Industry & Network Transformation Robert F. Balsamo Marketing Director Calix Petaluma, CA

1. Industry & Network TransformationRobert F. BalsamoMarketing DirectorCalixPetaluma, CA robert.balsamo@calix.com

2. Profound industry ramifications Elimination of service boundaries Elimination of network boundaries New opportunities Expand into incremental services Create new business models New threats New competitors Changing regulations Changing revenue models IP: The Enabler of Dramatic Change ANY SERVICE IP PACKET ANY MEDIA

3. Beyond voice, video, and data… The integration of INFORMATION, COMMUNICATION, & ENTERTAINMENT (ICE) services at the consumer interface is the next step… A Necessary Services Transformation

4. Service diversification Interactive ICE products Integrated value-added services across products portfolio Differentiation that leverages core competencies New businesses Enables high margin direct marketing / advertising Vehicle for access and commerce to subscribers Leverage position as the gateway to subscribers Impending Business Transformation

5. Repositioning for increased valuation MSO’s have materially higher “per-subscriber” market valuations ~ 70% of MSO valuation based on digital services ICE providers should have a valuation advantage (100% digital) Impending Business Transformation

6. The Success Equation:The Most Services at the Lowest Initial/Ongoing Cost

7. Service transformation Expand beyond voice and data Integrated ICE services Business transformation Expand business orientation beyond communications New lines of business, new paths to profits Network transformation Support compelling new services Increase competitiveness of basic broadband access Expand into innovative ICE services Accelerate service innovation to maximize revenues Improve operational efficiency to maximize profit Overarching Industry Transformation

8. Simplifying Network Transformation

9. Physical network transformation From ubiquitous narrowband to ubiquitous broadband FTTP or DSL over reduced CSAs to support broadband requirements Logical network transformation From circuit to multimedia over packet POTS to VOIP is the next critical service conversion Key to operational efficiency and services integration Operational network transformation IP based applications control and services integration Fixed-mobile convergence is driving an integration framework Key to compelling services, accelerated services introduction and operational efficiency Balance commitment to legacy considerations Dimensions of Network Transformation Develop a Strategic Transformation Vision… Simplicity & Savings!

10. Changing services demand increased broadband capacity IPTV – increased video stream counts, HDTV HSD – Video and music downloads, gaming, video conferencing… “Physical” Transformation Drivers

11. Push fiber deeper to support increased capacity and services FTTP – where economically viable DSL with reduced loop length CSA designs, using FTTN overlay CO, RT and FTTN (as close to sub as business case allows) Physical Network TransformationUbiquitous Broadband

12. More cross connect upgrades Recurring truck rolls Maintain parallel networks Lacks POTS to VOIP plan Avoids cross connect upgrades Eliminates truck rolls Retirement of legacy POTS Every line VOIP configurable Overlay DSL: Increased Cost & Complexity

13. Combo DSL and POTS enables unified services, remote node Physical Network TransformationPOTS Termination – Network Simplicity

14. POTS to VOIP - Network Implications • VOIP is the final stage of circuit to packet transformation • Softswitch migration requires media gateway POTS-VOIP conversion • Enables Class 5 switch collapse, preserves lifeline voice infrastructure

15. Complete the transformation of ICE services to packet Simplified access network, Class 5 CO collapse Physical Network TransformationNetwork VOIP: Lower Cost, Lifeline

16. IMS: founded in wireless, foundation for multimedia IP services and applications management Enabling a common operations model for fully integrated ICE services Operational Network TransformationApplication Level Services Integration

17. A converged model: All services enabled POTS, HIS, VoIP ready, IPTV ready Copper and fiber access optimized for all broadband Looking Beyond DSL…

18. Phased or direct transformation flexibility Freedom to manage investments and technology evolution Complete Network TransformationAll Packet, All Fiber – With Options

19. Physical network transformation FTTP where justifiable Reduced CSAs with VDSL2 for non-FTTP markets CO, RT and nodal solutions – access continuum Logical network transformation (VOIP) Converged POTS & DSL cards – with VOIP conversion offer lowest cost approach to both IPTV and VOIP Further simplifies the network Operational network transformation Seemingly independent wireless initiatives laying a foundation for converged IP services management Network Transformation Observations

20. Thought leadership Insight and perspective on key emerging market trends and opportunities Network Transformation The Book On Video Solutions, not just products Register for your copy at http://book.calix.com The Book On… Network Transformation

21. The Power of Simplicity