Transforming Broadband into Services TANE IPTV Seminar October

Transforming Broadband into Services TANE IPTV Seminar October 25, 2006

Tut Systems Background ® Founded in 1991; IPO 1999 NASDAQ: (TUTS) ® Headquartered in Lake Oswego, OR • Regional operations in: – – – ® Pleasanton, CA Chicago, IL Oxford, England Hong Kong Beijing, China November, 2002, acquired Video. Tele. com from Tektronix • • 25 -year video heritage, 1500 video patents • MPEG-2, MPEG-4, ITU Standard Committees • Today, world’s leading provider of DHEs for delivering digital TV over x. DSL networks First to deliver broadcast-quality video over fiber optic network (NBC, 1980 Winter Olympics)

The Telco Drive to Survive Worldwide Market (Subscribers in Thousands) ®Tut provided the first IOC Switched Digital Video Headend in 1999 ®Tut powers the largest SDV provider in the world ®Tut customers serve more than 50% of this market as of 2005 Telco Video Subscriber Growth Worldwide 2002 -2008* Source: In. Stat/MDRMay 04

Tut Systems Business Landscape Middleware, Management, & Professional Services

Transforming Broadband into Services Digital Video Headend Components

IPTV Product Categories ® ® ® Dishes and Antennas Receivers Video on Demand (VOD) Ad Insertion Encryption Switches/Routers Access Platforms (DSLAMs) Set top Boxes (STB) Emergency Alert Systems (EAS) Middleware Systems Billing Systems Provisioning Systems

Complete Ecosystem of IPTV Components Digital Headend Satellite Encoding DTA Local Off-Air and PEG Channels Access DSL IRDs Content Rights Video Edge Regional ATM or IP Backbone FTTH Cable Off-Air Middleware Encryption/CA EAS Caller ID VOD Ad Insertion STB

Digital Headend Functions Digital Headend Satellite Content Rights Receivers IRDs Encoding DTA Regional ATM or IP Backbone ® Digital Headend Functions • Acquire national content – Convert to digital (if required) Middleware Encryption/CA • Condition content for transport over access network(s) – Optimize and manage tradeoff between bandwidth and quality • Conditional access

Video Edge Functions ® Complement headend functions providing differentiation and additional revenue sources Local Off-Air and PEG Channels Video Edge Access DSL ® Video Edge Functions • Acquire local content – Convert to digital, if required • • ATM/IP protocol conversion Convert digital content for transport over RF Regional ATM or IP Backbone – For FTTH and coax • • Conditional access Others (local customization) – Emergency Alert – Ad insertion – Vo. D Middleware Encryption/CA EAS VOD Ad Insertion FTTH Cable STB

Functional System Framework Off-Air & Satellite Receive EAS & Character Generation Content Aggregation Content Processing Encryption Ad Insertion - Optional VOD - Optional Section 3. h Diagnostics, Management & Middleware

Satellite 101 – The Machine ® Highly specialized tool ® Categories: 1. Communications • Echo. Star 3 (TV signals) 2. Earth Remote Sensing • Study Earth's Surface 3. Weather – TRIOS – forecast weather – track storms 4. Global Positioning – latitude, longitude, and altitude 5. Scientific Research • SOHO (Solar and Heliospheric Observation) - Study the SUN

Content Acquisition Off-Air Antennas • • Networks/Affiliates Public, Education, Government (PEG) Satellite Delivery • National broadcast • Premium channels

Off Air Receivers Videotek DM 145 • • 1 -Channel analog demodulator 154 channel tuning (VHF/UHF/Cable) Simultaneous stereo and SAP audio outputs Frequency synthesized channel selection SAP and Stereo presence indicators Front panel memory retained for one week in event of power loss Optional Ghost Cancellation Circuitry Videotek DDM-500 • • Multi-channel, digital demodulator, decoder SMPTE 310 M, DVB-ASI, DVB-SPI transport stream inputs and outputs CAV, SVGA, SDI, NTSC outputs Signal to Noise Ratio and Segment Error Rate information available HD/SDI output (option) AC-3 TM and Stereo Audio outputs

