CompTel 2010CompTel 2010Wireless Backhaul Panel

March 16, 2010

Wireless Data Evolution is Driving Fast Growing Demand for Backhaul Services

Voice Texting and Email Mobile Internet

Two T‐1’s (3 Meg)  3 ‐ 8 T‐1’s (5 ‐ 10 Meg)  25 ‐ 50 Meg Ethernet300 Meg in 5 years

Typical Cell Tower Bandwidth Requirements Per Carrier

Demand for “Smartphones” and 

g y

246 Million Data Capable Devices 

Smartphones

mobile Internet applications driving bandwidth requirements 

at cell towers

40 Million  (16%)

Page 2Confidential

Source:  CTIA 10/8/09

CompTel Wireless Backhaul Panel

• John ScaranoCOO and Co‐founderZayo Group

• Lynn ReferCEOCEOTelecom Transport Management 

• Matt YoungDirector of SalesAlcatel‐Lucent

• Jeff Stuparits PEJeff Stuparits, P.E.Distinguished Member of Technical StaffVerizon Wireless Backhaul Planning

• Moderator: Ron Mudry CEO of Tower Cloud• Moderator: Ron Mudry – CEO of Tower Cloud

ZAYO BANDWIDTHdCompany Summary and

Wireless Backhaul Overview

March 16, 2010

Zayo Group

2

Wireless Trend

More data devices… Driving >250% data CAGR… Accelerated further by LTE

(VzW: top 30 mkts by 2011)% of ATT Subs withintegrated devices

Zayo is actively building fiber to the tower networks in order to meet the growing demand for wireless data services

3Source: AT&TW presentation at 2009 4G Conference

to meet the growing demand for wireless data services

Primer – Base Station Capacity

Maximum ‘useable’ bandwidth per tower increasing rapidly…

R t ti B St ti C it E l tiRepresentative Base Station Capacity Evolution

2006 2007 2008 2009 2010 2011 2012 2013

Base stations connect wireless voice/data traffic to fiber (and copper, microwave,

etc ) backhaul

HSDPA/HSUPA3.6 / 14.4Mbps 1.9 Mbps

HSPA+21(28) / 5.8

HSPA+42 Mbps

HSPA+(MIMO)84 Mbps

HSPA+(MBand)168 Mbps

LTE172 Mbps etc.) backhaul

networks172 Mbps

‘2G’ ‘3G’ ‘4G’

Base stations ultimately govern the maximum bandwidth a tower can support… upgrades trigger multi-year handset upgrade cycles

4

Source: Telstra plan presented at 4G Conference

How Does Zayo Support the Wireless Space?

Mobile Switching CenterTowerCentral Offices

Antenna Local Voice Connectivity

Central Offices

Other MSCs

Wi l

IPRouters

Voice Switches

Voice Tandem Exchanges

Backup; voice and data aggregation

Wireless – Wireless voice ti itWireless

Provider Base Station App Servers

(e.g., Voicemail)Other NetworkElements

Internet Peering Locations

connectivity

Internet Traffic

Zayo Fiber Network

Fiber to the Tower ‘Backhaul’

Other Bandwidth Infrastructure services

5

Backhaul Infrastructure services

Price per Meg?

Without price compression per meg, high speed smart phones are unlikely to be economically viable for wireless carriers

Illustrative Price per Meg – Fiber to the Towerp g

Price per Meg at Various Bandwidth Commitment Levels

75%100%

0%25%50%

6 Megs 20 Megs 50 Meg 100 Megs

Cost effective for voice

Cost effective for

3G Speeds

Cost effective for high speed

wireless internet

85%, while bandwidth increases 16x

Price per meg decreasing…

this elasticity of demand fuels healthy growth

6

Using this example, revenue increases by 2.4x

…this elasticity of demand fuels healthy growth

Compelling, Common Characteristics

D i ti t fib t k

Memphis Indianapolis Philadelphia Spokane

Example Markets

Dense pre-existing metro fiber network

Balance sheet affords very long term payback

Believe high likelihood of a second/third tenant

5-10 year contracts; 100% ETL

Provide service to majority of customer towers

100% Zayo controlled end to end network

7

Requires laser implementation focus…

Telecom Transport Management, Inc. Overview

Privately-held, venture-backed companyy , p y

Pure-play provider of high capacity wireless backhaul services

Utilize hybrid fiber/microwave backhaul solutions to over 1 000 Utilize hybrid fiber/microwave backhaul solutions to over 1,000 cell sites

