MXK Overview and Roadmap

PROPRIETARY & CONFIDENTIAL

Access network apps, requirements evolving rapidly

Continued high expectations for Quality of

Experience
• Clear, fully-featured voice
• Smooth, high-quality video
• Reliable, fast Internet connectivity

New streaming applications requiring more,

dedicated bandwidth
• Multiple HDTV channels
• On Demand
• Over-the-top video
• More intense Internet usage
with video sharing, gaming

PROPRIETARY & CONFIDENTIAL 2

This change is accelerating, in magnitude and impact

Year-over-Year Growth in Internet Video Traffic Forecasts

Global traffic actuals and forecast for Internet video to PC, Internet video to TV, video communications, and gaming

PB/Month
20,000
86%
18,000
Unicast
2009 Forecast
16,000

14,000

12,000
66%
10,000 Unicast
2008
8,000
Forecast
6,000

4,000
2007 Forecast
2,000

0
2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: Cisco Visual Networking Index

PROPRIETARY & CONFIDENTIAL 3
Substantial changes in subscriber behavior

VIDEO STREAMING FROM TOP 10 SITES IN APRIL, 2009

Millions of Clips Watched

Google sites 6,832

Fox Interactive Media 513
Hulu 397
Yahoo! sites 355
Viacom Digital 315
Microsoft Sites 288
Turner Network 273
CBS Interactive 203
Disney Online 132
AOL 121

Source: comScore

PROPRIETARY & CONFIDENTIAL 4

Unicast growth has large implications for access

Multicast to Unicast Shift Raises Bandwidth Requirements in Access Concentration

Traffic per chassis, Gbps
250 Network Location
Access Concentration
Backplane
200
Distribution Port, or
Access Uplink
150

100

50

Scenario 1 2 3 4 Other Assumptions:

4,000 households
Unicast
adoption,
400 multicast
% of hh
channels
15 Mbps/channel
10% 25% 50% 80% 2.5 streams/hh
PROPRIETARY & CONFIDENTIAL 5
What will use this Bandwidth?

Source: Yankee Group

PROPRIETARY & CONFIDENTIAL 6

More than just bandwidth, good traffic control is key

Varying Application Requirements Demand Differentiated Approach

PROPRIETARY & CONFIDENTIAL 7

Give them more of what they want: bandwidth

Typical Rate/Reach for Broadband Access Technologies

VDSL2 200 Mbps

2 bonded pairs
175

150

125
GPON (2.5 G split 20 or 32 ways)
VDSL2 100

75
HFC DOCSIS 3 (Typical)
ADSL2+ (2 pr)
50
EFM (8 pr)
ADSL2+ 25
EFM (1 pr)

0 0.5 1.0 1.5 2.0 2.5 3.0 km

0 0.5 1.0 1.5 2.0 miles

Sources: DSL Forum; Zhone testing.

PROPRIETARY & CONFIDENTIAL 8
 OSP design can have huge strategic value!

Rate/Reach for Fiber-based Broadband Access Technologies

Active Ethernet (Dedicated fiber)

1,000 Mbps

900

800

700

600

500

400

300
HFC DOCSIS 3
VDSL2 200
2 bonded pairs GPON (2.5 G split 20 or 32 ways)
VDSL2 100
ADSL2+ (2 pr)
EFM (8 pr)
ADSL2+
EFM (1 pr)
0 2 4 6 8 10 12 96 km
0 2 4 6 8 60 miles
Sources: DSL Forum; Zhone testing. PROPRIETARY & CONFIDENTIAL 9
Change demands a new design for access networks

Baseline MSAP requirements still apply

Lower Capex
• Multiple residential and business services
Lower Opex
• Carrier-class support for fiber or copper
Higher Revenues • Compatible with core MPLS, routed or bridged
New requirements for access evolution
• All IP network
• Clean-sheet approach to truly scalable architecture —
to Terabit bandwidth
• Sophisticated service intelligence closer to the
subscriber, even at very high bandwidth concentration
• Higher capacity — more subscribers per rack
• Easier to manage, to address rising costs of operation
• Dependable security

