What’s New In Service Provider Networks? Intro to Carrier Networks Broadband You Can Build On It’s a great shot when you pull it off, It’s a smart shot when you don’t have the guts to try it. - Phil Mickelson Benjamin Franklin ® ADTRAN, Inc. 2010 All rights reserved 2 Service Providers What keeps me awake at night? ® ADTRAN, Inc. 2010 All rights reserved 3 ® ADTRAN, Inc. 2010 All rights reserved 4 Who is ADTRAN? Leading provider of networking and communications equipment Smart, Reliable Solutions for Today’s Communication Networks – Widely deployed throughout North America and a growing number of Global Service Providers – One stop shopping for business networking equipment needs - routing, switching, telephony Innovative Product Approaches – All-in-one solutions save space, integrate functionality, reduce cost – Multi-service platforms leverage existing network infrastructure, enable networks for new service deployments at lower cost Dependable solutions for business and residential connectivity – Strategic product position – Entrepreneurial engineering capabilities – Demonstrated financial competence ® ADTRAN, Inc. 2010 All rights reserved 5 Strategies for Growth Our Growth Businesses 2009 Results: – Primary Growth Products 52% of Revenue INTERNETWORKING Up 13.5% year over year – Broadband Access = $111.5M Up 9% year over year TA5000 platform had record sales! OPTICAL – Optical Access = $60.6M ACCESS Up 12.5% year over year – Internetworking = $80M Revenue Record! BROADBAND ACCESS Up 21.5% year over year – R&D Investment $83M Up $1.5M year over year ® ADTRAN, Inc. 2010 All rights reserved 6 The Access Network Carrier Networks Division Enterprise Networks Division ® ADTRAN, Inc. 2010 All rights reserved 7 High Performance Services for Business & Residential Customers Central Office HIGHERSPEED INTERNET ACCESS MANAGED NETWORK SERVICES METRO ETHERNET Improve Access Infrastructure for Service Providers Enable Services for Business & Residential Customers ® ADTRAN, Inc. 2010 All rights reserved VoIP IPTV BROADBAND ACCESS MOBILE BACKHAUL IP TELEPHONY VOICE & DATA NETWORKING 8 Total Access Solution ® ADTRAN, Inc. 2010 All rights reserved 9 Goal for the Network Migrate to a single, unified network infrastructure that delivers all next generation services, residential or business. Maximize existing assets without encumbering future capabilities. Ethernet ® ADTRAN, Inc. 2010 All rights reserved 10 AOS: Foundation for Success Same OS used on TA 900 Series Interoperable with leading softswitches Proven SIP and MGCP implementation Wide array of statistics and debug tools ADTRAN OPERATING SYSTEM ® ADTRAN, Inc. 2010 All rights reserved 11 Driving Next-Generation Architectures Carriers are moving toward converged networks over IP/Ethernet – Scalability for enhanced broadband – Lower operational cost Migration to IP-based applications and services – Copper, fiber and mobile infrastructure Evolution to higher-speed business services ® ADTRAN, Inc. 2010 All rights reserved 12 Providing Smart Connectivity for Delivery of Services Broadband Access Network Transport/Aggregation – Higher Speed Internet – Optical – IPTV – Ethernet – POTS / Specials – Mobile Backhaul Unified Communications – Hosted and Premise-Based VoIP Metro Ethernet – Fiber and Copper Managed Network Services – Security, LAN ® ADTRAN, Inc. 2010 All rights reserved 13 Impact on Mobile Backhaul ® ADTRAN, Inc. 2010 All rights reserved 14 Evolution of Technology Computing Costs Infonetics, Deloitte Processing cost is dropping faster than bandwidth cost… ® ADTRAN, Inc. 2010 All rights reserved …driving distributed architectures like the IP for LTE 15 Provide Essential Technologies to Deliver Enhanced Services Technologies increase access network bandwidth for business and residential customers – Ethernet-based Broadband Access GPON Active Ethernet VDSL2 ADSL/ADSL2+ SHDSL EFM – Optical Access SONET/SDH Ethernet – Internetworking Routing/Switching Unified Communications ® ADTRAN, Inc. 2010 All rights reserved 16 Smart Solutions for Wireline Service Providers Multi Service Access Platform (MSAP) – – – – – – – – BBDLC IP DSLAM Fiber to the Node (FTTN) Fiber to the Premises (FTTP) Fiber to the Curb (FTTC) Network Aggregation: TDM, ATM and IP Business Carrier Class Ethernet Business Services Migration Optical Access Network Communications Terminating Equipment (NCTE) Multiplexers ® ADTRAN, Inc. 2010 All rights reserved 17 Innovative Time To Market Cost of deployment – in $5000 increments Equipment Cost Materials and Labor Cost Cabinet Deployment OSP Deployment 40 days 1-2 days Time to Market – in 5 day increments ® ADTRAN, Inc. 2010 All rights reserved 18 Complete Broadband Solutions Broadband Product Suite for Copper and Fiber Delivery Central Office ® ADTRAN, Inc. 2010 All rights reserved Remote Terminal Remote Node Customer Premises 19 Emerging Opportunities Next-generation architectures are now a necessity – Counter the competitive threat from cable – Increase revenues through the delivery of higher bandwidth services – Optimize network to drive out operational cost How can carriers enable the new without stranding the existing? – Legacy and next-generation services – Phased evolution from discrete to converged networks ® ADTRAN, Inc. 2010 All rights reserved 20 Building Tomorrow’s Network More fiber – less copper – Maintain existing subscribers and services – Deliver higher bandwidths – install fiber, shorten copper loops near term, FTTP long term More packet – less TDM – Migration to IP-based networks inevitable – Unified network drives simplicity, savings, scalability – Rise of Multigigabit Ethernet networks – decline of traditional TDM/SONET networks due to inefficiency, complexity ® ADTRAN, Inc. 2010 All rights reserved 21 Carrier Ethernet Services Better Services to More Customers – Sooner • Faster Time to Market • Universal Service Coverage • Value-Added Service Delivery • Simplified Deployment Model ® ADTRAN, Inc. 2010 All rights reserved 22 Key Applications for Carrier Ethernet Enabling bandwidth growth and new services • Business Services – Metro Ethernet service delivery – Business-class direct internet access – Point to Point and Multipoint LAN services – Service availability is key • Mobile Backhaul – Support evolution from TDM to Ethernet – Legacy support, including synchronization, are critical attributes ® ADTRAN, Inc. 2010 All rights reserved 23 Mobile Backhaul ® ADTRAN, Inc. 2010 All rights reserved 24 Next Generation Ethernet Applications 10Mbps to 1Gbps Ethernet Service Delivery ® ADTRAN, Inc. 2010 All rights reserved 25 Service Provider ® ADTRAN, Inc. 2010 All rights reserved 26 ADTRAN’s Unique Position ADTRAN’s proven ability to enable sustainable delivery of business class and high speed data services ADTRAN’s significant embedded base of deployed solutions ADTRAN’s extensive real world experience in deployment ADTRAN’s full suite of standards based Ethernet delivery solutions ADTRAN’s commitment to delivery of mass deployable (replicable, scalable, easily maintained) Ethernet services ADTRAN’s commitment to continued innovation ® ADTRAN, Inc. 2010 All rights reserved 27 ® ADTRAN, Inc. 2010 All rights reserved 28