Evolving Toward a High Leverage Network

Transcription

1 S T R A T E G I C W H I T E P A P E R Evolving Toward a High Leverage Network Extracting additional value from the network to create sustainable business models Network providers must address the key challenge of being both efficient, low-cost bit transport providers and innovative, value-added service providers. A high leverage network addresses this challenge; allowing network providers to continuously scale network bandwidth cost effectively from the access to the transport layer, as well as instrument or equip the network with built-in service and application awareness, quality of service (QoS), and traffic optimization. A high leverage network supports application enablement, which allows network providers to deliver their own differentiated portfolio of advanced applications, attractive content and personalized services to residential, business and mobile users, as well as their partners users and other content and application providers users. This approach allows network providers to adopt new business models to extract additional value from their networks and to grow revenues. In addition, it enables network providers to continue investing in their networks to meet future needs.

2 Table of contents 1 1. Introduction 2 2. Market dynamics 3 3. Wireline and wireless network transformation to IP 5 4. Defining a high leverage network The requirements of a high leverage network The benefits of a high leverage network The high leverage network and application enablement Incremental steps and common approaches to a high leverage network Alcatel-Lucent innovations toward a high leverage network Innovations in technology Innovations in eco-sustainability Conclusions

3 1. Introduction The Alcatel-Lucent high leverage network strategy addresses the key challenge of network providers who simultaneously need to be efficient low-cost bit transport providers and innovative, valueadded service providers. A high leverage network allows network providers to continuously scale the bandwidth of their networks from the access layer to the transport layer at the lowest total cost of ownership to provide scalable and reliable low-cost bit transport. In addition, a high leverage network allows network providers to instrument or equip the network with built-in service and application awareness, QoS, and traffic optimization. This enables network providers to provide the appropriate levels of intelligence within the network at the optimum cost. A high leverage network supports application enablement that exposes selected capabilities of the network in a managed and controlled way. This enables network providers to deliver their own differentiated portfolio of advanced applications, attractive content and personalized services to residential, business and mobile users, as well as those of their partners and other content and application providers. This shift from keeping value in the network to extracting value from the network allows network providers to grow revenues and enables them to continue investing in their networks to meet future needs. The communications industry is undergoing dramatic but exciting changes. End users enjoy closer interaction with multimedia and video/tv services through the tighter integration between telecom, IT and media, including advertising. Broadband is more pervasive and affordable, and consumption of video and content is booming. User-friendly and Internet-capable devices that support the latest multimedia and video applications are proliferating. Yankee Group: The Essence of the Anywhere Revolution A powerful trio of technology developments in the past decade is triggering a new wave of global transformation. The internet as a digital communications standard combined with the increasing demand for broadband capacity and the game-changing economics of wireless networks are inciting a revolution whose impact will be far greater than the sum of these parts. Yankee Group, September 2008 As end users become further immersed in the Web and its ever-expanding possibilities, demand for bandwidth both wired and wireless is soaring as users want to take the Internet experience with them, on the move. Expectations of quality of experience (QoE) are also increasing as end users want seamless and always-on access to services across wireline and wireless. For network providers, this translates into the need to continuously scale network bandwidth across multiple dimensions while supporting the lowest total cost of ownership to meet the challenge of being efficient low-cost bit transport providers. Furthermore, the Web model has challenged the equilibrium of existing business models and has created instability. Many web applications and content, particularly video, are sponsored by third parties such as advertisers, and are thus free to end users. Network providers must find new and innovative ways of generating additional revenue for carrying this extra traffic on their networks; currently they receive no incremental revenue for doing so. At the same time, application and content providers have restricted access to network capabilities that can improve QoE and strengthen relationships with end users. These changing dynamics in the telecoms market require network providers to equip their networks to support service and application awareness, advanced QoS and traffic optimization and meet the challenge of being value-added service providers. Evolving toward a high leverage network Strategic White Paper 1