PROPRIETARY & CONFIDENTIAL 10

Zhone advantage: common architecture

Zhone’s single line, multi-service (SLMS)

operating system creates unique value for
any network — (fiber, copper, or both)
For carriers:
• Reduced capex, opex, and network
complexity
• Increased flexibility for new service
deployment and network transitions
For Zhone:
• Reduced time to market and
development costs for new features
• Continued category leadership

PROPRIETARY & CONFIDENTIAL 11

SLMS — Rich feature support for triple play

Video High bandwidth service over fiber (GPON, Active Ethernet)

or copper (bonded ADSL2+, VDSL2)
RF or IP, with RFoG RF return
IGMP proxy and snooping for packet video
Multicast at MALC for efficiency
Closely integrated with CPE portfolio, including HPNA

MALC can function as IP, Ethernet, or traditional ATM

Data DSLAM as network requires
Bridging or routing
Extensive QoS, access control, security, and traffic
management features (e.g. DHCP server and relay, IP/MAC
address limiting, rate shaping, VLANs, TLS)

Combo ASDL2+ and POTS cards

Voice Voice gateway card, GR-303 and V5.2 interfaces to TDM

switches, port-by-port migration to IP
Integrations with 10 leading softswitches, via SIP, H.248, and
MGCP
Emergency standalone functionality

PROPRIETARY & CONFIDENTIAL 12

Industry’s broadest integrated access portfolio

PROPRIETARY & CONFIDENTIAL 13

MALC — Industry-Leading MSAP

More than 4 million ports of capacity shipped

MALC™ Family
Industry-leading density, flexibility, and breadth of uplink and
line card options

Uplinks FE/GE, DS3/E3, OC3/STM1, T1/E1 IMA, RPR

Fiber Active Ethernet, GPON
Copper ADSL2+ (bonded), VDSL2, ReachDSL,
EFM (SHDSL)
DS3/E3, T1/E1, EFM T1/E1, ISDN, POTS,
P-Phone, Specials, DLC with ESA
Wealth of features tuned specifically to access (L2 and L3,
security, traffic management), driven by customer engagement
in more than 70 countries
1U, 3U, 7U (19 and 23 in.) form factors, with OSP options
Carrier class design (redundant uplinks, hot swap, hitless
upgrades, NEBS, integrated line test)
Line-powering integration for carrier-class metro Wi-Fi with
SkyZhone
Web UI, CLI, and ZMS/OSS Gateway

PROPRIETARY & CONFIDENTIAL 14

Support for all FTTx network architectures

All FTTx variations supported on one platform, including GPON, Active

Ethernet, VDSL2, and bonded ADSL2+
End-to-end solution, including configurations for remote node, MDU, and
a variety of indoor and outdoor ONTs
Full support for RF or IP video over fiber

PROPRIETARY & CONFIDENTIAL 15

Zhone Ethernet over Copper / EFM Solutions

802.3ah standard EFM as well as time-tested Net to Net protocol,

bonding SHDSL.bis, T1, or E1
Broad selection of aggregation and CPE options
Fully integrated into Zhone MSAP
Supports wide range of business, utility, education, and municipal
applications

PROPRIETARY & CONFIDENTIAL 16

 SkyZhone — Metro Wi-Fi done right.

SkyZhone AP

Zhone MSAP Remote-Powered

Camera

SHDSL (EFM) Local Power

Backhaul and over Ethernet
Line Powering

SkyZhone Wired Backhaul Reliable 20 Mbps per AP

Advantages Line Powering Telco-grade uptime, easier siting
at a Glance
802.11n + MIMO Better coverage, higher data rates
MSAP Integration Simple, low-cost deployment
2.4, 4.9 GHz Broader application support

Supports the full range of municipal and commercial metro Wi-Fi applications

PROPRIETARY & CONFIDENTIAL 17

ZMS - Powerful, scalable management and integration

Carrier OSS Single integration to manage

complete access network

Zhone OSS Powerful client-server architecture

Gateway Flexible and completely
programmable
Function calls to all of ZMS

ZMS Manage all Zhone network

Element elements with one tool
Management Service definition, control, and
System reporting

