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Presentation on eAccess Ltd. September 27, 2000

Presentation on eAccess Ltd. September 27, 2000. The Company. Business Opportunity. Business Strategy. The Company. Business Opportunity. Business Strategy. Corporate Summary. Company Name. eAccess Ltd. Established Date. November 1, 1999. Capital.

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Presentation on eAccess Ltd. September 27, 2000

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  1. Presentation on eAccess Ltd. September 27, 2000

  2. The Company Business Opportunity Business Strategy

  3. The Company Business Opportunity Business Strategy

  4. Corporate Summary Company Name eAccess Ltd. Established Date November 1, 1999 Capital \2.475 billion【Shareholders Capital - \4.725 billion】 Employees 105（as of August 2000） Business Broadband IP services and solutions

  5. Corporate History • November 1999 eAccess Ltd. found • February 2000 Series A private equity placement（\4.5 billion） • April 2000 Commenced ADSL trial service from 2 Tokyo COs • June 2000 Commenced ADSL trial service from 2 Osaka COs • July 2000 Commenced ADSL trial service from 3 Osaka COs • August 2000 Announced trial service with 5 ISPs Commenced ADSL trial service from 4 Tokyo COs Exceeded 200 trial service subscribers Tested live streaming service of High School Baseball Championship over ADSL • October 2000 Commencement of ADSL commercialservice

  6. CEO　Sachio Semmoto • Co-founder and Senior Vice President of DDI Corporation, the first purely private telephone company in Japan • Over 30 years of telecom experience • Professor at Keio University Graduate Business School • Awarded Full-bright Exchange Program Grant and received M.S. and Ph.D. degrees in Electrical Engineering from the University of Florida • Joined NTT to develop the first optical fiber system in Japan and led the development of the Information Network System, the world’s first digital service which embodied the ISDN concept • Japan’s official representative to the ITU on optical fiber and ISDN (1974-1980) • A major role in bringing DDI up to $5 billion in sales and $630 million in profits after 7 years of operations. DDI completed its Initial Public Offering on theTokyo Stock Exchange, after 6 years of operation, which set the record then for the fastest company to conduct an IPO in Japan. The current total market capitalization of DDI is $17 billion. • December 1999, Chairman and CEO of eAccess Ltd.

  7. COO　Eric Gan • B.S. degree in Chemistry, Imperial College, University of London • 11 plus years of telecom industry analysis and financial experience • No. 1 ranked telecom/Internet analyst in Japan/Asia • Managing Director and Senior Telecom Analyst at Goldman Sachs Japan • Coordinator of Goldman Sachs Global Telecom Research • Investment banking deals: NTT DoCoMo IPO ($18 bn), NTT IV & V tranche offerings ($10bn & $16bn, respectively), NTT ADR listing, IIJ IPO (NASDAQ), SmarTone IPO (HK), Hikari Tsushin II, KDD & Teleway merger, DDI financial advisory, DDI, KDD&IDO merger, etc. • Research coverage: NTT, NTT DoCoMo, DDI, KDD, Japan Telecom, Okinawa Cellular, IIJ (CrossWave), Matsushita Communications, Kyocera, Uniden, Hikari Tsushin • Fluent in Mandarin, Cantonese, English and Japanese • December 1999, COO of eAccess Ltd.

  8. CTO　Yoshihiro Obata • Bachelor of Electrical Engineering, Kyoto University • Master of Electrical Engineering, Kyoto University • Joined Kokusai Denshin Denwa Ltd. (KDD) in April 1986. He has extensive experience in designing and implementing IP networks and related functionality. Specifically, he led the planning and implementation of NEWEB services’ (formerly known as Internet KDD) global backbone between Japan-US and intra-Asia, subsequently negotiating interconnection with foreign carriers to expand network reach in Europe, US and Asia • Recruited to the Internet Research Institute Ltd. (IRI) in October 1999, where he provided on-going consulting services to KDD and NTT Communications to develop global IP business strategy. Additionally, he was instrumental in determining the feasibility of investments into Pan-Asian IP service provider businesses. • Selected as Asia Pacific Internet Consortium member • December 1999, CTO of eAccess Ltd.

