Ubiquitous Carrier Ethernet Service Offering Leveraging Ethernet Access

Ubiquitous Carrier Ethernet Service Offering Leveraging Ethernet Access Aggregation

Agenda rket et Ma n r e h t E s s e Busin ü ü ü ® Adtran, Inc. 2008 All rights reserved view Market over uity Service Ubiq rview e v o t n e m ip u Eq itoring n o m e c n a m r Perfo gement a n a m A L S d an Questions 2

How Big Is The Ethernet Service Market ® Adtran, Inc. 2010 All rights reserved

Worldwide Ethernet Services Market • U. S. revenue was up 24% in 2009 to $4. 5 B • EMEA is projected to grow to $10. 7 B by 2014, 21% CAGR • Asia/Pacific region grew 22% in 2009 to $6. 8 B • Regional revenue is projected to rise to $15. 6 B by 2014, 18% CAGR • Rest of World is projected to grow from $642 M in 2009 to $2 B in 2014 Feb 2010 Business Ethernet services are projected to grow from $16. 1 B in 2009 to $40. 2 B by 2014, 20% CAGR ® Adtran, Inc. 2008 All rights reserved 4

Regional Demand for Business Ethernet All Regions continue to expand at Double Digit Rates

2010+ Outlook ® Adtran, Inc. 2008 All rights reserved 6

Regional Demand for Business Ethernet • Colt and Orange are addressing global enterprise application requirements by capitalizing on existing fiber infrastructures in major commerce centers throughout Europe • Verizon and AT&T are expanding their Business Ethernet access worldwide • Deliver pan-European and pan-Asian networks • Broaden service accessibility for U. S. based multinational networks Global interconnect for Business Ethernet is about service footprint ® Adtran, Inc. 2008 All rights reserved 7

Ethernet Service Drivers ® Adtran, Inc. 2008 All rights reserved 8

Ethernet Migration Sources Business Ethernet Applications & Migration Sources Service Applications Top Migration Sources Internet Access DIY VPNs Data/Voice Bundles § § Migration of IP Circuits Business DSL upgrades Metro LAN Intra-metro connectivity IP Convergence Regional site aggregation § § § Migration of DIY IP VPNs Migration from Broadband services Conversions of Local FR/ATM networks EPL & EVPL Data Center links Backup / Disaster Recovery Video transport Backbone connections § § § Conversions of legacy Local Private Lines Conversions of legacy Long Haul PLs Greenfield applications Inter-metro connectivity Integration with IP/MPLS VPNs Backbone convergence § § § Migration from Dedicated IP/MPLS VPNs Conversions of domestic or global FR/ATM Greenfield applications Ethernet DIA Long Haul Mesh Vertical Systems Group – ENS ® Adtran, Inc. 2008 All rights reserved 9

Ethernet Purchase Decisions Main Drivers Are Service Availability And Reliability ® Adtran, Inc. 2008

U. S. Ethernet Service Addressable Market Ethernet Service Opportunity Available U. S. Market Access Technology Filter Application Bandwidth Filter Addressable Market Ethernet Services 2 Mbps - 20 Mbps Ethernet Services >20 Mbps - 45 Mbps 3, 667, 993 1, 618, 717 Connections T 1/FT 1, T 3/FT 3, DSL 2, 786, 459 1, 259, 035 Connections No fiber 971, 045 19, 582 Connections 2 Mbps - 20 Mbps >20 Mbps - 45 Mbps 1, 106, 183 Connections 5 -year target 28, 265 Connections 5 -year target Number of high speed retail access end points based on 2006 U. S. business customer installations Number of connections into buildings with no fiber available Number of connections with Ethernet (2 Mbps - 20 Mbps) or (>20 Mbps - 45 Mbps) bandwidth requirement within next five years Addressable market opportunity between 2007 and 2011; includes adjustments for projected service growth / decline Vertical Systems Group ® Adtran, Inc. 2008 All rights reserved 11