Web GUI, CLI, Direct configuration

scripts interface
Easy-to-use GUI
Powerful CLI &
scripts for
automation

PROPRIETARY & CONFIDENTIAL 18

Introducing Terabit Access
Accelerating changes in access network demands
Substantially higher performance requirements
• Bandwidth
• Sophisticated traffic control, security, management

MXK™ = clean-sheet architecture + proven SLMS software

Results:
MXK
• Unrivaled bandwidth and feature depth
• Higher revenues, lower capex and Intelligent
opex Terabit
Access Concentrator

PROPRIETARY & CONFIDENTIAL 19

Zhone’s MXK: Intelligent Terabit Access Concentrator
Performance
Key Hardware Features Advantages Results
v1.0: 400 Gbps pure IP backplane
Unmatched Lower
Non-blocking 20G to every slot
Scaling Efficiency Capex
Scalable through terabit access
Software
Full SLMS™ features — embodying
Superior Service Higher
8 years of access experience with
Intelligence Revenues
700 operators worldwide

Management
ZMS integration Comprehensive,
Lower
OSS gateway Intuitive
Opex
Smart OMCI™ for true interop Management

Carrier-class hardware and software implementation

Active Ethernet and GPON available now
Architected for MSAP support with additional cards

PROPRIETARY & CONFIDENTIAL 20

MXK: The Essential Ingredients

Scalable Architecture Proven Software

Zhone’s SLMS access operating system
8 years of commercial experience,
700+ operators, 70 countries
Rich feature set for full range of residential
and business services

Installed Base of 15,745

SLMS Chassis
At Year End
12,035

8,630

5,425

2,475
230 535
85
2001 2002 2003 2004 2005 2006 2007 2008
PROPRIETARY & CONFIDENTIAL 21
MXK architecture sets a new standard

Physical design
• Distributed Ethernet switch fabric;
L2 efficiency + L3 intelligence
• Completely passive backplane allows upgrade
from 400 Gbps through 1T capacity by uplink
swap-out alone
• Slots A & B dedicated to uplink cards, with hitless
redundancy
• Slots 1-18 are universal, slots 1-9 grouped to the
left of the uplinks, slots 10-18 to the right
• All cards & chassis I-temp for remote node
installations
Unrivaled capacity
• Up to 20 Gbps per slot (non-blocking 1/2.5/10 G
serial links per slot from each of the 2 uplinks)
• Architecture supports non-blocking service for up
to 3,600 100 Mbps GPON subs, or…
• Up to 360 1 G Active Ethernet subs

PROPRIETARY & CONFIDENTIAL 22

MXK physical packaging for FTTx applications

Bezel with Fan MXK 819, 823

Assembly &
Status LEDs Redundant controllers +
uplinks
14 line cards
(19”) or 18 line Eight 1G Ports (SFP)
cards (23”)

Dual 10G Ports

GPON
Line Card
4- or 8-port 20-port
Active Ethernet
Line Cards
Fiber Tray &
Management
Front and Rear Power,
Alarms, Cable Entry

Removable fan &

filter assembly
with status LEDs MXK 319
2x10G to each slot, as in
819/823
7 line cards,
all front access, Redundant controllers +
hot swappable uplinks

All components I-temp hardened for remote node applications

PROPRIETARY & CONFIDENTIAL 23
MXK: Unmatched Scaling Efficiency
Features
Initial 400 Gbps backplane, nonblocking
20G to every slot
Multiple uplink options
2x10G+8x1G, 8x1G,
4x1G (at 1 or 2.5G per slot)
4- and 8-port GPON cards
20-port Active Ethernet cards
Architected for multi-service access
(ADSL, VDSL, SHDSL and Voice)
Non-blocking service to 3,600 100 Mbps
GPON subs or
360 1G Active Ethernet subs
Unmatched
Scaling Efficiency
Benefits
Substantially more sheer bandwidth in your
access network
More subscribers per rack
Higher utilization of costly distribution
ports
Capex optimized for application
requirements
Future-proof investment
• Modular, distributed architecture
• Expansion in service scope
Lower
Capex
PROPRIETARY & CONFIDENTIAL 24
MXK: Superior Service Intelligence