Integrated Receiver Decoders Scientific Atlanta IRD – 9660 – 1 -Channel analog receiver and descrambler (Video. Cipher) Scientific Atlanta IRD – 9850 – 1 -Channel digital receiver, decoder, and descrambler – Dig. Prog. Replacement providing uplink control of program replacement in blackout areas Scientific Atlanta IRD – 9228 – Multi-channel, digital receiver, decoder and descrambler (Power. Vu) Motorola 4402/4400 MD – 1 -channel and multichannel, digital receiver, decoder and descrambler (Digi. Cipher) MPEG-2 Motorola 4500 IRD – Multi-channel, digital receiver, decoder and descrambler (Digi. Cipher) – 8 RF Inputs; ASI and DHEI Outputs

Functional System Framework Off-Air & Satellite Receive EAS & Character Generation Content Processing Encryption Ad Insertion - Optional VOD - Optional Section 3. h Diagnostics, Management & Middleware

DHE Content Processing for Broadcast TV Analog Video ADSL ATM or IP Digital Video VDSL ATM Digital Audio FTTP IP or RF Analog Video CABLE IP or RF Content Processor VBR Video BB Analog Video CBR Video

Astria® CP Content Processing Technology Digital Satellite Digital Turnaround (DTA) Audio / PIDs HBO, TNT, CNN VBR RATE CONVERT DEMUX SINGLE Pass MULTI Pass Off Air Analog MULTIPASS MPEG-4 AVC CBR RATE CONTROL PROTOCOL MAPPER HBO TNT CNN 1% Variance NBC AVC or MPEG-2 IP, IP/ATM, DVB-ASI NBC TRANS CODE ENCODE CBR/ VBR Constant. Stream™ Analog Encode De. Mux – separate/extract channels from MPTS / pass-through SPTS Transcode – convert MPEG-2 stream into MPEG-4 AVC stream Rate Control – Optimally package all Video/Audio/PID and (re)calculate clocking requirements Protocol Mapper – Optimally map the stream and apply clocking to the downstream I/F Encode – convert analog RF input into MPEG-4 AVC or MPEG-2 digital stream Rate Convert – compress MPEG-2 in digital domain either single or multi-pass Plan Deploy Market Maintain

What’s an Astria® Content Processor? Rear Transition Modules: Robust Chassis: Input/Output for Analog & Digital Audio and Video Carrier Class, Industry Standard Chassis with Full Redundancy Processing Modules: Network Interface Cards: MPEG-4 & MPEG-2 Encoding & DTA (Transcode & Rate Convert) OC-12/STM-4 SM, OC-3 c/STM-1 c SM & MM, Gig. E-C/F Hot-Swappable Modules: Management: Dual 2. 1 Gbps Backplanes Control via Aveon® EMS, or Aveon® Device Manager GUI Power Supplies: Qual. View® Applications: Hot-Swappable, Redundant, Load-Sharing (AC or DC) Advanced processing on DSPbased Stream Processor Cards

Functional System Framework Off-Air & Satellite Receive EAS & Character Generation Content Processing Encryption Ad Insertion - Optional VOD - Optional Section 3. h Diagnostics, Management & Middleware

Astria® – Emergency Alert System EAS Receiver (AM, FM, VHF, NOAA) EAS Messaging System Force Tune to Channel x i. View. TV Alert Active Msg Character Local - Channel 2 Generator Video Overlay Alert!!! Channel 2 w/EAS Msg Centralized Headend Digital Video Feed FCC Requirements: - Monitor at least two off-air (AM, FM or VHF) sources for EAS information - Have the ability to decode the EAS message - Be able to override the audio with the EAS message on all programming channels - Transmit a complete visual EAS message on at least one channel - Provide a video override or a video interrupt on all channels. Normal Video Path Alert Message. Path IP Middleware Path (physically across the Gig-e switch)

Functional System Framework Off-Air & Satellite Receive EAS & Character Generation Content Processing Encryption Ad Insertion - Optional VOD - Optional Section 3. h Diagnostics, Management & Middleware

Ad Insertion, A New Source of Revenues ® Cable MSOs generate 7 -12% of revenue from ads ® Local ads differentiate your offering ® Leap from delivering 30 second local ad to providing 30 minute local programs is minimal Plan Deploy Market Maintain

Analog and Digital Ad Insertion Today Also, Today Analog Transport Astria® Encoder MPEG Primary Video Access Networ k ® Primary Video and Ad Streams Toggled by Analog Video Switch Local Ads Ad Server MPEG Video Switch Local Ads MPEG Ad Server Baseband Primary Video Digital Transport Astria® Splicer MPEG Access Networ k ® Primary Video and Ad Streams spliced in Astria® CP ® Astria CPs bridge the gap between analog and digital Plan Deploy Market Maintain