4 2. Market dynamics The changing dynamics of the telecoms market means that network providers must support varying business models with different revenue and profit profiles. In a traditional carrier model the network provider offers pure connectivity using broadband pipes to transport 3rd party traffic transparently and as efficiently as possible. This traffic includes videointensive consumer traffic, and enterprise application and data traffic, in addition to other carriers traffic (the carrier s carrier model). In this model, the network must continuously scale to achieve the highest capacity at the lowest total cost of ownership per transported bit and it must do this end-to-end, across wireline and wireless and from access to core. It primarily means the network must provide high bandwidth and high scalability. However, the network also requires high reliability and high QoS, with the ability to distinguish high priority traffic from best effort traffic. For example, enterprise traffic needs prioritization, great QoS granularity and better service and application assurance than best-effort consumer Internet traffic. In this model, network providers must adopt this approach to avoid the risk of commoditization due to increasing competition and regulation. In an enhanced services model the network provider leverages the capabilities of their network and the knowledge, trust and confidence they enjoy in their relationships with their own end users. These capabilities and this knowledge can be used to deliver a differentiated portfolio of advanced applications, attractive content and personalized services that are better tailored to meet their end users expectations of high bandwidth services and high QoE. Examples include personalized consumer multi-media communication services and enterprise application-assured business services. In this model, the network must be equipped at optimum cost to support multiple and concurrent customized services with dynamic service creation, delivery and assurance. In addition to high bandwidth and high scalability, the network must also offer enhanced QoS, traffic optimization, high reliability and availability, improved security, application assurance, caching, and enhanced policy management and mediation all of which help to generate incremental revenue and increase end user loyalty. Another model is based on application enablement. This is the Alcatel-Lucent vision of how network providers can develop profitable partnerships with selected application and content providers to create new web-based services, such as personalized Internet TV. As with the enhanced services business model, in this model the network must be equipped at optimum cost to allow the network provider to fully leverage the capabilities of their network but expose selected capabilities to their partners and other 3rd parties in a managed and controlled way. This new model delivers the high bandwidth and the network capabilities required to enhance the end user s QoE, such as QoS, reliability and security. However, unlike a Web 2.0-centric model, in which network providers receive no additional revenue for carrying over-the-top applications and content, it ensures that the network provider receives a share of the revenue from their partners and other 3rd parties in exchange for delivering their applications and content in an enhanced way. The Alcatel-Lucent application enablement vision allows network providers to develop new, innovative and collaborative business models that enable them to generate additional revenue for delivering popular web applications and carrying bandwidth intensive video traffic on their networks. At the same time, application and content providers have controlled access to selected network capabilities that can improve the performance of their applications and content, and thereby strengthen their relationships with end users. 2 Evolving toward a high leverage network Strategic White Paper

5 3. Wireline and wireless network transformation to IP Many wireline network providers have already started on the evolutionary path to a high leverage network with their transformation to IP, particularly for triple play services. This transformation, which is typified by the Alcatel-Lucent Triple Play Service Delivery Architecture (TPSDA), is shown in Figure 1. Figure 1. Wireline network transformation DSL gateways ADSL ATM DSLAM ATM switch BRAS IP/MPLS Backbone HSI only Policy manager Residential gateways VDSL, GPON IP DSLAM Ethernet/ MPLS transport Broadband network gateway IP/MPLS Backbone Triple Play Bundle Web 2.0 Initially, to provide basic high speed Internet access, wireline network providers deployed residential broadband services based on Asymmetric Digital Subscriber Line (ADSL) using ATM Digital Subscriber Line Access Multiplexers (DSLAMs), ATM aggregation and Broadband Remote Access Servers (BRAS). Many wireline network providers have now transformed their residential broadband networks to all-ip using IP DSLAMs, Carrier Ethernet aggregation, broadband network gateways, and an IP/MPLS service edge and backbone. With centralized subscriber and policy management, distributed policy enforcement and end-to-end service aware management, wireline network providers can now control and deliver enhanced triple play service bundles with improved QoE. Evolving toward a high leverage network Strategic White Paper 3