SLMS Features Benefits

Native IP network control, with a wealth Increased service options

of QoE and security features, including…
Better Quality of Experience
• Multicast IGMPv 2 & v3
• Improve customer retention
• Q-in-Q
• Generate customer goodwill
• 3-color policing
Tailor services to meet business needs
• 802.1p
Sophisticated security and control
• Secure bridging, SSH, SFTP, HTTPs,
port access, ACLs
• EAPS
• RSTP

Superior Service Higher

Intelligence Revenues

PROPRIETARY & CONFIDENTIAL 25

Zhone SLMS Management Options

CLI Web UI ZMS

SLMS Device
with HTTP
server

Network

ZMS
Server

Telnet or Console PC with Web Browser ZMS and Clients

Cisco-like feel Java-based embedded HTML Scalable distributed element
Optimized for scripting element manager management system
Radius login authentication

PROPRIETARY & CONFIDENTIAL 26

Zhone Management System

Comprehensive Set of Management

Applications
Fault Management
Network Configuration
Performance Management
Operational Tools
Service Provisioning
OSS Gateway API with Corba and XML
interfaces

PROPRIETARY & CONFIDENTIAL 27

Smart OMCI — Context and advantages

Multi-vendor interop is essential for ONTs

ITU’s GPON ONT Management Control Interface (OMCI) standard is
complex
Most vendors have evaded it with proprietary approaches
Zhone Smart OMCI leads the industry
• Fully standard-compliant
• Proven multi-vendor interop
• Clean, simple interface,
integrated with ZMS
• Allows rapid ONT and service
portfolio extension,
without OLT
software upgrades

PROPRIETARY & CONFIDENTIAL 28

MXK: Comprehensive, Intuitive Management

Features Benefits

CLI and Web user interface to individual One application layer to manage all devices
chassis configuration
Intuitive user interfaces
ZMS for seamless management of all
True interoperability support, with no code
Zhone devices across the network
changes required by introduction of new
OSS Gateway API, with XML and Corba ONT models
options for complete back-office
Tight integration with your business
integration
Zhone’s unique Smart OMCI™ for GPON
ONTs

Comprehensive,
Lower
Intuitive
Opex
Management

PROPRIETARY & CONFIDENTIAL 29

MXK Future Direction

December 2009

PROPRIETARY & CONFIDENTIAL

Complete PON Access Solution from Zhone

Voice
VoIP Local
Exchange
ZMS GR303 Switch
V5.2
SIP
IMT
MGCP
H.248 HSIA

MxK
IPTV IP/MPLS
zNID Core
zNID
Existing Coax Cable
HPNAv3 Video
Splitter IGMP
HDTV
MPEG2
MPEG4

Business
Services MDU
zNID

Residential Triple Play Services : IPTV/RFTV, VOIP/POTS & HSIA

MDU Triple Play Services : IPTV/RFTV, VOIP/POTS & HSIA
Business Services : VoIP/POTS, T1/E1, L2 and L3 VPN, and HSIA

PROPRIETARY & CONFIDENTIAL 31

New GPON bandwidth

Video
ZMS
IP/MPLS
10 GPON OLT Core
Data

MxK Voice

Splitter

Business
Services MDU

As standards evolve, there will be enhancements to the GPON protocol coming

in the coming month and years
Zhone is a FSAN member and follows the XGPON discussions very closely
Based on all current development the MxK is the ideal platform for this.

