Cisco IP NGN

Powering Experience Provider

Transformation; Enabling the
Connected Life

Service Provider Marketing

Strategic Communications Team
SEPTEMBER 2007

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 1
 Service Provider Needs
To Make the Experience Provider Transition

Services Efficiencies Control

Differentiation OPEX Service
Loyalty CAPEX Network
Revenue Profits Business

IP
Intelligence
Flexibility
Adaptability

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 2
 Cisco Service Provider Vision
Connecting Customers with Services,
Services with Networks,
and Networks with Each Other
Small/Medium SP
Consumer Enterprise
Business Wholesale

IP Next-Generation Network

VPNs Content Transport Mobility Internet Voice &

Video
13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 3
 Experiences on the Human Network
Delivered by Experience Providers, Enabled by IP NGN

Connected
Life At Home At Work On the Move
Personalized Experiences for Individual Preferences

Experience
Providers
Delivers Unique, Integrated Experiences

Provides the Enabling IP NGN Foundation

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 4
 The Connected Life
Personalized Experiences to Many Screens
GPS Tracking /
Travel Info
Residential Video: Custom Downloads:
IPTV / VoD / DVR Music / Games / Video

Connected Home: Mobile Video:

Media / Storage Streaming Content

Unified
Communications / Presence-Based
Business Services / Search
Collaboration Tools

Remote Access / Business Video:

Productivity TelePresence
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 What’s Working? Industry Recognition of IP
The Ultimate Epic Standard, Proving Our Vision Further

“ Innovative Internet applications are not only redefining business,

but they’re changing the way we live and learn through
applications like VoIP, video file sharing and distance learning.”
Larry Irving, Co-Chair Internet Innovations Alliance (Brookings Institute)

“ Using IP makes communications cheaper, better and friendlier.

And it makes it easier to combine voice with video and application
sharing for more user-friendly communications.”
Michael Stanford, Intel Principal Engineer

“ IP Technologies and communications networks change

everything! From voice to video, intranet to Internet, IP
technologies deliver a robust and scalable solution...”
Larissa Herda, Chairman, President/CEO Time Warner Telecom, Inc.

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 Four Key Connected Life Enablers

Internet Quality
Protocol Bandwidth Connectivity
of Experience
Information Information Information Information
becomes becomes becomes becomes

Agnostic to Agnostic to Agnostic to Agnostic to

Content Time Space Form

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 Cisco IP NGN Credibility
Cisco is The Leader in IP Networking

Intelligent Networking
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 Cisco IP NGN Innovation Breadth and Depth
Delivering Unique Value to Experience Providers
Changing Business Unified Personal Mobile Unified IP Phone Consumer
Operations Communications Communication Leader Video Portal Experience
Telepresence Media Center
Application

Most
Best Video Advanced
Video Program Receiver SetTop
and Subtitling Encoder Picture in Picture
VoIP Softswitch
MSO’s Choice
IP-IP Gateway Secure, Fast
SGSN Content Delivery
GGSN
Setting the
Policy SP’s Choice
Pace for
Management Session Border
Video
Service Layer

Control #1 share
Leader in Managed Quality SCE: Application
PGW Class 4 Media
Security Management
Switch, WW Lead Gateways
ME3400 Ethernet First Ethernet
Access Switches 12k Multi- ISG: Subscriber Service Edge for
ISR #1 for #1 Share Service Edge Quad-Play
Management
Businesses CMTS
Broadband CRS-1 #1 92TB
Aggregation Most Compact 40G Router
Leader 40G Router
Leader Active FTTx
Network Layer

51% Market Industry First Aggregation ME4900 Ethernet

Share Tunable 40G Aggregation
ROADM WiFi
Access
Industry First 1st Networked Point Digital Media
Cable Tunable 10GE 3200 DVD Player Player
Modem WiFi
Mesh

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 9
 Cisco IP NGN Credibility
Market Leadership / Innovation Acknowledgement