  9. Roll-Out of Corporate Strategy Next Generation IP Services and Solutions Broadband Access Contents & Applications IP Backbone To provide broadband access to Internet users in major metropolitan areas To provide solutions and entertainment with ASP/CSP services To construct IP fiber backbone spanning major metropolitan areas Phase 1 Phase 2 Phase 3

  10. Ownership Structure eAccess founders Management Team Goldman Sachs Leading Global Investment Bank Morgan Stanley Dean Witter Leading Global Investment Bank Morningside Leading HK Investor Group Leading French Financial Institution Azeo Ventures Other shareholders Angel Investors

  11. The Company Business Opportunity Business Strategy

  12. The Second Biggest Telecom Market Market Size March 2001): \16.4 trillion International \4.5 tn Mobile \7.1 tn Revenues PHS \4.4 tn Pager \0.1 tn Fixed line \ 8.5 tn Source: Calculated from Ministry of Post and Telecommunications’ information

  13. Business Opportunity Business Opportunity Problems up until now NTT’s monopoly of the local access market Deregulation of the local access market High demand for flat-rate services High usage cost of Internet Slow transmission speed High speed Internet services desired Low penetration of Internet usage Provision of DSL local access services

  14. Effects of Deregulation Local LD Mobile International Local Access Market Size \1 trillion \7.6 trillion \0.5 trillion \3-5 trillion NTT Com KDD DDI TTNet CWC, etc. KDD C&W IDC NTT Com DDI, etc. NTT East NTT West TTNet, etc. NTT Docomo J-Phone DDI, Astel, etc. Operators Old Monopolist’s Current Market Share NTT Com 50％ NTT Docomo 57％ KDD 66％ NTT 98％ Date of Deregulation 2000 1987 4/1994 12/1997

  15. High Internet Usage Cost 10.0 20.0 30.0 40.0 50.0 60.0 70.0 Comparison between dial-up and ADSL Internet access usage cost 0.0% % % % % % % % 65.7% Communications cost too high 51.9% Slow transmission speed 37.6% Data and informational security Monthly usage cost 60,000 35.2% Privacy Standard Plan 26.1% Difficult to use, not helpful 50,000 40,000 Maximum difference of 5x with 50 hours of monthly usage 30,000 20,000 Special Discount Plan 10,000 ADSL 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 Hours of Usage Source: eAccess

  16. High Demand for Flat-Rate Services Internet hours of usage 0 5 10 15 20 25 30 28.2 ★　50+ hrs. / mo. 21.7 ★　30 – 50 hrs. / mo. 22 15 – 30 hrs. / mo. 12.7 10 - 15 hrs. / mo. 9.6 4 – 10 hrs. / mo. Approx. 50% of users that use Internet for 30 plus hours have strong interest in flat-rate services Interest in using flat-rate service Not interested 10% Interested 90% Source: MOPT Telecommunications While Paper

  17. Mostly low access speeds… Residential user transmission speed used 10.0 20.0 30.0 40.0 50.0 60.0 70.0 0.0% % % % % % % % 65.7% Communications cost too high 51.9% Slow transmission speed 33.6kbps and under 37.6% Data and informational security 15% Don’t know 35.2% Privacy 36% 26.1% Difficult to use, not helpful 21% Other 56kbps and under 1% Corporate user transmission speed used 64kbpsand under Up to T1（1.5Mbps） 17% 10% Don’t know 64kbpsand under Other 5% 1.5Mbps and above 32% 1% 16% Up to T1（1.5Mbps) 8% 512kbps and under 128kbpsand under 8% 30% Source: Internet White Papers 2000

  18. The Company Business Opportunity Business Strategy

  19. Overseas Broadband Access Penetration • U.S. • DSL subscribers expected to exceed CATV Internet subscribers in several years • South Korea • 3 to 3.5 million subscribers expected by the end of 2000 • Taiwan • 200,000 subscribers expected by Chong Hwa Telecom by the end of 2000 • Hong Kong • 190,000 subscribers as of August 2000 (2.25 million basic service subscriber) • Singapore • 135,000 subscribers as of May 2000. Expected to increase to 200,000 by the end of 2000. Broadband access available at all schools and libraries. Increased of broadband access using DSL, instead of making large investments in optical fiber

  20. DSL Market Growth in North America Estimated DSL subscribers in North America 136% increase of DSL subscribers in 1999 ILEC holds majority of the market share, but CLECs’ market share expected to increase with approval of Line Sharing regulations by FCC in December 1999 Source : The Strategies Group, Inc.