PROPRIETARY & CONFIDENTIAL 32

Growing PON bandwidth with standard GPON Network

Voice

DWDM PON ZMS

IP/MPLS Video

Core
Data
MxK

zNID

Splitter

Business
Services MDU
zNID

Standard Based WDM PON

Dedicated wavelength from OLT to ONU/ONT
Point-to-point topology over shared PON allow for larger bandwidth per Subscriber
May Require a splitter to be replaced for PON

PROPRIETARY & CONFIDENTIAL 33

Growing PON bandwidth with standard GPON Network

Voice

DWDM PON Overlay ZMS

IP/MPLS Video

Core
Data
= GPON + DWDM MxK

zNID

Splitter

Business
Services MDU
zNID

Leveraging unused frequency around 1550 nm (C, L and U bands)

Allows carriers to sell high bandwidth – up to 1 Gbps over the exiting PON Infrastructure while
still maintaining a standards-based GPON solution
Support for both GPON and 1 GE Services in the Same Chassis on the same fiber

PROPRIETARY & CONFIDENTIAL 34

Ring Enabling MxK

Ethernet Protection MxK MxK

Switching
MxK

Supporting ring, hybrid ring, and star topologies

Based on RFC 3619 Ethernet Automatic Protection Switching
Provides SONET recovery time (sub 50ms) over speeds from 1 Gbps to over 10Gbps
• Supports packet rings over individual links as well as link-aggregated interface
groups
Enables spatial re-use and multi-node ring egress capabilities

PROPRIETARY & CONFIDENTIAL 35

Higher Speed Uplinks

Today 2011 2012

40G and 100G
MxK MxK MxK
Uplinks

MxK Architecture is designed for terabits of traffic

• Current uplink capability is 28 Mbps
2 X 10G and 8 x 1G physical interfaces
New uplinks based on existing switching technologies will start to scale up
to speeds of 40G and 100G
All interfaces will support SLMS packet features
• RSTP, Ling Aggregation, LACP, and EPS

PROPRIETARY & CONFIDENTIAL 36

Moving MPLS Closer to the Edge

Voice
LSR
MxK LER Video
LSR
support Data
LSR
ZMS LSR LSR

LER
LSR
MxK LSR

MxK is a Label Edge Router establishing Labels Via Label Distribution via LDP
• Allows for tunnel information to be distributed between SLMS end-points
PWE3 tunnel functionality for point-to-point and point-to-multipoint applications
ZMS integration of tunnel management
• Manage VPLS mesh networks that scale across the network
Multipoint support for VPLS for PWE3 interfaces

PROPRIETARY & CONFIDENTIAL 37

MXK Detailed Roadmap Update

December 2009

PROPRIETARY & CONFIDENTIAL

Release 2.0.1.xx (Mar, ’10) - Hardware

ADSL2+ Combo card with new POTS daughter board/Ringing SLICs

(Lightning Protection): 48 port, dual slot; removes the need for MTAC card
for ringing and test
VDSL2 - support for 24 port 5-Band (up to 17a) without ADSL Compatibility
(Beta in December)
Uplink: 4 X 1GE: 2.5/10 Gig backplane
MXK ADSL2+ Annex B
New TAC cards

PROPRIETARY & CONFIDENTIAL 39

Release 2.0.1.xx (Mar, ’10) - Software
EFM SHDSL Bonding Across cards
EFM SHDSL CPE Manager & OAM
functionality
EFM-SHDSL support for TCPAM 4,8,64,128
(no auto-rating;)
ADSL: PPP over ATM with IWF Support (RFC
2364)
Broadcast storm protection: Throttle
requests between host and switch on line
card, to ensure higher priority traffic makes
it to CPU
EAPS on uplink card, simplex mode
AE link aggregation: Link aggregation will
be supported on single card
Bridge Loop issue prevention: This is to
protect MXK from any misbehaving ONT
that can cause bridge loop ONT status of all
ports with one CLI command and
equipment ID display
Disable Tx power on uplink standby:
Workaround for VRRP
OMCI support for PPPoE: Add OMCI
commands to OMCI stack to support
PPPoE.
GPON Redundancy (Type B protection)
Transmit and Receiver level sensitivity
parameters as configurable variable in
OMCI for ease of use
Configurable variables for choosing fax
mode as G.711 or T.38
FR 20249: Ethx 3000/3400: Zero touch
provisioning (Customer: Radiant/MTS)
Wire bridge (2 port TLS)
Add GPON capabilities to manage RF via CLI
Automatically bond EFM lines (Discovery)
Add ADSL line rate information into the
PPPoE-UA signaling FR20015
PROPRIETARY & CONFIDENTIAL 40
Release 2.1 (Jun ’10)

