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									         The Future Of Network
          Intelligence: IN 2.0




           Roderick K. Randall
            Senior Managing Director
              Vesbridge Partners


Page 1
            Why Start or Invest in a Telecom
                      Company?



         • Why do you rob banks, Willy?
            “Cause   that’s where the money is”
                                  Willy Sutton
                                 Bank Robber




Page 2
              Where are the New Opportunities?



         •   Answer:


             The      Second Derivative




Page 3
                             Second Derivative Plays

         •   The Base
                 Internet infrastructure
                 Starting with narrowband and moving to broadband.
         •   The First Derivative opportunities
                 Internet based companies such as AOL, Amazon, Yahoo, Google,
                  eBay, and others
         •   The Second Derivative Plays
                 Skype - $4 Billion!
                 Moogle, MeBay, Mamazon, Metc.
                 Mass Personalization and Citizen Media
                 MediaCos (not Telcos or CableCos, but Network TV without the
                  Network)
                      Voogle – Video Search Based TV Ad Delivery


Page 4
                                           Web 2.0

         •   Blogs (Weblogs)
                 Augment if not replace traditional news sources
         •   RSS (Really Simple Syndication)
                 Automated personalized assembly of web info of interest
         •   Online Advertising
                 CPM (Cost Per Mil), PPA (Pay Per Action), PPC (Pay Per Call)
         •   Peer-To-Peer
                 From “free” Napster to Bit Torrent and e-Donkey
         •   Digital Media
                 From DRMed i-Tunes to Movielink
         •   Consumer Generated Media
                 YouTube, My Space, We Media, Flickr, Face Book
         •   Podcasts
                 Professional and Consumer Generated
         •   Vodcasts
                 Podcasts with video

Page 5
                        “A Network Carol”
                           Not by Charles Dickens



         •   The Ghost of Network Past
         •   The Ghost of Network Present
         •   The Ghost of Network Future




Page 6
                    The Ghost of Network Past


         •   Telecom was the most valuable and profitable industry in
             the world
                When I joined AT&T Bell Labs in 1981 it was the worlds largest
                 company and its most valuable
         •   We’ve since seen Divestiture and Trivestiture, (and now
             reassembly!) along with a tremendous growth in the
             competitive environments…
         •   Along with a dramatic surge in capacity and capability in
             the following 25 years..
         •   Spurring in turn a tremendous surge in innovations, not
             the least of which included the internet and the web




Page 7
           Worldwide Telecom Service Revenues
                               $1.4 Trillion in 2005




               $1.0 Trillion




         Source: IDC
Page 8
                The Ghost of Network Present

         •   Strong demand for higher and higher bandwidth
         •   Increasingly Pervasive “always on” Broadband
         •   Enabling the 1st derivative business models to enormously
             prosper such as those of Amazon, Yahoo, eBay, and
             Google
         •   Google is now worth over $100 Billion, which is more than
             any telecom operator in the world, except for Vodafone
             Group, which has grown by acquiring over 26 operators
         •   Skype was already acquired for $4 Billion by eBay
         •   P2P traffic from a small percentage of subscribers
             dominates the internet backbone
         •   All telcos are planning some form of IPTV in a triple play
             with 10s of Mbps of BB BW


Page 9
                  The Ghost of Network Future


          •   A number of potential futures
          •   One is where telcos ride the new wave of opportunity by
              radically transforming their business models to meet the
              new challenge
          •   Another is where telcos are ridden by the new 2nd
              derivative players, some of which are the 1st derivative
              players, who have evolved, and are now gear-shifting into
              overdrive
          •   Let’s look at the second one first, because that’s what
              Dickens would do




Page 10
                                Key Catalysts

          •   Plentiful Consumer Broadband in capacities un-dreamed of 10
              years ago…
          •   Driven by the MAD Winner-Take-All competitive threat of The
              Triple Play …
          •   Driven by the push to mix Entertainment Delivery with Telecom…
          •   Digitally using IP…
          •   At low costs…
          •   Even free…
          •   Or “apparently” free to the consumer…
          •   Using a new advertiser supported business model…
          •   Which is no longer broadcast based…
          •   And everything is stored on increasingly abundant cheap
              storage, and instantly retrievable by anyone anywhere



Page 11
                                      Magnetic Disk Storage Cost:
                                      Declining at a Rate of 45% Annually

          $1,000.00


                                $1,000.00




                                                     Cost of 1GigaByte
                                                     Cost of 1G Storage
                                                     of Hard DiskByte of Capacity



                                       $303.00
           $100.00



            $10.00                               $92.00
             $1.00                                        $28.00
                                                                   $8.37     $2.53     $0.77   $0.23     $0.07
             $0.10
                       1992           1994   1996     1998     2000        2002      2004   2006       2008
  Source: Berghell Associates, 2001



Page 12
              What Do You Call 1,024 Petabytes?