6 With mobile broadband services growing rapidly, wireless network providers are now starting a similar transformation to all-ip, with the industry deciding that Long Term Evolution (LTE) and the Evolved Packet Core (EPC) is the evolution plan for both 3GPP and 3GPP2 based technologies. As a result, in the transformation to all-ip, wireless network providers are going through a process similar to what wireline network providers previously experienced. For wireless network providers, the focus is on the evolution to a converged RAN, migration of the backhaul network from TDM and ATM to all IP, and implementation of the EPC, as shown in Figure 2. Figure 2. Wireless network transformation 2G/3G CDMA/EV-DO GSM/GPRS EDGE UMTS HSPA Voice channels IP channel BTS Node B Cell site access TDM and ATM aggregation BSC RNC MSC SGSN PDSN GMSC Softswitch Circuit switched core (voice) Packet switched core MGW GGSN HA GGSN HA PSTN Other mobile networks Internet VPN HSI only LTE+EPC IP channel enode B Cell site access Ethernet/ MPLS transport SGW MME PCRF Evolved packet core (wireless) PGW Triple Play Bundle Web Evolving toward a high leverage network Strategic White Paper

7 As wireline and wireless networks transform to IP and packet-based architectures, increasingly these networks start to look similar. From a network architecture perspective, these networks have a converged IP/MPLS-based core, complemented by converged IP/MPLS-based aggregation and access. The move to all-ip also improves scalability, reliability and QoS, while dramatically simplifying the network and lowering operating costs. From a transport perspective, the use of more efficient packet-based transport instead of circuit-based transport helps improve efficiency and reduces costs further. Finally, providing end-to-end policy and service aware management allows more personalized services and improved service level agreements (SLAs) as well as enhanced operation, administration and maintenance (OAM). Network providers with all-ip wireline and all-ip wireless networks must now meet end user demands for bandwidth and services everywhere both wired and wireless. Therefore, the next step for network providers is the evolution to a fully converged high leverage network. Today s customer concerns Multiple overlay networks Too much complexity and a lack of flexibility Services implemented in silos Services cannot be delivered over any access We have way too much complexity; we will implement a next generation network Alcatel-Lucent Tier 1 customer 4. Defining a high leverage network A high leverage network is a fully converged network that provides continuous scaling of bandwidth across multiple dimensions, from the access layer to the transport layer, at the lowest total cost of ownership. At the same time, it equips the network with built-in service and application awareness, QoS, and traffic optimization to provide the appropriate levels of intelligence within the network at the optimum cost. In addition, a high leverage network offers high reliability and availability, improved security, application assurance, caching, and enhanced policy management and mediation. Combined with application enablement, this approach delivers more advanced applications, attractive content and personalized services, and it extracts additional value from the network and generates additional revenue. Figure 3 shows the concept of a high leverage network. Evolving toward a high leverage network Strategic White Paper 5