Hardware
• POTs 72 port card; Single Slot
• ADSL 72 port card; Single Slot
• Traffic Manager for GPON:
• TAC card with Timing (IEEE 1588 support)

PROPRIETARY & CONFIDENTIAL 41

Release 2.1 (Jun ’10) - Software
VDSL2- support for 24 port (17a profile) with
ADSL mode
MXK GPON Provisioning using Registration ID:
Provides the ability to field technician to bring up
service without having to call in to CO
MXK GPON ONU Name needs to be integrated
into command
MXK Bridge MAC flapping not working
GPON Class C, C+ SFP optics
Bulk stats on GPON and uplink ports
CRC Statistics
MVR
Unidirectional failure detection on uplink cards
OLT Performance Statistics
PhyR statistics
Configurable ADSL PSD masks (t-shell only)
Egress Rate limiting for SHDSL EFM
IGMPv3 - phase 1 (Reply to Joins/Leaves,
membership queries) (Beta end of Q1)
MEF 9, 14 certification
FR 20207 Add modem serial number to DHCP
Option 82 message
Add ability to configure speed and duplex modes
of subscriber facing ports on GPON ONUs
Display model ID along with serial number
Active Ethernet Redundancy
EAPS on Concurrent uplinks
IP Stats on demand
Add OMCI support for Wi-Fi ONTs: Add OMCI
Commands, CLI/SNMP work for manipulating Wi-
Fi ports as well stats on Wi-Fi port
PROPRIETARY & CONFIDENTIAL 42
Future Releases

Release 2.2 (October ’10) Release 2.3 (Q1 ’11)

Hardware Hardware
• Voice Gateway card • 40Gig Uplink
• T1/E1 PWE Support • ZNID: Support 1Gig ports on line
side
• VDSL + POTS
Software
• VDSL + Splitter
• Link Aggregation across
Software
• MSTP
• TOS/DSCP based QoS - Deep
Packet inspection allows quality of
service mapping from L3 to L2

PROPRIETARY & CONFIDENTIAL 43

Future Releases

Release 2.4, Q3, 2011 Release 2.5, Q1, 2012

Hardware
Hardware
• 10GPON, GEPON
• MDU version of MXK (1U Chassis) • 100Gig Uplinks
• WDM PON Software
Software • MAC in MAC: To simplify
• MPLS deployment of L2 networks
• VPLS
• VRRP support on uplink cards
• DPI: To provide advanced
capabilities to enable user to build
intelligence based on packet types
• Anti DOS control

PROPRIETARY & CONFIDENTIAL 44

Future MxK MPLS Integration

PROPRIETARY & CONFIDENTIAL 45

Zhone’s Access Roadmap
Additions in…
2009 Baseline 2010 2011 Beyond

Applications Triple play Triple play with intensive HD video surveillance Ubiquitous HD Tele-
EFM HD and unicast and home video portals presence
Metro Wi-Fi
1080p Video on net DPI-based value-add

Services FTTx, xDSL, Legacy TDM over Packet: PWE EFM replacement of Cloud Based
with Sync-E and 1588 T1/E1 for IVD
P-2-P
Support

Solution Elements Indoor and outdoor ONTs, MDU ONT line Home networking 2.0 All Devices Network
full xDSL range of CPE (G.hn) Aware (TV, Phone,
RFoG for RF Return and
Alarms)
Smart OMCI Docsis 3.0 Solution Management
ZMS

Network Wealth of QoS, security, Ring Enabling: Ethernet MPLS closer to the edge DPI Service/Session
Intelligence traffic management Protection Switching (MXK LER) Based
features
Distributed DPI Per Layer 4-7 Packet
Packet Forwarding

Bandwidth GPON VDSL /w Bonding 10 GPON DWDM-PON

Active Ethernet
VDSL with DSM

MXK Hardware 8U (19, 23 in.) 3U 40G uplinks 100G uplinks

4-port GPON ADSL2+, combo, VDSL2, WDM Uplink Integration
EFM
20-port AE
High-density AE
10G Uplinks

PROPRIETARY & CONFIDENTIAL 46