          •   And the answer is…

              An        Exabyte
          •   Terabytes of Storage will become common place in the
              average broadband consumer home within 5 years
          •   As the tendency to keep rather than discard data
              increases, along with more sources
          •   What is a Googabyte?
                 1 with 100 Zeroes of bytes




Page 13
                    A New $1 Trillion Industry…


          •   It will be made up from the convergence and collision of
              three different industries
                 Entertainment: $72 Billion
                      $12 Billion Music
                      $60 Billion Movies
                 Advertising: $600 Billion
                 Telecom Services:$1.4 Trillion
          •   The Tail may be wagging the Dog
          •   Net Net: $2 Trillion  $1 Trillion
          •   But, there will be a different set of winners and losers
          •   Key Catalysts: Read on…

Page 14
                               Enter Googlezon

          •   EPIC 2014, a short film by Matt Thompson and Robin Sloan
          •   Ads move from broadcast TV, newspapers, print,
              billboards, other, to Online
                 NY Times shuts down, unable to support its printing costs
          •   Mass personalization makes advertising much more
              compelling both to advertisers and potential customers
          •   Google buys Amazon to create Googlezon
          •   Everything that’s bought begins with a search
          •   With personalized, search driven, real-time inserted, online
              Ads…
                 People get ads that they actually want to watch,
                 Related to something they are interested in purchasing,
                 Rather than are annoyed by and seek to skip
Page 15
                   Which Becomes Googlezonage

          •   TV is offered for free, again, this time Pointcast over IP, not
              broadcast
                  All supported by a real-time hyperlinked Mass Personalized Ad model
                  NBC, ABC, CBS shut down, replaced by Bloggers
                  MTV, Fox, and Craig’s List survive as the new Ad Aggregators (a la
                   Overture)
          •   Telephony rides for free on IP, leading to financial crisis in
              network operators
          •   All telcos learn to operate within bankruptcy, like the airline
              industry
          •   Google buys AT&T (out of bankruptcy) and Vonage to keep the
              broadband pipes flowing
          •   Wireless is the only surviving stand alone network business
                  But its threatened by Googlezonage’s new Global WiFiMAX FreeNet
                  Enter Googlezonage Mobile



Page 16
                       It’s a MAD MAD World


          •   M.A.D.: Mutually Assured Destruction for telcos and cable
              operators




Page 17
              But, There’s An Alternative Future

          •   Telcos and Cablecos not only offer IPTV, but get involved in
              Internet TV
          •   They add intelligence in their networks to make sure they are
              paid for the value of connection in order to keep the pipes alive
          •   Nobody unsustainably gives valuable network connections away
              for free without someone paying the operators
          •   The new business models that are created involve a true payment
              methodology for QoS that reflects value, and that could be paid
              by sponsors such as advertisers
          •   New applications are spawned, which further institutionalize the
              network providers into the value chain, rather than Skype them
              out
          •   Connection will continue to be valued and paid for



Page 18
                The Stupid Network is a Stupid Idea

          •   Stupid Networks lead to stupid and
              unsustainable Business Models
          •   Stupid Networks would ultimately only have
              price/bit as differentiation…
          •   Leading to rapid commoditization…
          •   Which drives profitability out of all competitors…
          •   Which makes the business un attractive…
          •   Which makes it un-finance-able…
          •   Which makes it un-staff-able with top talent
          •   Which leads to collapse
Page 19
                                Intelligent Network 2.0

          Signaling and Control            Control
          • AIN Services
              •800/900, Caller ID/Name
              •Voice Mail, IVR
          • Mobility                                        IP Enhanced
          • SMS                                            3-D Intelligence
          • SIP
          • Fixed/Mobile Convergence