Currently offer service in 5 markets/12 cities to four national carriers and one regional service provider

Contracts are typically 5-7 years in length with recurring revenue while expenses are fixed allowing for considerable revenue while expenses are fixed, allowing for considerable scalability through lease-up activity

TTM expects to become cash flow positive 3Q 2010

1

p p Q

End to End Backhaul: Fiber and Microwave

ProtectedMicrowave

FiberCapacity Microwave

Hub

Fiber Hub

Wireless Carrier Switch

Cell Site

Cell Site

Hub Ce S e

FiberFiber Cell Site

Cell SiteCell Site

TTM E d E d S i

2

TTM End to End Service

Mobile Transport EvolutionComptel 2010

Matt Young

Sales Director

March 2010

Market Trends… explosive growth in Mobile Broadband

N t i l b t d t Faster/cheaper mobile broadband devices are driving the need for higher capacity networksContinued growth in mobile subscribers with strong forecasted growth in 3G subscribers

New terminals boost data …

ubs

Mob

ileV

or V

ideo

New end user services are IP driven with network assets migrating to support Ethernet/IPIP transformation needed to provide scalability and to reduce/control network transport costsE d d d f b db d i

% S T V

Source: MMetricsAverageiPhone

End user demand for new broadband services can offset reductions in ARPU 2009

$1992007$599

Mobile BroadbandNew Handsets + Services + SubscribersAll IP + RAN Capacity

Mobile data-users growth rate 2008 to 2012

BackhaulAll IP + RAN CapacityCost + Scalability

bers

Information service 86%

Mobile data-users growth rate 2008 to 2012

Video 194%

E-mail 83%

Games 95%

MMS 99% Graphics/images 77%Music 136%

Ringtones 62%obile

Sub

scri

b(M

illio

ns)

All Rights Reserved, Copyright © Alcatel-Lucent 20092 | Alcatel-Lucent Mobile Transport Evolution

Ringtones 62%

Mo

Source: Pyramid

IP/MPLS Mobile Backhaul Transport Solution For 2G, 3G and LTE

Convergence over Ethernet networks where available

Ethernet EthernetCarrier Ethernet or IP Network

(MetroE, TPSDA, PacketMicrowave…)

7750 SR

RNC, BSC,SGW, MME, …

NodeB.eNB,BTS

Ethernet

NodeB

ATM/IMA

(nxT1/E1)

OC3ch

ATM OC3

7750 SREthernet

T1/E1 TDMIPoMLPPP (nxT1/E1)

BTS

7705 SAR-8

7705 SAR F

or

nxT1/E1 OC3chTDM SONET or Microwave Network

BTSIPoMLPPP (nxT1/E1) 7705 SAR-F

Connection ResiliencyLAGMulti Chassis APSConvergence over TDM

Cell Site AggregationDynamic end-to-end MPLS PWsAny access media

Service Router flexibilityRAN MLS (L2/L3)

Multi-Chassis APSRedundant Pseudowires Fast Re-RouteEnd-to-End OAM and SLAs

Convergence over TDM networks where required

All Rights Reserved, Copyright © Alcatel-Lucent 20093 | Alcatel-Lucent Mobile Transport Evolution

Any access mediaMPLS OAM tool kitAccurate synchronization delivery

RAN router aggregationBackbone VPN edgeIntra-MTSO consolidation

Convergence of 2G/3G/LTE Backhaul, Backbone and LTE Evolved Packet Core

Seamless convergence of IP backhaul/backbone and Evolved Packet CoreFlexible eNodeB Carrier Ethernet access alternativesMulti‐technology solutions => higher BW, Ethernet and all‐IP

CDMA / EVDOGSM / GPRS BTS

2G/3G2G/3G Circuit Switched Core (Voice)

Microwave

Fiber

IP Backhaul MPLS, Edge

RouterCell Site AccessGSM / GPRS

EDGEUMTS /HSPA+

IP channelBTS

Node B BSCRNC

META (IP backhaul and backbone)