8 Figure 3. A high leverage network Converged RAN Network and service management Cell site aggregation Base station Converged service control: Session control (IMS) Mobility manager (MME) Dynamic policy management Service router DSL/GPON/ Ethernet Ethernet/ MPLS/optical... Service router IP/optical Converged backbone Ethernet Converged edge Converged metro and aggregation Converged wireline access In a high leverage network, the transformation to IP and convergence starts in the backbone of the network and moves to the edge. The common converged metro and aggregation network, the converged RAN and the converged wireline access elements become extensions to the converged edge, with common end-to-end network and service management and fully converged service control. The converged RAN enables support of broadband wireless access using technologies such as GSM, CDMA, W-CDMA and LTE as well as provides continued support for legacy wireless technologies. At the same time, converged wireline access enables support for broadband over copper and fiber using DSL, GPON and Ethernet technologies. The converged metro and aggregation network, the converged edge and the converged backbone elements are all based on multi-service IP/MPLS for scalability, reliability, and high availability and all run over an efficient and highly resilient packet-based transport infrastructure. In the converged backbone, cross layer automation between the IP and optical layers enables dynamic bandwidth allocation for greater efficiencies and lower costs. The converged service control brings together all the necessary elements to control, manage and assure the delivery of end user services. The characteristics of a high leverage network are: High bandwidth delivers the applications and content end users want, where they want it, over both wireline and wireless infrastructure, and in a way that scales for future growth. Scalable and elastic expands and contracts dynamically to meet network provider and end user requirements, but at minimum marginal cost. Reliable and resilient enables always-on and non-stop services and applications that work around failures transparently with no disruption to end users. Cost-effective offers maximum capability at optimum CAPEX, while reducing OPEX through maximum operational efficiency and technical innovation that improves eco-sustainability. 6 Evolving toward a high leverage network Strategic White Paper

9 Eco-sustainable realizes bottom-line and top-line benefits across the network while dramatically reducing the environmental footprint. Multi-service supports multiple and concurrent customized services over a single, flatter, costoptimized, higher-performance IP architecture with more dynamic service creation, delivery and assurance. Open and interoperable enables rapid service velocity and monetization through the exposure of network capabilities in a managed and controlled way to enhance end user QoE. Secure and private protects the assets and intellectual property of all parties, and the personal and contextual information of end users. The evolution to a high leverage network will not happen overnight. However, it can be done in a non-disruptive, step-by-step manner, taking into account the network provider s current network situation and competitive and regulatory environment. Ultimately, this evolution means collapsing today s multiple overlayed, complex, and costly networks into a converged IP, multiservice, applicationenabled broadband network. Network providers will reduce network deployment costs dramatically, and will simplify network operations and use network bandwidth and resources more efficiently. This value-driven and cost-effective evolution is required for network providers to remain relevant and to play a strategic role in the increasingly competitive communications market. 4.1 The requirements of a high leverage network A high leverage network requires a combination of key technologies: Broadband (wireline and wireless) that is available whenever and wherever the end user needs it Seamless and ubiquitous broadband access across wireline and wireless is a prerequisite for maximizing usage and availability of bandwidth-intensive, application-enabled services quickly, reliably and efficiently. An architecture with the highest speed and the lowest total cost of ownership per transported bit and the highest reliability from access to core This means efficient packet transport. It also means taking advantage of the latest innovations in optical technology technology such as tunable lasers and wavelength tracking, packet-optical transport, cross-layer control plane automation, and other transport technologies that lower the total cost of ownership. IP The network must be intelligent, secure, scalable, and reliable and it must be user, service and application-aware, with advanced QoS for service differentiation and application performance. The network must be programmable so existing services can be adjusted and new services developed to meet end user application needs simply and rapidly. Evolving to a high leverage network requires an experienced partner with a leading portfolio of products. It also requires expertise in IP transformation to successfully migrate existing and new services to a fully converged network efficiently and cost effectively. Most importantly, network providers need a partner that they can trust a partner with the knowledge and know-how to ensure business continuity and reduce risk throughout the evolution process. 4.2 The benefits of a high leverage network A key benefit of a high leverage network is that it enables the network provider to offer a differentiated portfolio of advanced applications, attractive content, and personalized services to end users that cannot be offered via the over-the-top model that uses best-effort high speed Internet connectivity. These services include: High bandwidth everywhere for both wired and wireless which allows end users to take the Internet experience with them anywhere IPTV offering hundreds of channels of interactive, real-time, high definition channels that eclipse traditional broadcast TV and result in new revenue streams and enhanced end user QoE Evolving toward a high leverage network Strategic White Paper 7