5 -Year Ethernet Opportunity Ethernet over X Opportunity 5 -Year Target by Technology / Speed T 1/FT 1 Frame Relay T 1/FT 1 Private Lines DSL Internet Access T 1/FT 1 IP VPN Circuits T 1/FT 1 Internet Access T 1/FT 1 PBX Circuits T 1/FT 1 ATM T 3/FT 3 IP VPN Circuits T 3/FT 3 Private Lines T 3/FT 3 ATM T 3/FT 3 Internet Access T 3/FT 3 Frame Relay T 3/FT 3 PBX Circuits Total Connections # of Connections % of Total 291, 575 248, 540 225, 539 179, 069 110, 306 43, 296 3, 330 1, 271 1, 232 814 642 348 221 1, 106, 183 26. 4% 22. 5% 20. 4% 16. 2% 10. 0% 3. 9% 0. 3% 0. 1% < 0. 1% 100. 0% Source: Vertical Systems Group The addressable market for Ethernet services (2 Mbps - 20 Mbps) between 2007 and 2011 is 1. 1 million connections. ® Adtran, Inc. 2008 All rights reserved 12

U. S. Ethernet Service Installations ® Adtran, Inc. 2008 All rights reserved 13

Ethernet Technology Forecast Source: Heavy Reading, Carrier Ethernet Access Platforms Quarterly Market Tracker; January,

What Market Segments & Applications To Target ® Adtran, Inc. 2010 All rights reserved

Ethernet Service - Target Applications Ethernet is high bandwidth upgrade alternative for… T 1 Point-to-Point and DIA Frame Relay Point-to-Point, Multilink Wireless retail providers Apartments and Hotels (Starbucks) Executive Suites Service win back from Connection to IP PBX via other T 1 providers over Ethernet the past few years of Multilink Frame intense T 1 pricing Replacement (since it competition can’t support Co. S) City-Wide Wi. Fi Networks E-Rate / Educational Internet Access Replacement of point to Point-to-Point between point Frame Relay office locations Hosted Vo. IP High-end workers at home ® Adtran, Inc. 2008 All rights reserved Fiber Where fiber is not available • Healthcare / HIPAA requirements for VPN’s & Ethernet Private Lines Full duplex all speeds • Video Conferencing Diverse Routes - Eo. C (copper) uses different route to building than fiber CAD/Engineering transmission Secure Government apps 16

The Fiber Gap 77% to 88% of Businesses don’t have fiber ® Adtran, Inc.

Business Ethernet Speed Forecast 10 M and sub 10 M is the Sweet Spot

Ethernet Market Growth By Speed Sub 10 Mbps Ethernet grew at 227% in 2008

Ethernet Service Target Market Displace T 1 s – DIA – 30%, Frame Relay – 26%, Private Lines – 22%, IP VPN Circuits – 16% and PBX – 4% Multi-Location – Financial, Medical, Insurance, Schools, Gov’t, Business Offices Sub 10 Mbps – Fastest growing market segment 10 Mbps – Market sweet spot Up to 45 Mbps – Upsell existing customers to higher rates [beyond 10 Mbps] Many opportunities to ramp high growth revenue ® Adtran, Inc. 2008 All rights reserved 20

Typical 10 Mbps Eo. C Deployment Bandwidth available to 10 Mbps Customers 70% of 10 Mbps customers can be up-sold bandwidth Average of 4. 48 pairs deployed per customer • More bandwidth is available by deploying 8 pairs per customer Upsell bandwidth at no additional cost ® Adtran, Inc. 2008 All rights reserved 21

Business Ethernet Service Delivery Understanding the Importance of Delivering Carrier Ethernet to the Business

Addressing the Coverage Gaps Increasing coverage with disparate technology models limits revenue and profitability – Slow customer response time – Disparate systems increases operational complexity – Management methods and capabilities vary between systems Ethernet over Copper Eo. Cu OSS Ethernet over TDM Eo. TDM OSS Ethernet over Fiber Eo. F OSS Different Platforms per Access Technology Limits Solution Value and Increases Operation Complexity and Cost ® Adtran, Inc. 2008 All rights reserved 23

Addressing the Coverage Gaps Agile coverage model enables new business – Ubiquitous coverage – Expediting New Applications/Services – Capable and consistent management Improved Reliability Assured Qo. S and SLA management Testability and Troubleshooting – Improved Scalability Unified OSS ® Adtran, Inc. 2008 All rights reserved 24

Eo. Cu, Eo. TDM, Eo. F Completing the customer reach puzzle • Eo. Cu – Ethernet over Copper – Optimized bandwidth per loop – Perfect for short to medium length loops – Requires local deployments & loop access • Eo. TDM – Ethernet over TDM – Predictable bandwidth per circuit – A Fast. Break™ toward customer deployments – Minimizes Cap. Ex by centralizing aggregation platform Ethernet over Fiber – Active Ethernet for higher rate business service offerings • Combination enables ubiquitous coverage – Complete Ethernet solution from 2 , 10, 100+Mpbs to 1 Gbps – Consistent service offering ® Adtran, Inc. 2008 All rights reserved 25

