Evolving the Service Provider Business Model for OTT Service DeliveryJune 21, 2011

V2.0

Glenn ThurstonVice President Global MarketingBTI Systems Inc.

22Outline

What is OTT Content?

Its Impact On Networks and Users

Changing the Broadband Provider business model and relationship to OTT Content

33The OTT Content Explosion Driven by on-demand Video…Today

MP3 Youtube 3 minute video

iTunes feature-length movie

HD Movie (Netflix)0

1000

2000

3000

4000

5000

6000

7000

3MB 38MB

1500MB

6000MB

Content Transfer Requirements (MB)

Video will account for 90% of network traffic by 2012Cisco Visual Networking Index Forecast

What is it?• Internet Video• Software Updates• P2P File Sharing• HTTP Downloads

Bandwidth drivers Content duration Resolution Mobility Market Adoption

44OTT Traffic Composition

Source: BTI Systems Inc. Traffic Report - June 3, 2011 – US Broadband Operator – Suburban Site

55Content Delivery Environment

Content Owners

Content Aggregators

Broadband Network Content Delivery

Content Subscribers

Broadcasters Studios Others

66

Company Confidential. Distribution of this document is not permitted without written authorization.

OTT Impact: Broadband Network Operators

Internet request

AccessCore/AggregationTransitPeeringPoint

CO POP Subscriber

Rapidly growing peering $$

Frequent upgrades to bandwidth interfaces

Network Utilization Increased utilization network Expensive upgrades to

Routing and Transport Poor quality, poor resolution, extended download times “Slow connection” drives churn

Subscriber QoE

Over Utilization

Content Request

Content Served

77OTT Impact: Subscriber Experience

Users love “a la carte” content

• Access to Highly promoted services• Massive variety / Most popular• Multitude of screen options• Ease of Access - Simple to access &

play

Beware - experience may vary

• Pinwheel of pain !• Variable quality on 50” HDTV

• Blotchy – fuzzy – freezes- jumps• Still Best effort delivery

• Time to start-to-play can vary - can take several minutes

• QoE varies

Perception = declining Broadband Quality

88Problem Summary

Hi-Speed Broadband = delivery technology for Services• Consumers to a-la-carte consumption• Business Cloud services• Wireline and Mobile

Video leading the growth…gaming, music, app updates also increasing load

Networks - designed for shared use• Typical Access to Core ratio is 100+:1• Busy hour sizing – constant upgrades for no new Revenue $• Access providers are not making large profits on today’s BroadbandA New Approach is needed to Augment Broadband

services that improves service and reduces cost

99

High Speed Internet service • HSI Needs to be cost-competitive to offer

― HSI Needs to be as good as or better than the competition

• Can’t violate Neutrality or Filtering “Rules”― Don’t degrade base service if you offer new services.

― Blocking / Degradation of services not a long term answer

Provide a path for value add services― To Content Providers

― To Subscribers

― To advertisers / 3rd parties

― Charge for value― Direct or indirect methods

Foundation Service and Building Blocks Approach

1010Evolving the OTT Business Model:Content Aware Networking

What is it?

Identify repetitive content at network edge, cache it, serve it locally

Why?

Content requests are repetitive in a given served area

Significantly reduces the bandwidth impact to Broadband operator

Radically improve the user experience by avoiding network congestion

Leverage80:20 rule

BTI

1111What is an Integrated Transparent Cache ?

Policy Based Solution • looks at every packet for cacheable content• Caches only desired popular content for

local play-out

Addresses all cacheable content • All large objects• Internet video, music, games • Graphical Images, Software updates

Simple to operate• Automatically updates content & responds

to shifting usage• No active management of content or

negotiations with content owners

Simple insertion into the Network• No Router upgrades required – goes in with

Layer 2 Ports• IP Transparent

Transparent to source

Transparent to subscriber

Digital Millennium Copyright Act Neutral

BTI

1212

Company Confidential. Distribution of this document is not permitted without written authorization.

Improvements with Content Aware Networking

Internet request

AccessCore/AggregationTransitISP CO POP Subscriber

Bandwidth Savings

Improved Subscriber Quality of Experience

Subscriber QoE

Content Request

Content Served

Peering Savings Peering savings [MB/month] Peering connection savings

Network Utilization Savings Growth Rate Reduction Network savings

>30% peak utilization bandwidth savings7x improvement in content delivery speed

>30% peak bandwidth savingsSLOWER GROWTH GOING

FORWARD

1313Value Beyond Costs Savings:Quality of Experience & OTT Service Data

Web Site Visitors (K) Bytes played out

1) youtube.com 3972,533,534,3442) apple.com 15122,340,070,1643) mcafee.com 2692,094,633,0154) netflix.net 32501,715,060,6645) symantec.com 12581,663,329,0816) pandora.com 398541,532,5907) farmville.com 2772352,416,4308) hulu.com 609 310,521,0209) photobucket.com 859301,090,10310) xbox.com 582262,658,449

High value information:- Top URLs (sites visited)

Hour, day, month…- Top applications

Web, P2P …- Heaviest users

Before: Slow play out – waiting 10 X faster buffering and downloads

Quick buffer fills – no waiting 7x improved screen resolution

1414

Internet

Opens up possibility for Premium Services

Same Content Intelligence can be applied to identify Users who have signed up for a Tiered Service

Accelerates and locally delivers their content

Provides a Measureable SLA

Can be extended to many types of filter, block, whitelist services

Remote COs

OriginContentServers

Premium Content Delivery

Tiered Service Subscriber

BTITransit COs

1515Summary

Service demands are driving a transition in service delivery

Networks are evolving to address bandwidth pressures and QoE expectations with Content Aware Networking

BTI is on the Forefront working with Major Operators world wide to make OTTop a successful business model

Visit Us:

Booth # B-J-205

1616BTI Systems | Corporate Summary

300+ customers: Service Provider, Content Providers, Governments, Utility, Research & Education

Portfolio: Packet Optical Transport, Content Aware Networking, Service Management & Analytics

Delivering innovative metro networking, offering scalable, content and service delivery solutions for service providers to monetize broadband telecommunications

Ethernet Services Delivery

Content Aware

Networks

Packet Optical

Infrastructure

Mobile Backhaul

DatacenterInterconnect

Visit Us:

Booth # B-J-205

17

Glenn ThurstonVP Global Marketing

gthurston@btisystems.com

www.btisystem.com | info@btisystems.com