10 Targeted Internet and IPTV advertising where the network provider has much better and much broader knowledge of end user interests Reporting, optimization and assurance of enterprise applications such as business VPN services and cloud-based applications such as B2B video conferencing Content delivery where content is cached by the network provider much closer to the end user than in a typical content delivery network High quality, real-time communications, which offer enhanced communications services across fixed and mobile devices and encompass voice, multimedia messaging, and social networking A high leverage network offers seamless integration of services and enriches the service experience for end users across both wireline and wireless broadband. It allows end-users to personalize their services. It allows network providers to deliver services that are contextual and more relevant to the end-user services such as targeted advertising based on information such as preference, location and presence derived from the network provider s knowledge of the end user. The other key benefit of a high leverage network is convergence of the network infrastructure vertically across multiple network layers and horizontally across residential, business and mobile services. This enables the network provider to consolidate multiple parallel overlay networks, which today deliver separate residential, business and mobile services. A high leverage network offers a converged service and application-aware infrastructure that delivers services to all end users and is optimized for the lowest total cost of ownership per transported bit. Apart from providing a more efficient, much lower cost infrastructure, this convergence provides the following benefits: A single converged, multi-service network that leverages the power and commonality of Ethernet and IP, and is application-aware and highly equipped to cost effectively enable the creation and delivery of more dynamic, flexible and personalized services Universal converged access with scalable dynamic bandwidth across wireline and wireless, with converged aggregation for wireline and wireless that reduces costs Convergence across the IP and Optical layers in the backbone to enable continuously scalable and dynamic bandwidth, from 10Gb/s to 40Gb/s and 100Gb/s. Integration of the optical and IP domains through cross-layer automation greatly improves operational efficiencies, reduces costs and carbon footprint. Supports end-to-end network and service management with tighter integration of OSS/BSS with the network which enables greater efficiency and faster time to market for new services Enables converged service control for seamless and transparent service delivery across wireline and wireless domains through dynamic policy management, IP Multimedia Subsystem (IMS), and Mobility Manager (MME) A high leverage network with a converged multi-service infrastructure that transports and delivers all traffic efficiently makes traffic optimization, service bundling and convergence easier, and provides simpler and more flexible service provisioning and interworking. This converged, multi-service environment is a radical benefit to the network provider of a high leverage network. In addition, this network is much simpler, less complex and less costly than multiple overlay networks that are optimized for a given service. 4.3 The high leverage network and application enablement As noted previously, the Web model has challenged the equilibrium of existing network provider business models and has created instability. Many web applications and content, particularly video, are bandwidth intensive and latency sensitive, and place heavy demands on network provider infrastructure. Application and content providers who offer services and applications, many of which are Web 2.0 centric and free to end-users, receive revenue from third parties such as advertisers and 8 Evolving toward a high leverage network Strategic White Paper

11 sponsors. Network providers receive no revenue for the use of their network assets. In addition, the application and content providers have restricted access to network capabilities that could enhance quality of experience and strengthen their relationship with the end user capabilities such as location, presence, QoS, and security. Application enablement is the Alcatel-Lucent vision of how to broaden and stabilize the value of the relationship between network providers and application and content providers. It is based on the complementary strengths of each stakeholder. Application and content providers offer innovation and the quick development of new services. Network providers bring a level of scalability, reliability and security that is only possible with carrier grade networks. Network providers also bring valuable network capabilities, such as control, QoS, privacy, and billing, as well as valuable end-user knowledge that reside in or can be derived by the network, such as presence, location, and preference. Figure 4. The high leverage network and application enablement Web content and applications Application enablement Selected exposed capabilities Application enablers Web service accessible Open, Secure, Trusted IP Programmable application/ service aware nonstop Network High leverage network Optics Zero touch, high capacity at the lowest total cost of ownership Broadband everywhere Wireline and wireless on when needed Application enablement allows network providers to extract value from the network to enhance end user QoE. Value is extracted by exposing selected network capabilities in a managed and controlled way and by leveraging the knowledge, trust and confidence they enjoy in their relationships with end users. In this way, network providers enhance end user QoE by creating trusted, scalable, reliable and higher quality services that are more contextual, personal and therefore more meaningful and valuable to end users. Application enablement allows network providers to partner with application and content providers to bring the complementary strengths of each party together in a fair and equitable way. This stable and sustainable business model increases the opportunity for all participants and is based on a larger addressable market in which increasing numbers of end users enjoy a wider range of advanced applications, attractive content and personalized services that deliver enhanced QoE. The shift from keeping value in the network to extracting value from the network enables network providers to derive new sources of revenue. This justifies further investment to grow the network cost effectively to meet increasing end user bandwidth demands and QoE expectations. Evolving toward a high leverage network Strategic White Paper 9