Functional System Framework Off-Air & Satellite Receive EAS & Character Generation Content Processing Encryption Ad Insertion - Optional VOD - Optional Section 3. h Diagnostics, Management & Middleware

Encryption Solutions Encryption is a requirement for VOD content delivery Encryption is becoming a requirement for Broadcast content delivery ® Widevine • Amino 110 • *i 3 Micro in final stages • *Entone integration underway ® Verimatrix • i 3 Micro • Amino 110 • *Entone final stages ® The following will be evaluated on an opportunity basis • Secure Media • NDS • Latens • Irdeto • Nagravision Tut Systems provides VOD systems as part of the turnkey solution

Functional System Framework Off-Air & Satellite Receive EAS & Character Generation Content Processing Encryption Ad Insertion - Optional VOD - Optional Section 3. h Diagnostics, Management & Middleware

Video on Demand servers Tut Systems utilizes VOD servers from Kasenna, Entone, and Concurrent

Example VOD Revenue/Splits Content Category Approx Hrs / mo. SRP New Release 100 $3. 95 65% $2. 57 $1. 38 Studio Library 120 $2. 99 55% - 65% $1. 64 - $1. 94 $1. 05 - $1. 35 Independent 20 $3. 95 65% $2. 57 $1. 38 Events 60 $3. 95 - $29. 95 50% $1. 98 - $14. 98 $1. 97 - $14. 97 Tune-In Classic 15 $1. 95 55% $1. 07 $0. 88 Children 20 $0. 79 - $2. 95 55% $0. 43 - $1. 62 $0. 50 - $1. 33 ESPN 20 $1. 99 - $2. 95 65% $1. 29 - $1. 92 $0. 70 - $1. 03 Hot Body 20 $5. 95 15% $0. 89 $5. 06 Adult (X-XXX) 150 $8. 95 - $10. 95 15% $1. 34 - $1. 64 $7. 61 - $9. 31 TOTAL 525 Hours Based upon 9/2003 VOD Avails % Split to Content Supplier $ Minimum Content Supplier $ Operator Revenue

Winning Partnerships for the Last Mile Centralized Digital Headend Metro / Regional Headend Satellite TV Central Office ADSL Content Processor Remote Content Processor VDSL Regional Network FTTP Occam Calix Zhone Paradyne Allied Telesyn AFC Alcatel Catena Pannaway Motorola Alloptic AFC Local Content CABLE Ad Server Video On Demand Off-Air Telstrat Zhone OSI Teleste Cisco Motorola

Deliver More Services to More Customers 24 AWG Cu 28 M 26 M ADSL Down 24 M S=1/2 Down 22 M ADSL 2 Down 20 M ADSL 2+ Down 18 M 16 M MPEG-2 14 M HD MPEG-4 AVC HD 12 M 10 M MPEG-2 MPEG-4 AVC HD MPEG-4 H. 264 8 M MPEG-2 MPEG-4 6 M 4 M MPEG-2 2 M 0 AVC HD MPEG-4 H. 264 Internet / VOIP 0 Internet / VOIP 5000 Hybrid Approach up to 8 k ft Internet / VOIP 10000 ft Internet / VOIP 15000 ft Pure MPEG-4 Approach up to 15 kft 20000 ft 25000 ft

Functional System Framework Off-Air & Satellite Receive EAS & Character Generation Content Processing Encryption Ad Insertion - Optional VOD - Optional Section 3. h Diagnostics, Management & Middleware

What is Middleware? Generically speaking, middleware systems are responsible for four things: The subscriber's service experience The definition of services, service packages, pricing and service bundles Interfaces to external systems The management of transactions, media assets, physical assets and subscribers, and the underlying data about them

Subscriber Side ® JAVA Client Software ü ü ü Digital TV (DTV) Pay-Per-View (PPV) Video on Demand (VOD) Subscription VOD (SVOD) Interactive Guides – Favorites, Reminders Client-side Personal Video Recorder Network-based Personal Video Recorder TV Portal, Walled Garden, Internet Caller ID on TV Digital Music (with title, track, artist info) Parental Controls/Settings – Hide/Delete Channels ü IP-based EAS

The Middleware – STB Maze Middleware Vendors Alcatel Myrio Conklin Minerva Kasenna Microsoft Chip Vendors Broadcom Set-top Vendors Amino Conexant I 3 micro Intel CPU Kreatel Sigma Scientific Atlanta STMicro Thomson TI DSP Wegener MPEG-2 PVR MPEG-2 HD AVC SD AVC PVR AVC HD PVR Application/Formats