“ Any vendor can cobble together a bunch of products and

call it a next-generation network architecture or vision. To
truly achieve IP NGN, there needs to be strong, continued
innovation behind it. Cisco has met this requirement.”
Mark Bieberich, Yankee Group

“ Cisco is firmly entrenched “ …with IP NGN, Cisco is

in the minds of service demonstrating insight
provider buyers as the and leadership.”
top… vendor worldwide.”
Heavy Reading Tom Nolle, CIMI

Intelligent Networking
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 What’s Working? Recognition of OpEx
Savings Strengthening Balance Sheets

€184M €200M €980M £1B

OpEx Savings OpEx Savings OpEx Savings CapEx / OpEx
(from 1Q’06 (2006 vs. 2005) (by FY’08) Savings
to 1Q’07) (by 2011)
Enabled by IP Expect to reduce
Cited cost network / IT OpEx 200 BPS of Enabled by IP
reductions in integration and EBITDA margin via network convergence
network operations sales force network / service and new multiservice
as a major source integration. convergence. network deployments.
of savings.
Source: Source: Source: Source:
Deutsche Telekom 2007 Telecom Italia 2007 UBS 2006 JP Morgan 2007

Intelligent Networking
13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 11
 …But There are SP Business Challenges
Maximize Network Potential / Increase Consumer Loyalty

Quad play is too limiting

Today’s voice, video and data services (with mobility) do not
address full range of residential / business consumer needs

“One size fits all” service model doesn’t work

Consumers want a Connected Life that meets needs / preferences
at home, at work, and on the move

Bundles create commoditization

Bundled services lead to margin erosion, “race to zero” mentality
that degrades value of unique, branded experiences

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 The Connected Life: More Than Quad Play
Cisco Enables Integrated “Any Play” Possibilities

Voice Video Data Mobility

“Quad Play”

Voice Video Data Mobility

“Any Play”

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 13
 Surpassing Quad Play Limitations
Proven Service Model
Call Waiting
$3.25 / Mo
3-Way
Voice Mail
Calling
$6.00 / Mo
$3.00/Mo

Call Return/
Caller ID
Repeat Dial Residential Voice $6.00/Mo
$6.00 / Mo

Speed Call
Dialing Forwarding
$3.00 / Mo $2.50 / Mo
Call
Blocking
$1.00 / Mo

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 14
 Similar Approach Can Be Applied to New
Offerings, At Home…
2007 Service Model
Parental
Control

Video Turbo
Chat Button

Burn Tailored
to Disc
Residential Content
Purchasing
Broadband Spider

Remote Application
Backup Awareness
Spam
Blocker
More consumer choice…
13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 15
 …At Work…
2007 Service Model
Managed
VPNs
Remote
Business
VPN
Intelligence
Access

Managed
Metro
Managed Business TelePresence
Ethernet
Services

Managed Unified
LAN Comm
Managed
Storage
More consumer choice…
13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 16
 …and On the Move…
2007 Service Model
Streaming
Video

SMS /
Gaming
Texting

Presence-
Music Mobile Services Based
Downloads
Services

Directory
Ringtones
Search
Custom
Mobile
Web
Content More consumer choice…
13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 17
Expanding The “One Size Fits All” Service
Model
Personalization — It’s All About the Experience

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 18
Expanding The “One Size Fits All” Service
Model
The Power of Personalization…

“…there is no doubt that when it comes to attracting an

audience, service providers have discovered that the key
is to focus on the one instead of the many. In other
words, personalization, in this high-tech paradox, is the
best way to reach the mass market.”
Current Analysis (2007)

Web Video Blogs Wikis

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 19
 Expanding the “One Size Fits All” Service Model
Proven Mass Personalization Formula

Add Value Give Consumer

with Partners Choice/Control
Engage with new Enable business /
partners—financial, residential consumers
retail, travel, et al.— to choose services
to deliver new, and options—let them
differentiated control the
service / content experience

Enhance Simplify
Experience Process
Deliver unique Create web-based
services / content that customer service
consumers value to portals that allow
maintain and increase consumers to easily
consumer loyalty customize services /
track use