12 5. Incremental steps and common approaches to a high leverage network There are many paths to a high leverage network and each network provider must determine which path gives them the most attractive return on investment. Both wireline and wireless network providers can take incremental steps on the evolutionary path to a high leverage network. Wireless network providers will take similar steps to those previously taken by wireline network providers. However, the incremental steps that a particular network provider adopts depend largely on specific market conditions, individual circumstances, business plans and strategies. As noted previously, most wireline network providers offering broadband access have taken some steps toward a high leverage network through their investments in broadband, multiservice IP/MPLS, and optical transport. These steps have enabled them to deliver new bandwidth intensive services such as residential Triple Play and business Virtual Private Networks (VPNs). Further incremental steps that wireline network providers can take towards a high leverage network include evolving the access network from copper to fiber, enhancing video, improving content delivery, enabling adinsertion and enabling the digital home and home networking. Over time, these incremental steps will help wireline network providers evolve more fully toward a high leverage network. Wireless network providers must evolve their voice-optimized networks to meet the growing demand for data services while reducing transport costs. This drives the need for wireless network transformation to all IP so data traffic can be transported in a scalable and cost-effective manner. Wireless IP transformation is not just a transport evolution issue it also encompasses RAN evolution, backhaul and transport, and core network and service delivery. A high leverage network and the extensive experience Alcatel-Lucent has in broadband and IP migration experience in wireline (such as in TPSDA) can help with this impending wireless IP transformation. As wireless networks evolve to support broadband, architecturally they become similar to a broadband wireline network. Therefore, the capabilities and expertise needed to deliver broadband services for wireline networks become very relevant to wireless networks. Indeed, as they evolve to broadband, wireless networks increasingly become an extension of a wireline network. To evolve further to a high leverage network, wireline and wireless network providers face some common challenges, including: Converging the metro, aggregation, and edge with Carrier Ethernet and MPLS Evolving from circuit-based to packet-based transport using packet-optical transport Scaling the core with next generation integration of IP and optical technologies Delivering service specialization and application assurance to improve end user QoE Enabling converged services control including dynamic policy management, session control and mobility management The incremental steps and common approaches that wireline and wireless network providers can adopt in the evolution to a high leverage network are discussed in the Alcatel-Lucent technical white paper, Incremental steps and common approaches toward the high leverage network. 10 Evolving toward a high leverage network Strategic White Paper