                                                PSTN
                                                                 Management

  Content                                                  Management
    •     Instant Messaging                            •    DNHR
                                    Content            •    Self Healing Networks
    •     Multimedia messaging
    •     Network Based Security                       •    Flow Through Provisioning
    •     Parental Control                             •    MPLS
    •     Spam Filtering
    •     Intelligent Content Delivery & Management
Page 20
                                           Fixed-Mobile Convergence
                                           Architectural Environment
                                                          HLR   VLR    Pre- SMSC          HLR
                                                                                           HLR
                                                                       Paid        SS7      HLR
                           RAN                                                               VLR
      GSM                     BSC
      CDMA
     WCDMA
                                                                                   PSTN
  1x-RTT/EV-DO                              A-Interface
                                                                   MSC                     MSC
     HSDPA
                             WBSC                               Hosted Voice               IMS
                           WiFi/SIP                             Svc Provider
                            BSC                                  MS        SG             SG     VLR

                                                                 SS        MG             MG   SS/MM




                                                                      IP
           Pico Cellular   L-AP


                 WiFi      L-AP


            Bluetooth      U-AP


              WiMax        M-AP



                        WLAN GWY
                                                   MFW




                                      IP




Page 21
                                              Fixed-Mobile Convergence
                                              Architectural Environment
                                                             HLR   VLR    Pre- SMSC                  HLR
                                                                                                      HLR
                                                                          Paid        SS7              HLR
                           RAN                                                                          VLR
      GSM                     BSC
      CDMA
     WCDMA
                                                                                      PSTN
  1x-RTT/EV-DO                                 A-Interface
                                                                      MSC                            MSC
     HSDPA
                             WBSC                                  Hosted Voice                          IMS
                           WiFi/SIP                                Svc Provider
                            BSC                                     MS        SG                    SG         VLR

                                                                    SS        MG                    MG     SS/MM




                                                                         IP
                                                                                             Broadband

           Pico Cellular   L-AP                                                                  Residences

                 WiFi      L-AP


            Bluetooth      U-AP
                                      SIP PBX
              WiMax        M-AP
                                                                                                   Remote
                        WLAN GWY                                                                   Offices
                                                      MFW




                                        IP

                                        MG


                                        PBX




Page 22
                               Intelligent Content Distribution
                   Every Song, Artist, Video, or Film Ever Recorded… On Demand




          Guest Room       Master Bedroom




                        Home Media
                          Server
                                                            DSL
                                                                    Cable   Network Edge
    Home Theatre
                                                            Fiber
                                                                                           Network Core
                                     Ethernet   DSL/Cable
                                      Switch     Modem




Page 23
                                       Intelligent Content Distribution
                                               Content Replication and Pre-Caching




          Guest Room            Master Bedroom




                             Home Media
                               Server
                                                                 DSL
                                                                         Cable              Network Edge
     Home Theatre
                                                                 Fiber
                                                                                                                                             Network Core
                                          Ethernet   DSL/Cable
                                           Switch     Modem




 Local DVRs                        Home Media Server                             Network Edge DVR                 Network Core DVR
 •    Store most recent tv         •        Store all purchased and              •    Store the most popular      •    Store all content:
      shows                                 downloaded content                        content:
                                                                                                                             All movies available
 •    Favorites                                       Movies                                Most downloaded                 for download
                                                                                              movies
                                                      TV shows                                                              All Music available
                                                                                             New releases                    for download
                                                      Pictures
                                                                                             Most popular MP3s              All Video...
                                                      MP3s
                                                      Etc.




Page 24
                                        Intelligent Content Distribution
                             Policy Control Servers Control Network Enforcement

                                                                                                   BW/QoS                Real Time Billing
                                                                                                 Policy Server            Policy Server


                                                                                                              PCS   PCS


          Guest Room             Master Bedroom




                              Home Media
                                Server
                                                                  DSL
                                                                          Cable              Network Edge
     Home Theatre
                                                                  Fiber
                                                                                                                                                   Network Core
                                           Ethernet   DSL/Cable
                                            Switch     Modem
                                                                                                      Policy Enforcement
                                                                                                             Point

 Local DVRs                         Home Media Server                             Network Edge DVR                   Network Core DVR
 •    Store most recent tv          •        Store all purchased and              •    Store the most popular        •       Store all content:
      shows                                  downloaded content                        content:
                                                                                                                                   All movies available
 •    Favorites                                        Movies                                Most downloaded                      for download
                                                                                               movies
                                                       TV shows                                                                   All Music available
                                                                                              New releases                         for download
                                                       Pictures
                                                                                              Most popular MP3s                   All Video...
                                                       MP3s
                                                       Etc.




