Keynote by Gunnar Florus - Sales Director for Verticals in Alcatel Lucent - Manchester NextGen Euro Conference 22 June 2009

1. Scandinavian Open Access Networks
5 years of success
…and a few lessons learned
Gunnar Florus <gflorus@alcatel-lucent.com>
Manchester, June 22nd 2009

2. 1
Investing in Fibre
Market Drivers and Services
2 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

3. Mass-market multimedia devices are changing our personal lifestyle
High-definition TV sets
MP3 players
(50% of TVs purchased
are HD-ready (35 Mio sold in ’
06,
(5% in ’
05)) 30% growth)
NG game consoles Digital photography
w/Internet (20% of BB subs used
(PS3, Xbox 360, Wii: Nintendo Internet upload services)
forecasts 16M units in ’
07)
Multimedia-capable PCs Digital cameras
(25 Mio sold in ‘
06, (Owned by 60% of
10% growth) households end ’06)
Heavy Reading FTTH Market in Europe 2006-2011
Consumer-focus
Multimedia applications drive the demand for UHS broadband
Note:
UHS = Ultra High Speed (optical fibre networks); ADSL/ADLS2+/VDSL/VDSL2 are considered as VHS (Very High Speed) networks
3 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

4. The service-oriented economy and information society
High-definition images Network-hosted
exchange applications
Tele-assistance,
Remote back-up,
Tele-monitoring storage
Interactive remote Large file-sharing
learning
Tele-working Home and premises
video surveillance
Citizen-focus Business-focus
UHS broadband as engine for local social and economic development
Note:
UHS = Ultra High Speed (optical fibre networks); ADSL/ADLS2+/VDSL/VDSL2 are considered as VHS (Very High Speed) networks
4 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

5. Innovative services with ‘no-limit’ UHS broadband open networks
Residential Services Business Services Public Services
Ultra High-speed Internet Data VPN Public safety
Multi-stream IPTV IP Telephony Emergency
Interactive TV Collaboration tools Healthcare
VoIP Mobility / Telecommuting Home Healthcare
Multi-player gaming Campus/building surveillance Information
Tele-assistance “Hospitality” services Education
Home surveillance Online learning High crime area CCTV
Security & Alarm Services Utility metering Public transportation
(rail, road)
Web services
Secure municipal network
One-stop administration portal
5 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

6. 2
Open Access Networks
A Business Model that Works
6 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

7. Open Network structure, roles and responsibilities
End user
Right to Choose!
Provides end-user
support for delivered
service
Retail Service  Owns the service and the application servers
Provider  Operates the service
Rights to offer
services on Network
Provides customer Operator portal
support for service
delivery, connectivity  Owns the network (edge/core/access) equipments
and network issues up to the customer premises
Network
operator  Operates the network
Rights to operate  Manages the delivery of the services on behalf of
the network the retail service providers
 Provides connectivity to end-users & retail service
providers
Provides customer
support for fibre  Provides end-user portals for service subscription
(self-registration & auto-provisioning)
 Interconnects the network to the Internet backbone
 and to other telco networks
Design and build the network
Infrastructure
owner  Manages site & civil engineering work
Rights of way  Owns the fibre
7 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

8. The Layered Model – Do what you do best!
End-user
Retail Services
(residential, public & business)
Active Network
(network equipments,
business & operation support)
Passive Infrastructure
(trenches, ducts, fibre)
Retail Service Provider Retail Service Provider
Integrated or separated?
Active Network Provider Active Network Provider
Passive Infrastructure Provider Passive Infrastructure Provider
8 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

9. Open Networks – Just how Open is Open?
End-user
Retail Services
(residential, public & business)
Active Network
(network equipments,
business & operation support)
Passive Infrastructure
(trenches, ducts, fibre)
Open networks are:
1. Technology-agnostic and open to all end users.
2. Non-exclusive, enabling multiple retail service providers to offer competitive services to end
users.
3. Open for all access technologies, all vendors, all network operators and all service providers.
4. Future-ready, because a fibre infrastructure is a long-term, low-risk investment and because the
active network is highly flexible and easily upgraded.
5. Financially sustaining, because they are paid for by subscribers, not tax payers.
9 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