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 20
 Air Canada Takes Personalization to New Heights
Customers Buy What They Value / Control Their Experience
A La Carte Pricing
Fly cheap by declining loyalty
points, schedule flexibility, baggage
handling, seat assignments,
day lounge access… Eased Check-in Enhanced Web Ticketing
Get boarding pass Consumers book flights,
via bar code image select options,
on mobile device. spend flight
credits, track
status online
Air Canada
Business
Innovations
for Traveler
Value /
Digital
Convenience Entertainment
Ticket Flexibility Enhanced in-flight
Offered tickets that experience, installed
are part refundable, movie / music entertainment
Flight Passes part non-refundable to systems in every seat
Captured frequent expand traveler flexibility
business fliers by selling
ticket books of 10 or 20
flights in specified zones
over set time period
13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 21
 Overcoming Bundle Commoditization
Offer Unique / Branded Experiences

Tighter Integration

Better Control More Convenience

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 22
 Comcast’s Value-Added Bundle
Broad Suite of Personalized Video/Residential
Services
OTT
“Fancast”
Comcast and
Digital Commercial
Voice
Video on DVR
Demand
High-Speed HD
Cable Data Service
TV

N Subscriber Highlights:
r sN G
c
r iob eIP 24M TV Subscribers
s
bCsic
d b
S u
y 12M HSD Subscribers
ere
Pow 2.5M VoIP Subscribers

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 23
 British Telecom’s Value-Added Bundle
Broad Suite of Personalized Managed Business Services

Hosted CRM /
Business TelePresence
Managed Intelligence
Managed Security
IP Network Services
High-Speed
Infrastructure
Managed IP Internet / Data
Telephony & Services
Call Services

N G N Subscriber Highlights:
iob I
e rs
P
cc
bCsis r 10M Wholesale Customers

ed Syu
b Serves 80% of FTSE 100
ow er
P Serves 19 of 20 Top UK Banks
1.1M SME Customers
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 NTT DoCoMo’s Value-Added Bundle
Broad Suite of Personalized Mobile Services

Location Based
E-Wallet Services / Search
Mobile Video Handsets
Personalized Content
Mobile News /
Mobile Internet / Alerts
Mobile
Voice / E-mail (i-mode)
Messaging

N G N Subscriber Highlights:
ci o
b eIrPs
bCs i
c sr > 52M Mobile Subscribers
uy
a nc edSb > 47M i-Mode Subscribers
Enh > 20M e-wallet Subscribers

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 Sustainable Experience Provider Growth
Requires Expansion into New Markets

Consumer Commercial

Experience
Provider
Any Play Managed
Services

Enterprise

Global IT Services
13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 26
 Cisco IP NGN Vision & Architecture
Supports Experience Provider Expansion/Growth
Connected Life Connected Life Connected Life
At Home On the Move At Work

Consumer Video Mobile Managed

Connected Home Services Business Services

Intelligent Networking
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 Cisco IP NGN Vision and Partner Approach
Fosters Innovation / Experience Provider Transformation

Pioneering 21CN Venturing into New Major CRS-1

Effort in Core/Edge Web-based Deployment for
for New Services Services / Content Advanced Services

Leading Mobile IP Largest Emerging Makes Mobile Phones

Transformation; Market Customer; a Vital Lifestyle
A-IMS IPTV Provider Device in Japan

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 28
 Worldwide Telecom Revenues
Revenue ($US
Billions)

$1,600 $109.6 $114.5

Cable $103.5
$96.4
$1,400 Wireline $85.5
$76.5
Wireless $69.6
$1,200
$62.7 $687.5 $686.5
$687.7
$691.8
$46.5 $55.8 $686.2
$1,000 $37.7
$681.1
$670.9
$800 $640.5
$668.0 $614.3
$668.8
$600

