Litespan Key Features And Benefits Table 3-5 3-20 Alcatel 7201 Litespan NGN Access Platform Features and Benefits Table 3-6 3-22 Alcatel 7201 Litespan NGN Access Platform Connections Table 3-7 3-25 Alcatel 7201 Litespan Distributed Architecture Functions Table 3-8 3-26 Alcatel 7201 Litespan Distributed Architecture Applications Table 3-9 3-30 Alcatel 7201 Litespan Distributed Applications Table 3-10 3-36 Advanced Fiber Communications EMAXplus Flexibility Enables On-Demand Fulfillment For The Revenue Services Table 3-11 3-38 AccessMAX Group Of Products Table 3-12 3-44 Lucent Broadband Access Solutions Table 3-13 3-45 Lucent Broadband Digital Loop Carrier Positioning Table 3-14 3-47 Lucent AnyMedia Access System Family of Products Table 3-15 3-49 Lucent Technologies AnyMedia Benefits Table 3-16 3-51 Lucent High-Runner Service Set Table 3-17 3-52 AnyMedia Access System Capacity Table 3-18 3-57 Lucent AnyMedia Access System Building Blocks Table 3-19 3-58 Lucent Application Pack Services Table 3-20 3-62 Nortel Networks Switch Remotes Table 3-21 3-64



Nortel Access Node Key Benefits Table 3-22 3-65 Nortel DLC Service Adaptive Access Technology Table 3-23 3-67 Cisco Ethernet over Point-to-Point Optical Fiber Applications Table 3-24 3-78 Calix Network Platform Functions

NEXT GENERATION DIGITAL LOOP CARRIER TECHNOLOGY Table 4-1 4-3 Narrowband Services Table 4-2 4-4 Leased Line Services Table 4-3 4-5 DSL-Based Broadband Services Table 4-4 4-7 ATM-Based Quality of Service (QoS) Functions Table 4-5 4-8 VPI Connection Provisioning Table 4-6 4-12 IEEE 802.3 Ethernet-in-the-First-Mile Task Force Objectives Table 4-7 4-15 Standards Supporting Point-to-Point Ethernet in the First Mile Table 4-8 4-19 Management of Ethernet in the First Mile Functions

NEXT GENERATION DIGITAL LOOP CARRIER COMPANY PROFILES Table 5-1 5 Adtran Product Set Table 5-2 20 Alcatel Metro DWDM Positioning Table 5-3 22 Alcatel Terrestrial Optical Networking Strategy Table 5-4 23 Alcatel Submarine Optical Networking Strategy Table 5-5 37 Business Forces Driving Change Table 5-6 38 Lucent Broadband Access Solutions Table 5-7 39 Lucent Broadband Digital Loop Carrier Positioning Table 5-8 41 Lucent AnyMedia Access System Family of Products Table 5-9 54 Total Control 1000 Multiservice Access Platform Functions Table 5-10 59 Tellium and Zhone Merger Strategic And Financial Benefits



ABOUT THE COMPANY

WINTERGREEN RESEARCH, FOUNDED IN 1985, PROVIDES STRATEGIC MARKET ASSESSMENTS

IN TELECOMMUNICATIONS, COMMUNICATIONS EQUIPMENT , HEALTH CARE , AND ADVANCED COMPUTER

TECHNOLOGY . INDUSTRY REPORTS FOCUS ON OPPORTUNITIES THAT WILL EXPAND EXISTING MARKETS

OR DEVELOP MAJOR NEW MARKETS. THE REPORTS ASSESS NEW PRODUCT AND SERVICE POSITIONING

STRATEGIES, NEW AND EVOLVING TECHNOLOGIES, AND TECHNOLOGICAL IMPACT ON PRODUCTS,

SERVICES, AND MARKETS. MARKET SHARES ARE PROVIDED. LEADING MARKET PARTICIPANTS ARE

PROFILED, AND THEIR MARKETING STRATEGIES, ACQUISITIONS, AND STRATEGIC ALLIANCES ARE

DISCUSSED. THE PRINCIPALS OF WINTERGREEN RESEARCH HAVE BEEN INVOLVED IN ANALYSIS AND

FORECASTING OF INTERNATIONAL BUSINESS OPPORTUNITIES IN TELECOMMUNICATIONS AND ADVANCED

COMPUTER TECHNOLOGY MARKETS FOR OVER 30 YEARS.

ABOUT THE PRINCIPAL AUTHORS

ELLEN T. CURTISS, TECHNICAL DIRECTOR, CO-FOUNDER OF WINTERGREEN RESEARCH, CONDUCTS

STRATEGIC AND MARKET ASSESSMENTS IN TECHNOLOGY-BASED INDUSTRIES. PREVIOUSLY SHE WAS A

MEMBER OF THE STAFF OF ARTHUR D. LITTLE, INC., FOR 23 YEARS, MOST RECENTLY AS VICE PRESIDENT

OF ARTHUR D. LITTLE DECISION RESOURCES, SPECIALIZING IN STRATEGIC PLANNING AND MARKET

DEVELOPMENT SERVICES. SHE IS A GRADUATE OF BOSTON UNIVERSITY AND THE PROGRAM FOR

MANAGEMENT DEVELOPMENT AT HARVARD GRADUATE SCHOOL OF BUSINESS ADMINISTRATION. SHE IS

THE AUTHOR OF RECENT STUDIES ON WORLDWIDE TELECOMMUNICATIONS MARKETS, THE TOP TEN

INTERNET EQUIPMENT COMPANIES, THE TOP TEN CONTRACT MANUFACTURING COMPANIES, AND THE

TOP TEN TELECOMMUNICATIONS MARKET ANALYSIS AND FORECASTS.

SUSAN EUSTIS , PRESIDENT , CO-FOUNDER OF WINTERGREEN RESEARCH, HAS DONE RESEARCH IN

COMMUNICATIONS AND COMPUTER MARKETS AND APPLICATIONS. SHE HOLDS SEVERAL PATENTS IN

MICROCOMPUTING AND PARALLEL PROCESSING. SHE HAS THE ORIGINAL PATENTS IN ELECTRONIC

VOTING MACHINES. SHE HAS NEW PATENT APPLICATIONS IN FORMAT VARYING, MULITPROCESSING, AND

ELECTRONIC VOTING. SHE IS THE AUTHOR OF RECENT STUDIES OF THE REGIONAL BELL OPERATING

COMPANIES' MARKETING STRATEGIES, INTERNET EQUIPMENT , BIOMETRICS, A STUDY OF INTERNET

EQUIPMENT , WORLDWIDE TELECOMMUNICATIONS EQUIPMENT , TOP TEN TELECOMMUNICATIONS,

DIGITAL LOOP CARRIER, WEB HOSTING, WEB SERVICES, AND APPLICATION INTEGRATION MARKETS.

MS. EUSTIS IS A GRADUATE OF BARNARD COLLEGE.



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