10. Open Networks – End to End Architecture
Scalable and distributed subscriber, service and application policy enforcement
IP
IPTV communication
Providers providers
Optical Centralized policy
transport management
Fiber
High Speed
Internet
Digital providers
home IP/MPLS
RG Broadband Broadband Other
Access Service Router
residential Service service
Nodes
gateway Aggregator providers
for Optical core
xDSL,
PON, Residential
Ethernet
Business
WiMAX
Public
Integrated network, service and subscriber management
10 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

11. 3
A look to Sweden
Swedish City Networks
11 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

12. The Swedish broadband market
• 5th FTTx broadband country worldwide
 98% households BB enabled
 155 City Networks offering FTTH, mainly on open access infrastructure
 Over 800,000 active FTTH users, more than 50% via city nets
 Rated as country with the best value for bandwidth in OECD
S we de n , amo ng le ading FTTH c o untrie s
FTTH s ubs c ribe rs – e nd ‘05
CITYNETS
12 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

13. The Swedish CityNet Market
- 155 City Network Operators covering 60% of municipalities
- 18 Regional Networks, some connected to Finland and Norway
- Total investment 1,9 Billion EUR
- Funding from Swedish government 0,5 Billion EUR
- Funding from EU 200 Million EUR
- Yearly investment 150 Million EUR
- 3 500 000 km fibre deployed,
- 95% offers dark fibre
- 1,3 million homes passed
- 550 000 active customers
- 74% operating according to the OAN
- From 55 SP´s in 2002 – 400 in 2007
Sources: SSNF, 2008
13 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

14. Swedish Urban Network Association
 Lobbying (EU, Sweden)
 Education & Training
 Recommendations
 Yearly conferences
 Common set top box for Open IP TV
 Own magazine
 Certification of products and solutions
(SKA certificate)
 Visit http://www.ssnf.org/ Bredband &Samhälle
14 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

15. 4
Things we’ve done
and lessons learned
15 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

16. A few lessons learned
 There is no Crystal Ball
 Build for Change
 Maximum Flexibility
 Educate the End-Users
 Confusing Content Freedom?
 Community Involvement
 Local Content Generation
 Small and Large share common problems
 The network and operational challenges of a small building
block in Norway and of AT&T in USA are remarkably similar…
 Hence one common design blueprint for everyone to benefit
 Municipal Involvement
 Vital for rural area development
 Working together is twice the fun and quadruple the profit…
16 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

17. Some Further Examples
P2P Fibre
BPON
GPON
80+ FTTx (VDSL, PON, P2P)
20+ nation-wide operators, 60+ Municipalities/Utilities
25+ as end-to-end IP network vendor
FTTH integrator (Nordics, France, Spain, Kuwait, Switzerland)
17 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

18. www.alcatel-lucent.com
www.alcatel-lucent.com
18 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

19. Business Model Value Chains
Value chain Appoints
Infrastructure Network IP-bitstream access
Retail Service
Dark Fibre Services End-user
Owner Operator Providers
Rights of way Rights to operate Rights to offer
the network services on Network
Wholesale Operator portal
Ethernet
IP-bitstream
access offer
Model Revenue streams
End-user
Service fees
End-user
$
Retail Service
Retail Service Any Service Connection fees
Providers
Providers Provider $
Network fees
Network Independent $
Network
Operator Operator
Operator
Infrastructure Infrastructure fees
Muni/Utility
Owner $
(Accommodation $ Infrastructure
or other utility) Owner
19 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

20. Key Drivers for Municipalities
 Distinct competitive advantage to attract citizens and businesses
 Introduce new on-line capabilities to better serve their citizens
 Enhance their public service offerings to all
 Boost socio-economic development, even in underserved or remote areas
 Pay-by-itself public infrastructure: sustained by subscribers, not taxpayers
 Provide high-quality broadband at affordable prices
 Interconnect their offices to save cost
 Bridge the digital divide which has recently shifted from Internet access to
ultra high-speed Internet access
20 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

21. Key Drivers for Utilities
 Diversification & new revenue streams
 Telecom as part of a bundle offer (4th utility)
 Cost synergies at infrastructure level
 Operational cost savings and green initiatives
 smart metering capabilities
 new building management services
(remote monitoring, access control, energy management)
 Anticipate future legislative requirements in energy savings
21 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.

22. www.alcatel-lucent.com
www.alcatel-lucent.com
22 | Manchester Open Networks | June 2009 Copyright © 2009 Alcatel-Lucent. All rights reserved.