13 6. Alcatel-Lucent innovations toward a high leverage network Alcatel-Lucent is the trusted transformation partner for many leading network providers worldwide. We leverage our extensive product portfolio, expertise in IP, broadband and optics, and capitalize on our strong service-delivery capabilities to design, build, manage and operate integrated customerspecific solutions that meet complex transformation challenges. The Alcatel-Lucent technology innovations are uniquely aligned toward a high leverage network and network provider transformation needs; leveraging a focused and highly-differentiated portfolio of world-class products. This portfolio is based on innovations in all three of the key technology areas required for high leverage networks: Wireline and wireless broadband access to maximize bandwidth availability where it is most needed in the network IP to enable a foundation of converged and optimized networks that are service and application-aware Optics to deliver highly scalable and reliable transport networks at the lowest total cost of ownership per transported bit 6.1 Innovations in technology Alcatel-Lucent is the market leader in next generation wireline broadband access and innovation, both in copper and in fiber with technologies such as Smart DSL, Dynamic Line Management (DLM) and vectoring, and Received Signal Strength Indication (RSSI). In wireless, Alcatel-Lucent innovations include the flat IP architecture and critical radio technologies, and in particular, technologies such as Orthogonal Frequency Division Multiple Access (OFDMA), Beam Forming (BF), Multiple Input/Multiple Output (MIMO), and Active Antenna Array. Alcatel-Lucent has industry-leading expertise in these technologies as well as market experience such as pioneering flat IP radio access with Base Station Router (BSR), experience with mobile VoIP with CDMA/EV-DO, many WiMAX deployments around the globe, and driving Enhanced High-Rate Packet Data (ehrpd) to enable seamless voice and data mobility with LTE. This gives Alcatel-Lucent competitive and strategic advantages to lead the migration to next-generation wireless broadband access. Alcatel-Lucent is the market leader in next generation IP/MPLS service routing and innovation, with technologies such as the FP2 100 Gb/s network processor, TPSDA 2.0 for triple play service delivery, Service Router Specialization to support capabilities such as application assurance, and EPC for LTE. In optics, Alcatel-Lucent is the market leader in optical networking and innovation with technologies such as Zero Touch Photonics, Wavelength Tracker, Packet-Optical Transport, Microwave Packet Radio, Optical Cross Connects and Cross-Layer Automation. Alcatel-Lucent is also actively developing integrated approaches to IP and optical networking. As an example, the Carrier Ethernet Framework leverages Ethernet s existing benefits and marries them with application-aware service delivery and cost-optimized packet transport. This enables network providers to deliver additional value and intelligence prerequisites for a high leverage network. Building on further advances in IP and optical transport, Alcatel-Lucent enables network providers to leverage advances in Optical Transport Network (OTN), network control and management to further improve their ability to ensure QoS, while improving network efficiency and reducing costs. Evolving toward a high leverage network Strategic White Paper 11

14 7. Conclusions 6.2 Innovations in eco-sustainability Key focus areas for Alcatel-Lucent are energy efficiency, a reduced carbon footprint and environmental sustainability. Innovations in eco-sustainable networks and applications help network providers to realize bottom-line and top-line benefits while dramatically reducing their environmental footprint. New technologies also enable carbon-reducing communication applications that help end users reduce their greenhouse gas emissions. The Alcatel-Lucent approach to eco-sustainability focuses on three areas: Reducing total cost of ownership and CO2 emissions, Alternative Energy Program and Bell Labs green innovations. Alcatel-Lucent helps network providers realize bottom-line benefits by reducing total cost of ownership and CO2 emissions with a holistic approach across each layer of the network. Some proof points include: State-of-the-art advances in the latest VDSL products that reduce power consumption by 23% MC-PA, DPS, cooling, and Smart Antenna for radio that significantly reduces power consumption Packet-optical transport platforms that use 65% less power per transported bit than traditional platforms by forwarding traffic to the most efficient and economic layer - packet, circuit, optics/ wavelength The latest FP2 processor, the industry s first 100Gbit network processor with the lowest power consumption per gigabit of IP traffic IP platforms that leverage intelligent dynamic powering methods and operate at voltages and frequencies that are no higher than necessary to achieve desired functionality and performance A new professional service called the Sustainable Power solution helps network providers to assess, analyze and re-engineer network power and take care of the disposal of redundant equipment. Alcatel-Lucent can also help realize top-line benefits. The Alternative Energy Program for wireless network providers offers the first industrial solution to bring alternative energies to wireless networks. Smart metering and Smart Grid solutions help wireline network providers penetrate vertical markets and provide real time visibility of energy consumption, thus generating new revenue streams. Alcatel- Lucent provides end-to-end solutions with carrier grade reliability and scalability, as well as managed services. Alcatel-Lucent Bell Labs green innovations are an important source of new eco-sustainable solutions. With cooling representing 30-50% of energy consumption, the latest Alcatel-Lucent Bell Labs thermal management innovations include new efficient heat sink designs, better airflow designs such as the vortex generator, more forward-looking cooling technologies for equipment such as liquid cooling and vapor chambers, as well as the harvesting of heat to generate electricity. In wireless networks, the Active Antenna Array integrates the signal processing, signal generation and the receiver directly into the antenna at the top of the cell site tower. This eliminates the RF feeder cables and dramatically reduces energy loss and power consumption. Network providers must evolve toward a high leverage network to address the key challenge of simultaneously being efficient, low-cost bit transport providers and innovative, value-added service providers. The Alcatel-Lucent high leverage network strategy allows network providers to continuously scale the bandwidth of their networks from the access layer to the transport layer at the lowest total cost of ownership to provide scalable, reliable, low-cost bit transport. A high leverage network also allows network providers to instrument or equip the network with built-in service and application awareness, QoS, and traffic optimization to provide the appropriate levels of intelligence within the network at the optimum cost to deliver value-added services. 12 Evolving toward a high leverage network Strategic White Paper