Ubiquitous Ethernet Service Offering Eo. C 45 Mbps - 4 Kft Eo. C 10

ADTRAN Carrier Ethernet Getting Customers, Keeping Customers • Acquiring new customers with improved profitability – Increased revenue via new service enablement – Reduced CAPEX by leveraging existing assets – Reduced OPEX with simplified OAM&P • Retaining existing customers with quality, reliable service – Scalable, granular Qo. S mechanisms – Compatibility with adjacent DSL applications – Innovative solutions such as ADTRAN Any. Port. TM bonding and TScan. TM diagnostic tools ® Adtran, Inc. 2008 All rights reserved 27

A Single Centralized Solution Single Platform, Common OAM&P, Full Coverage ® Adtran, Inc. 2008

ADTRAN CARRIER ETHERNET Architecture Overview ® Adtran, Inc. 2010 All rights reserved

A Single Centralized Solution Single Platform, Common OAM&P, Full Coverage Partial Vision of Single Operational Model – Single Service and Maintenance Launch Point – Full suite of dedicated, low cost Ethernet Access Gateway for every access medium ® Adtran, Inc. 2008 All rights reserved 33

Ethernet over TDM Legacy Transport Solutions • DS 1 32 -Port Line Module – EFM bonding—any port to any port – Aggregation of Ethernet over TDM “Fast Break” circuits • 4 port DS 3 EFM Access Module – EFM bonding support – Full featured diagnostic and loop test capabilities – 1: 1 Redundancy • 3 port channelized DS 3 EFM Access Module – EFM bonding support – Supports any order bonding across DS 3 s – 1: 1 Redundancy ® Adtran, Inc. 2007 All rights reserved Proprietary and Confidential 34

TA 5000 Eo. Cu Delivery Mid-band Ethernet Solutions • E. SHDSL 32 -Port Access Module – EFM bonding support – any port to any port – Sealing current for loop conditioning – TScan® advanced diagnostic tools • E. SHDSL 24 -Port Access Module – EFM bonding support – any port to any port – Sealing current for loop conditioning – TScan® advanced diagnostic tools ® Adtran, Inc. 2007 All rights reserved Proprietary and Confidential 35

ADTRAN EFM NTU Every Rate, Every Reach, Everywhere The Net. Vanta 800 Series NTU – MEF certified and compliant – 2, 4 & 8 port bonding solutions Robust Ethernet capabilities – Common Ethernet switching and bonding engines – Resilient to loop failures with dynamic link adaptation NCTE Technology Rate per port 814, 818 T 1 1. 5 Mbps 828 HDSL 2 2 Port 4 Port 814 818 (8 pair) (16 pair) 1. 5 Mbps 828 (8 pair) 832, 834, 838 844 E. SHDSL 4 Up to 5. 7 Mbps 1. 5 Mbps 832 834 838 (2 pair) (4 pair) (8 pair) 844 (8 pair) 86 x 873 VDSL 2 DS 3 1 – 100 Mbps 45 Mbps 864 868 (2010) 873 (3 port unchannelized DS 3) ® Adtran, Inc. 2008 All rights reserved 36

Net. Vanta Eo. Cu Network Termination ADTRAN Eo. Cu (e. SHDSL) NTU Interface (Quantity)Type; Connector Model Part No. 10/100 T Gig. E Net. Vanta 838 1200633 G 4 (4) RJ-45 (1) SFP Net. Vanta 834 1200633 G 6 (4) RJ-45 Net. Vanta 832 1200718 E 1 (1) RJ-45 Net. Vanta 838 T 1172838 G 1 Net. Vanta 834 T Power Supply Temp. * EP* OSP* DC AC (1) RJ-21 (8) Cu pairs Yes No No -48 or +/-24 V Convertor (1) SFP (1) RJ-21 (4) Cu pairs Yes No No -48 or +/-24 V Convertor No (1) RJ-45 rear (2) Cu pairs No No 110 – 240 V (4) RJ-45 No (8) RJ-45 (8) Cu pairs Yes No No No 110 – 240 V 1172834 G 1 (4) RJ-45 No (4) RJ-45 (4) Cu pairs Yes No No No 110 – 240 V Net. Vanta 832 T 1172832 G 1 (4) RJ-45 No (1) RJ-45 rear (2) Cu pairs No No 110 – 240 V Net. Vanta 838 EP 1172839 G 1 (2) RJ-45 (1) SFP (8) RJ-45 (8) Cu pairs Yes No -48 or +/-24 V No Net. Vanta 838 OSP 1172830 G 1 (2) RJ-45 (1) SFP (8) RJ-45 (8) Cu pairs Yes Yes -48 or +/-24 V rear access Net. Vanta 838 ® Adtran, Inc. 2008 All rights reserved Network Environmental Hardening P/N 1202470 E 1 Convertor P/N 1172290 G 1 Net. Vanta 838 T 37