$400 $670.0 $707.7 $740.4 $763.4

$549.8 $612.8
$478.5
$405.4
$200 $330.9
$247.7 $285.8

$0
2000 2001 2002 2003 2004 2005 2006E 2007E 2008E 2009E 2010E

Source: Wall Street Research and Cisco Systems Corporate Development Analysis
13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 29
 Winning Ingredients for Experience Providers
Long-Term Growth and Profitability Require Innovation

Build Intelligent, Improve the Customer

Scalable IP NGN Experience

Focus on New Develop New Business

Services and Markets Models and Partners
13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 30
 Tap into Ancillary Addressable Markets
“Create a Bigger Sandbox”

Fight within market Expand to new markets

2010 Estimates 2010 Estimates

Telecommunications $1.14T Telecommunications $1.14T
Internet $536B
Entertainment $536B
Gaming $37B
Software $500B
Advertising $405B
Retail $3.5T
Finance / Insurance $3.8T

Total addressable market Total addressable market

$1.14 Trillion $10 Trillion

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 31
 NTT DoCoMo Japan
Network as a Platform—for Finance
Challenge
Grow wireless revenue after
100% saturation
Strategy
Use cell phone as a platform
I-Mode FeliCa mobile handset
Phone = e-wallet platform
Functions as an e-ticket for travel
or entertainment, multi-vendor
debit card, credit card

Success
New “service” revenue created
Merchant transaction fees (2–5%)
Technology licensing
Shares with credit companies
13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 32
 Cisco Service Provider Strategy
The Most Complete Partner for SP Success

Deploy Build Accelerate Optimize

Services Networks Demand Business
Layer existing Intelligent, Accelerate Provide domain
and new services extensible, and demand by expertise to
for revenue and efficient packet connecting support business
profit growth, infrastructures for consumers, and network
faster time lower TCO SMBs and transitions
to market enterprises to and improve
SP services operational
efficiencies

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 Significant IP NGN Momentum
Across Segments, Across Continents

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 Cisco Service Provider Commitment / Momentum
FY’07 Cisco IP NGN Launches and Acquisitions
Launches / Milestones
Enhancing Define, Preserve and Mobile Innovations Cisco CRS-1: 900
IPTV/Video Realize Video 2.0  MToP Units Shipped
Experiences Experiences  CSG2  More than 85 SPs
 CRS-1 4 Slot  Cisco CDS Predictable Business deploy industry-
 Cisco VQE leading multiservice
Services core platform
Technology
 Cisco XR 12000
 Cisco 7600 Series Enhancements
Innovations
DWDM Innovations
for Ethernet Services
 Xponder Technology

Enables carriers Extends Cisco Unified Leader in on-demand Leading provider of

to create / Communications to collaboration apps— IP-based video
distribute content business mobile phone extends Cisco's Unified surveillance software
to virtually any users Communications vision
device
Acquisitions
13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 35
 Cisco IP NGN Vision and Architecture
Enables The Connected Life

Resources
Comprehensive Build
IP NGN Portfolio CRS-1,
XR 12000,
7600, ISR, …

IP DNA
Unmatched IP
Expertise and Partner
Experience Ericsson,
Italtel,
Fujitsu, …

Commitment
Over $1.4B Acquire
for Service Scientific
Providers Atlanta,
Linksys, …

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 36
 Get More Cisco IP NGN Information
http://wwwin.cisco.com/sp/ipngn/index.shtml

13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 37
 Service Provider Value Selling Program
Value selling enables Cisco to truly differentiate from the competition by
addressing the business concern of its service provider customers through
the whole value that Cisco offers.
 Tools and Resources:
Value selling content is divided into six categories and delivered through a
series of modules in the form of scripted presentations and internal VoDs.
Design & Implementation Operational Support
Industry and Thought Leadership Financial
Go-to-Market Solutions and Technical
 More Information:
Value Selling Website: wwwin.cisco.com/go/spvalueselling
Contacts:
Lara O’Brien, Manager, Business Development, lobrien@cisco.com, +1 408 525 4748
Dianna Muncie, Integrated Marcom Manager, dimuncie@cisco.com, +1 469 255 6717

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13557_05_2007 © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 39