15 A high leverage network supports application enablement that exposes selected capabilities of the network in a managed and controlled way. It also allows network providers to leverage the knowledge, trust and confidence they enjoy in their relationships with end users to enhance QoE. This enables network providers to deliver their own differentiated portfolio of advanced applications, attractive content and personalized services to residential, business and mobile users, as well as those of their partners and other content and application providers. This approach enables new, innovative and collaborative business models for network providers to generate additional revenue for delivering popular web applications and carrying bandwidth intensive video traffic on their networks and to receive revenue for doing so. At the same time, application and content providers have controlled access to selected network capabilities that can improve the performance of their applications and content, and thereby strengthen their relationships with end users. This shift from keeping value in the network to extracting value from the network allows network providers to grow revenues and enables them to continue investing in their networks to meet future needs. A high leverage network offers a fully converged next generation, intelligent, all-ip multiservice infrastructure an infrastructure that implements the latest innovations in wireless and wireline broadband, IP and optics to transport and deliver traffic more efficiently and at the lowest total cost of ownership. Wireline and wireless network providers can evolve to a high leverage network by taking incremental steps and common approaches. However, the incremental steps that a particular network provider adopts depend largely on specific market conditions, individual circumstances, business plans and strategies. Alcatel-Lucent is well placed to help network providers build high leverage networks because of our long experience, continued focus, strategic investments and innovations in each of the three key technology areas: Wireline and wireless broadband access, to maximize bandwidth availability where it is most needed in the network, including VDSL, FTTX/GPON, WCDMA, EV-DO, and LTE Optical transport, to deliver highly reliable transport at the lowest cost: WDM and Zero-Touch Photonics WDM, 40G/100G optical transmission, Microwave Packet Radio, Packet-Optical Transport, Optical Cross Connects and Cross-Layer Automation IP, the foundation of converged, optimized and service-aware networks, including IP service routing, Carrier Ethernet, EPC, and converged IMS session control Alcatel-Lucent has leveraged its technology leadership and its breadth and depth of experience in triple play with the enhanced TPSDA 2.0 to help wireline network providers worldwide transform their networks and to provide a foundation towards a high leverage network in a non-disruptive and evolutionary way. As a result, Alcatel-Lucent is the ideal partner for both wireline and wireless network providers as they set out on the evolutionary path toward a high leverage network. Evolving toward a high leverage network Strategic White Paper 13

16 Alcatel, Lucent, Alcatel-Lucent and the Alcatel-Lucent logo are trademarks of Alcatel-Lucent. All other trademarks are the property of their respective owners. The information presented is subject to change without notice. Alcatel-Lucent assumes no responsibility for inaccuracies contained herein. Copyright 2009 Alcatel-Lucent. All rights reserved. CPG (05)