Net. Vanta 838 (834) NTU 4 or 8 pair e. SHDSL Network interface: Up to 8 (4) bonded e. SHDSL ports – – Line Rate : 200 kbps to 5. 7 Mbps per loop Resiliency through dynamic circuit removal and restoration Front Access 50 pin RJ-21 (AMP) ITU-T G. 991. 2 Annex A Physical – – – Four 10/100 Bt Ethernet interface via RJ-45 Single Gigabit Ethernet interface via SFP Rackmountable solution in 19” or 23” racks Wallmountable +/- 24 VDC, -48 VDC, AC local powering ® Adtran, Inc. 2008 All rights reserved 38

Net. Vanta 818 (814) NTU 4 or 8 DS 1 Network interface: Up to 8 (4) bonded DS 1/E 1 ports – 1. 5 / 2 Mbps to 12 / 16 Mbps – Resiliency through dynamic circuit removal and restoration – Front Access 50 pin RJ-21 (AMP) Physical – – – Four 10/100 Bt Ethernet interface via RJ-45 Single Gigabit Ethernet interface via SFP Rack mountable solution in 19” or 23” racks Wallmountable +/- 24 VDC, -48 VDC, AC local powering ® Adtran, Inc. 2008 All rights reserved 39

Net. Vanta 873 NTU Network interface: Up to 3 EFM bonded DS 3 ports – 45 Mbps to 134 Mbps – Resiliency through dynamic circuit removal and restoration – Front Access 75 ohm BNC Physical – – – Four 10/100 Bt Ethernet interface via RJ-45 Single Gigabit Ethernet interface via SFP Rack mountable solution in 19” or 23” racks Wallmountable +/- 24 VDC, -48 VDC, AC local powering ® Adtran, Inc. 2008 All rights reserved 40

Net. Vanta 832 T Network interface: Up to 2 bonded e. SHDSL ports – – Line Rate : 200 kbps to 5. 7 Mbps per loop Resiliency through dynamic circuit removal and restoration Rear Access RJ-45 ITU-T G. 991. 2 Annex A/B Physical – Four 10/100 Bt Ethernet interface via RJ-45 – Desktop unit – AC powering via desk supply ® Adtran, Inc. 2008 All rights reserved 41

Net. Vanta 834 T Network interface: Up to 4 bonded e. SHDSL ports – – Line Rate : 200 kbps to 5. 7 Mbps per loop Resiliency through dynamic circuit removal and restoration Front Access RJ-45 per port ITU-T G. 991. 2 Annex A/B Physical – Four 10/100 Bt Ethernet interface via RJ-45 – Rack or Wall mountable – Universal AC powering ® Adtran, Inc. 2008 All rights reserved 42

Net. Vanta 838 T Network interface: Up to 8 bonded e. SHDSL ports – – Line Rate : 200 kbps to 5. 7 Mbps per loop Resiliency through dynamic circuit removal and restoration Front Access RJ-45 per port ITU-T G. 991. 2 Annex A/B Physical – Four 10/100 Bt Ethernet interface via RJ-45 – Rack or Wall mountable – Universal AC powering ® Adtran, Inc. 2008 All rights reserved 43

Net. Vanta 8044 Physical Specs Front Panel Interfaces – 4 -10/1000 Base. T LAN/WAN – 4 -100/1000 Base. X SFP LAN/WAN – DB 9 local craft (RS-232) Mounting Options – 1 RMU Wall, Rack or Desktop Mounting – 19” or 23” Universal brackets, rubber feet. Powering Options – Wide mouth Universal AC powering. AC/DC Power Convertor kit option IEC cord set options to provide EU plug or Australian 10 A/240 V 100 – 240 V at 50 or 60 Hz. Grounding via Post and Lug type conn. ® Adtran, Inc. 2008 All rights reserved Net. Vanta 8044 Dimensions – Height: 44 mm (1 RMU) – Width: 437 mm or 483 mm (with mounting brackets) – Depth: 254 mm or 301 mm (with fibre guide) Weight – 6 lb – 2 ¾ kg Power – 18 W worst case/fully loaded – 14 W typical 44