Cell Site Aggregation

Backha lAccess MTSO

Packet Switched Core

Copper

Access

LTE+EPCLTE+EPC

IP channel All-IP

BackhaulAccess MTSOIP Backhaul MLS, Edge Router and

S/P GW

Microwave

FiberCell Site

eNode B

IP channel

META (IP backhaul and backbone)

All IPEvolved

Packet Core MMEPCRF

CopperCell Site

Aggregation

Access

All Rights Reserved, Copyright © Alcatel-Lucent 20094 | Alcatel-Lucent Mobile Transport Evolution

Common IP backhaul / transport and IP EPC management

Conclusion

Critical success factors for evolving transport of new mobile broadband services:

Architectural flexibility and scalability - to address diverse backhaul environments

Sophisticated QoS - essential for new services and new business modelsnew business models

Robust network and OAM tools - to meet SLAs and reduce OPEX

Clock synchronization – to enable reliable handoffs Clock synchronization to enable reliable handoffs and guarantee service performance

Trusted partner – with expertise in delivering true E2E transport solutions optimized per customer

All Rights Reserved, Copyright © Alcatel-Lucent 20095 | Alcatel-Lucent Mobile Transport Evolution

BACKHAUL REQUIREMENTS

[ Fiber Based Ethernet-to-the-Cell ]

C t lComptel March, 2010

Jeff Stuparits, P.E.Di ti i h d M b f T h i l St ff

1

Distinguished Member of Technical StaffVerizon Wireless Backhaul PlanningVerizon Network and TechnologyAtlanta, GA

Verizon Wireless OverviewVerizon Wireless Overview

Off V i (CDMA) d D t (EVDO) i• Offers Voice (CDMA) and Data (EVDO) services• 40,000+ cell sites

• Customers: 91M+• Net Customer Additions in 4Q09: 2M+• Net Customer Additions in 4Q09: 2M+• 4Q09 Revenue: $13B+

• Deploying 4G LTE starting in 2010• We need Fiber (Ethernet) to our Cell Sites

2

We need Fiber (Ethernet) to our Cell Sites

LTE PlansLTE Plans• Four-year plan to have all cell sites LTE capabley p p• Phase 1: Commercial launch of 25-30 markets by year-

end 2010

• All cell site traffic (voice, EVDO, and LTE) will run over Ethernet Backhaul All T1’s will be disconnectedEthernet Backhaul. All T1 s will be disconnected.

• Additional information available at Verizon Wireless web site or other internet sources (recent Tony Melone interview with Network World)

3

Fiber/Ethernet PenetrationFiber/Ethernet Penetration• Phase 1– 2010 (Metro) 90/10 (90% Fiber / 10% MW)( ) ( )• Phase 2 – 2011• Phase 3 – 2012• Phase 4 – 2013 (Rural) 10/90 (we want to avoid this)

C / ?• Can Phase 4 be pushed towards 50/50 ?

• A challenge for the Transport industry !• A challenge for the Transport industry !• Phase 3 and 4 planning needs to take place now.

4

What (most) Wireless Carriers Want:OOur Transport Wish List

1 Fiber (or MW) based1. Fiber (or MW) based Ethernet Transport System,

2. Delivering 5-10 times the bandwidth we use today,

3. At less MRC (OpEx) than t dwe pay today.

When all 3 of these items are enabled

5

When all 3 of these items are enabled, we tend to move forward with urgency.

VZW TargetsVZW Targets

• Fiber Based Ethernet BackhaulFiber Based Ethernet Backhaul• GigE Multimode fiber interface at cell site• High Availability Five 9’s+ in the coreHigh Availability, Five 9 s+ in the core

• 50Mbps to start• 50Mbps to start• 100Mbps once 4G ramps up, then +++• 100 500Mbps for Microwave Hub sites• 100-500Mbps for Microwave Hub sites

T t i 100Mb f $1500/• Target price: 100Mbps for $1500/mo.6

Backhaul RequirementsBackhaul Requirements

• End;

7

CompTel Wireless Backhaul Panel

• John ScaranoCOO and Co‐founderZayo Group

• Lynn ReferCEOCEOTelecom Transport Management 

• Matt YoungDirector of SalesAlcatel‐Lucent

• Jeff Stuparits PEJeff Stuparits, P.E.Distinguished Member of Technical StaffVerizon Wireless Backhaul Planning

• Moderator: Ron Mudry CEO of Tower Cloud• Moderator: Ron Mudry – CEO of Tower Cloud