  21. DSL Market Growth in South Korea Subscribers of DSLand Internet CATV in Korea 1,200,000 1,119,573 CATV DSL 1,000,000 905109 874,839 800,000 614,273 600,000 538,861 540,184 451,007 397,649 400,000 352,302 288,498 275,739 232,841 201,551 173,662 200,000 142,476 97353 0 Dec Jan Feb Mar Apr May Jun Jul Over 1 million DSL subscribers as of July 2000 Over 10 times growth rate in six months during 2000 Rapid usage of on-line music and on-line trading via DSL 60% of stock trades are done on-line) Source :　Korea Network Information Center（http: //stat.nic.or.kr/english/public_html/isp_stat.html）

  22. Korean DSL Market ｰ CLECs Hold Over 50% Market Share DSL subscribers in Korea Others 11% Dreamline 7% Korea Telecom 45% Hanaro 37% 1,119,573 lines as of July 2000 CLECshold more than ILEC’s (Korea Telecom) market share Source : Korea Network Information Center（http: //stat.nic.or.kr/english/public_html/isp_stat.html）

  23. Domestic DSL Services • Number of DSL subscribers in Japan is less than 1% of DSL subscribers in South Korea • CLECs are expected to increase through deregulations in the local access market Standard Type 1 Service Type 2 Service Total 404 Lines 777 Lines 1181 Lines ADSL SDSL 0 Lines 54 Lines 54 Lines Source：MoPT

  24. Splitter Splitter Splitter Splitter ATM Network eAccess DSL Access Network Architecture ISP-AUsers ISP-A Network Data only ADSL Modem Voice and Data ISP-A DSLAM MDF Broadband RAS （Aggregator) Public Phone Network RADIUS ISP-B ADSL Modem Voice and Data Data only ISP-B Network ISP-Buser ISP Network ATM Network NOC NTTCO Household

  25. Splitter Splitter ATM Network Protocol Stack Public Phone Network Household RADIUS DSLAM ADSL Modem MDF KDDOhtemachi Voice and Data Broadband RAS （Aggregator) ISP-A ADSL Modem Data only NTT CO ATM or 100Base-X 10Base-T or USB ATM over ADSL ATM L1/L2 Protocol PPPoA, IPoA, Bridge over ATM, PPPoE IP Segment Interwork Segment (ex: 172.16.0.252/30) WAN Segment (ex: 172.16.1.0/24) User Segment Private Address Block (ex: 192.168.0.0/24) ISP-A CIDR Block (ex: 172.16.0.0/16)

  26. eAccess ADSL Trial Service Areas April 2000 Trial service in Tokyo - 2 COs (Mita/Aoyama) June 2000 Trial service in Osaka - 2 COs (Yodogawa/Osaka Chuo) July 2000 Trial service in Osaka - 3 COs (Osaka Higashi/Kita/Higashi) August 2000 Trial service in Tokyo - 4 COs (Yotsuya/Ikebukuro /Kayaba Kabuto/Yodogawa) October2000 ADSL commercial service starts

  27. Interim Statistics of Trial Service • Transmission quality and speed • Transmission quality was not uniform due to transmission distance and background noise, but all lines achieved greater than 512kbps • Maximum transmission speed • Downward:1.54Mbps / Upward:512kbps • Average transmission speed • Downward:1.35Mbps / Upward:508kbps • Interference with ISDN • Deterioration of transmission speed from ISDN interference was negligible • The longest transmission distance among the trial service participant was 2.81km; attained average downward transmission speed of 989 Kbps • Compatibility of ADSL lines with the environment • NTT ADSL compatibility investigation failure rate was 4.3% (reason: most of them were equipped with optical fiber)

  28. Transmission Speeds Achieved During Trial Service

  29. Phase 2 Contents & Applications Services Internet Data Center ISP Intranet eAccess IP backbone DSL access network DSL access network

  30. Phase 3 IP Backbone Business Overview and Strategy • Metropolitan areas、NTTCOs、data centers • Cut major source of cost • Reduce bottlenecks • Can provide a variety of IP services • New business model can be added atop current services • Increase in actual usage speed per user • Increase in service reliability Subscriber Growth / Market Expansion

  31. Disclaimer This document has been prepared by eAccess solely for use at the presentation and may not be distributed to any other person. The information contained in this document has not been independently verified. No representation or warranty expressed or implied is made as to and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of eAccess or any of their respective advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the document. This document does not constitute an offer or invitation to purchase or subscribe for any shares and neither any part of it shall form the basis of or be relied upon connection with any contract or commitment whatsoever. This document and its content are confidential and should not be distributed, published, reproduced or disclosed (in whole or in part) by recipients to any other person.

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