Ethernet over Fiber Components TA 5000 8 -port Gigabit Ethernet Access Module – 8 Gig. E SFP cages – Link Aggregation – Link OAM Net. Vanta 8044 M – – – 4 -10/1000 Base. T WAN or LAN 4 - Gig. E SFP WAN or LAN 2 - Expansion Slots 1 and 2. 5 G ERPS Ring support with optical bypass option. Clock Sync over Packet Ready e. g. G. 8261/62 Sync. E Dual fed DC options (+/-24 V, -48 V DC) Carrier Ethernet – MEF 9, 14, 18 – Eth OAM CFM and PM – TACASC+ and RADIUS Authentication, Authorization 8 -port Gig. E Access Module ® Adtran, Inc. 2008 All rights reserved Net. Vanta 8044 M Modular NTE 45

ADTRAN Eo. Cu OAM&P Standards based TSCAN diagnostic capability – Fault. Detector™ – Splice. Detector™ EFM OAM for trouble isolation/ detection – Link performance monitoring – Fault detection – Loopbacks Ethernet OAM – – – Eo. Cu Aggregation Eo. Cu CPE Continuity check Loopback Link Trace Round trip delay Loss measurements – using continuity check messages Comprehensive Operational Measurements / Statistics – Physical Loop and Ethernet statistics captured in 15 -minute and 24 -hour buckets – End-to-End and segment-based monitoring (IP SLA equivalent) – Alarm signaling – Threshold alarming ® Adtran, Inc. 2008 All rights reserved 46

Ethernet OAM – Supporting/Selling Ethernet SLAs Common OAM&P across NV 800 and 8000 series NTU (UNI) SONET IEEE 802. 1 ag IEEE 802. 3 ah ® Adtran, Inc. 2008 All rights reserved 802. 1 aj Demarc Switch ITU-T Y. 1731 IETF T-WAMP Leased TDM MEN Switch Service Layer OAM (per UNI) Connectivity Layer OAM (per EVC) Access Links OAM 802. 1 aj Demarc NTU (UNI) 47

ADTRAN Eo. Cu OAM&P Standards based SLA monitoring Two-Way Active Measurement Protocol – Jitter and Latency measurements for SLA guarantees – NCTE implementation draft-ietf-ippm-twamp-04. Session reflector/server Ethernet OAM Physical layer turn-up and troubleshooting tools – Loopbacks – Bit Error Rate Testing capabilities ® Adtran, Inc. 2008 All rights reserved 48

Detection Notification Verification Isolation Delay Jitter Loss IEEE 802. 1 ag ITU-T Y. 1731 ü ü ü ü IETF TWAMP ITU-T Y. 1731 ü ü ü IEEE 802. 3 ah Link OAM Performance Management Connectivity Fault Management (CFM) ADTRAN Ethernet OAM Multiple paths for both Fault & Performance Management ® Adtran, Inc. 2008 All rights reserved 49

Simplified Ethernet Service Activation • Minimize operational costs associated with Ethernet service rollouts – Pre-provisioning by Operations Centers in advance of NCTE – Allows for easy service activation • EZ Series for Ethernet activation – EZ Bonding: Link assignment – EZ Set-up: NTU pre-provisioning – EZ Ethernet: User profiles ® Adtran, Inc. 2008 All rights reserved 50

EASY ELAN Service Provisioning Same Wizard Screens as for EPL and EVPL. Allows single S-tag to be configured on multiple ports with MAC switching of traffic between those ports ® Adtran, Inc. 2008 All rights reserved 51

ADTRAN Operations Environment Intelligent Service Activation Application awareness OSS integration via Robust Modular Gateway/Network Automation Interface (TL 1/XML) Strong Decision Support Fault Response Advanced testing, troubleshooting and diagnostics Flexible Integrated Security Advanced PM, Traffic and Capacity Management Performance Monitoring/Trending Traffic Engineering/Network Tuning VQM/DQM Fully Integrated from Planning to Operations to Customer Service ® Adtran, Inc. 2008 All rights reserved 52

Ubiquitous Carrier Ethernet Service Offering Leveraging Ethernet Access Aggregation