Add the OS and Browser Elements Middleware Vendors Alcatel Myrio Conklin Minerva Kasenna Microsoft Chip Vendors Broadcom Conexant Intel CPU Sigma STMicro TI DSP Browser Vendors ðAnt ðEspial ðXYZ OS Platform ðLinux ðWindows ðVx. Works MPEG-2 PVR MPEG-2 HD AVC SD AVC PVR AVC HD PVR Application/Formats Set-top Vendors Amino I 3 micro Kreatel Scientific Atlanta Thomson Wegener

Add the Broadcast and VOD Conditional Access Maze Middleware Vendors Alcatel Myrio Sea. Change Minerva Kasenna Microsoft Chip Vendors Broadcom Conexant Intel CPU Sigma STMicro TI DSP Vendors • Browser Widevine ðAnt • ðSecure Media Espial XYZ • ðLatens Platform • OS Veri. Matrix Linux It’sðcomplicated! • ðMicrosoft Windows ðVx. Works MPEG-2 PVR MPEG-2 HD AVC SD AVC PVR AVC HD PVR Application/Formats Set-top Vendors Amino I 3 micro Kreatel Scientific Atlanta Thomson Wegener

The Middleware – STB Maze Only you can prioritize the business parameters that will guide you through the maze ® Characteristics of local cable competition ® Relative importance of low-cost SD STBs versus features of higher cost HD PVR STBs ® Relative importance of price versus performance ® Time to market ® Risk of deployment delays

Amino Ami. NET 110 ® I/O • • • 10 / 100 Mbps Ethernet Composite Video S-Video Component Video (RGB) Stereo Audio, Dolby 5. 1 RF output with loop-through ® Video • MPEG-1 • MPEG-2 MP@ML ® External Power Supply ® Size 4. 4” x 3. 9” x 1. 4”

Amino Ami. NET 120 ® I/O • • • 10 / 100 Mbps Ethernet Composite Video S-Video Component Video (YPb. Pr) Stereo Audio, Dolby 5. 1 RF output with loop-through ® Video • MPEG-1 • MPEG-2 MP@HL (HDTV) ® External Power Supply ® Size 4. 4” x 3. 9” x 1. 4”

Amino Ami. NET 124 ® I/O • • • 10 / 100 Mbps Ethernet Composite Video S-Video Component Video (RGB) Stereo Audio, Dolby 5. 1 (Electrical) RF output with loop-through ® Video • MPEG-2 MP@L 3 D 1 (up to 10 Mb/s) • MPEG-4 H. 264 MP@L 3 D 1 (up to 2 Mb/s) ® External Power Supply ® Size 4. 4” x 3. 9” x 1. 4”

Amino Ami. NET 500 ® I/O • • • 10 / 100 Mbps Ethernet Composite Video S-Video Component Video (YPr. Pb) Stereo Audio, Dolby 5. 1 (Electrical) RF output with loop-through ® 80 GB Hard drive for approximately 40 hours of PVR storage ® Video • MPEG-1 • MPEG-2 MP@ML ® External Power Supply ® Size 7. 2” x 9. 4” x 2. 2”

Entone – Hydra IP Video Gateway ® I/O • • ADSL 2, ADSL 2+ Modem 10 / 100 Mbps Ethernet S-Video (Mini-DIN), Composite Video (RCA) Component Video (YPr. Pb) Stereo Audio (2 x RCA) Digital audio with Dolby™ passthrough (electrical and optical) RF ouptut (supports three TVs) ® Standard Video (three simultaneous decoders) • MPEG-1 • MPEG-2 MP@ML ® External Power Supply ® Size: 13. 8” x 9. 8” x 2”

Tut Systems: Experienced IPTV Pioneer ® 1999: First Telco TV deployment with M 2 product line ® 2001: Launch of Astria CP – First Carrier-Class, Single-chassis Video Processing System ® 2002: 50 th Telco. TV customer; First Consortium IPTV network ® 2003: First IPTV User Group Formed ® 2004: 100 th IPTV service provider powered by Tut ® 2005: First MPEG-4 AVC Advanced Compression Launch ® 2006: Market Leader with 160+ IPTV service providers powered by Tut

Winning with U. S. Telcos Enabling over 100 Service Providers to Deliver TV Our largest deployment worldwide has more than 500 K video subscribers serviced by our headend

Transforming Broadband into Services Thank you