Page 25
                                       Intelligent Content Distribution
                             Search Based Personalized Real Time Ad Insertion

                                                                         Real Time Ad            Search based             Entitlement &        P2P Swarm
                                                                           Insertion             Personalization              DRM               Controller


                                                                                                      PCS      PCS   PCS       PCS

                                                                                                                                                           Ad Server Network

          Guest Room            Master Bedroom




                             Home Media
                               Server
                                                                 DSL
                                                                         Cable                Network Edge
     Home Theatre
                                                                 Fiber
                                                                                                                                                    Network Core
                                          Ethernet   DSL/Cable
                                           Switch     Modem
                                                                                                       Policy Enforcement
                                                                                                              Point

 Local DVRs                        Home Media Server                             Network Edge DVR                     Network Core DVR
 •    Store most recent tv         •        Store all purchased and              •      Store the most popular        •       Store all content:
      shows                                 downloaded content                          content:
                                                                                                                                    All movies available
 •    Favorites                                       Movies                                  Most downloaded                      for download
                                                                                                movies
                                                      TV shows                                                                     All Music available
                                                                                               New releases                         for download
                                                      Pictures
                                                                                               Most popular MP3s                   All Video...
                                                      MP3s
                                                      Etc.




Page 26
                                       Intelligent Content Distribution
                                            Controlled Peer-To-Peer Swarmcasting

                                                                         Real Time Ad            Search based             Entitlement &        P2P Swarm
                                                                           Insertion             Personalization              DRM               Controller


                                                                                                      PCS      PCS   PCS       PCS

                                                                                                                                                           Ad Server Network

          Guest Room            Master Bedroom




                             Home Media
                               Server
                                                                 DSL
                                                                         Cable                Network Edge
     Home Theatre
                                                                 Fiber
                                                                                                                                                    Network Core
                                          Ethernet   DSL/Cable
                                           Switch     Modem
                                                                                                       Policy Enforcement
                                                                                                              Point

 Local DVRs                        Home Media Server                             Network Edge DVR                     Network Core DVR
 •    Store most recent tv         •        Store all purchased and              •      Store the most popular        •       Store all content:
      shows                                 downloaded content                          content:
                                                                                                                                    All movies available
 •    Favorites                                       Movies                                  Most downloaded                      for download
                                                                                                movies
                                                      TV shows                                                                     All Music available
                                                                                               New releases                         for download
                                                      Pictures
                                                                                               Most popular MP3s                   All Video...
                                                      MP3s
                                                      Etc.




Page 27
          Intelligent Content Distribution
           Controlled Peer-To-Peer Swarmcasting

                    Real Time Ad      Search based          Entitlement &   P2P Swarm
                      Insertion       Personalization           DRM          Controller


                                           PCS     PCS    PCS    PCS

                                                                                   Ad Server Network




                                   Network Edge
                                                                               Network Core

                                            Policy Enforcement
                                                   Point




Page 28
                    Intelligent Access Control
          IP TV will Dramatically Increase Network Capacity Demand

                             Real Time Ad      Search based          Entitlement &   P2P Swarm
                               Insertion       Personalization           DRM          Controller


                                                    PCS     PCS    PCS    PCS

                                                                                            Ad Server Network




                                            Network Edge
                                                                                        Network Core

                                                     Policy Enforcement
                                                            Point




                            1000x Increase
                  In Simultaneous IP Access Demand



Page 29
             Intelligent Content Distribution 2.0
          Controlled Subscriber Side Peer-To-Peer Swarmcasting

                             Real Time Ad        Search based          Entitlement &   P2P Swarm
                               Insertion         Personalization           DRM          Controller


                                                      PCS     PCS    PCS    PCS

                                                                                              Ad Server Network



                         Policy Enforcement
                                Point



                                              Network Edge
                                                                                          Network Core

                                                       Policy Enforcement
                                                              Point




                  Content Can Be Re-Distributed
            On The Abundant Side of the Access Node


Page 30
                   Summary: IN 2.0 Involves…


          •   Content and Context Aware Networks with Intelligent
              Policy Enforcement
          •   Mobile Intelligence Converged with Fixed
          •   Intelligent Content Distribution as well as Connection
          •   Rich Media Experience including Advertiser Support
          •   Dynamic Mass Personalized Intelligent Ad Insertion…
          •   Dynamic pricing by a Real Time Online Auction Market
          •   Distributed Storage with Intelligent SwarmCast Replication
          •   Content Value adds to Connection Value, rather than
              replaces it



Page 31
               $1 Trillion Market Grows to $3 Trillion


          •   Oops, what’s that ringing sound?
          •   Was that the alarm clock waking me up from this dream, or
              is it a nightmare???
          •   You be the judge




Page 32
           Thank You!
          www.vesbridge.com




Page 33

								
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