Institutional Investor Presentation and Site Visit

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Institutional Investor Presentation and Site
Visit
Greg Bader iiNet CTO
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Agenda

• Snapshot of today
• Where are we at, what are we doing
• The road ahead
• Challenges and Opportunities
• Future directions
• Where are we going and why we are going to
  succeed

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Agenda

• Snapshot of today
• Where are we at, what are we doing
• The road ahead
• Challenges and Opportunities
• Future directions
• Where are we going and why we are going to
  succeed

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Snapshot of Today

• Digesting OzEmail
• Maintain focus on DSLAM deployment
• Readiness for VoIP Launch
• MSAN Development
• Network Hardening
• Departmental Development

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Digesting OzEmail

• iiNets most significant integration to date,
  required a different approach
• Dedicated Team (both Companies, PMI Methodology)
• Focus on Systems (Billing, Mail) before Network
• 6 month Integration/Build, 3 month Migration
• On track, BB2 products to OzEmail a bonus

Cisco 10k (250k per pair)
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Maintain focus on DSLAM deployment

• Phase 3 build well underway, continued expansion
  of existing sites
• As of today, 28,000 people on our DSLAMs
• Migrations re-commenced (1500 in the last 3
  weeks)
• Dedicated Team, support agreements in place

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Readiness for VoIP

• This is the most significant VoIP model to be
  deployed in Australia to date
• Utilises full Carrier Interconnect model (C7
  IP)
• ACA compliant STS (standard telephone service)
• Commercial agreements with top 4 carriers in
  place
• Further opportunities for cost optimisation

Cisco 10k (250k per pair)
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MSAN Development (Multi-Service Access Node)

• Our DSLAM and VoIP initiatives converge with the
  MSAN platform
• First Office Application (FOA) agreement in
  Place
• iiNet Delivered first SIP units from Sweden
• Ericsson Supported Trial
• HW arrives Oct
• Friendly User Trials December
• First Customers in Q1 2006
• Simplified build (we control timing)

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Network Hardening

• Our Network continues to evolve maintain ISP
  cost model whilst adding Carrier reliability and
  functionality
• Full DR model
• Dark Fibre Solution (multiple suppliers)
• Fibre ring being deployed in Sydney
• Fibre to exchange (CBD)
• Redundant bandwidth feeds
• Redundancy within the main PoPs

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Departmental Development

• It is not only the network that is developing,
  but our people and processes as well
• 24 x 7 International Network Operations Centre
  (NOC)
• PMI Methodology, Maintain ISO Certification
• Defined skills strategy (grow our own and
  recruit)
• Engage Vendors (Cisco, Ericsson, IBM, Juniper)

Cisco 10k (250k per pair)
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Agenda

• Snapshot of today
• Where are we at, what are we doing
• The road ahead
• Challenges and Opportunities
• Future directions
• Where are we going and why we are going to
  succeed

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The Road Ahead

• The Story
• Challenges / Risks
• Opportunities

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The Story - LSS

• TEBA Exchanges (Roadside being investigated
  exception only)
• LSS (line spectrum share) _at_ 9.00 (ACCC upper
  limit)
• Backhaul a combination of Telstra and alternate
  Providers
• iiNet bundles voice as a reseller of the Telstra
  service

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The Story - LSS VoIP

• Introduce VoIP solution
• iiNet selling VoIP ready CPE (Customer Equipment
  - price leader)
• Full STS 1900, 1300, PSTN and Mobile
  Terminating
• Geographic Numbering, capped local calls in Metro

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The Story - ULL VoIP POTS

• Migration to ULL (use full spectrum of copper)
• Preserve analogue primary line to the home (MSAN)
• Move from 39 (LSS Voice Line) to 22 (declared
  ULL)
• Customer retains their number

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Challenges Distributed IP Network
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Challenges Distributed IP Network

• We currently acquire IP capacity in a variety of
  locations
• Delivered IP price negates business case for
  backbone transmission
• Currently deploying a Voice Quality ATM network
  nationally dynamic, can be scaled to meet
  capacity requirements

Fits our standard model, we will grow into a full
backbone network based on when it makes financial
sense to do so.
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Challenges - Backhaul

• We use Telstra for 85 of our DSLAM exchanges
• Competitive Tender process, Telstra offered
  best value wide scale solution (all exchanges)
• Also deploying alternate fibre solutions to
  exchanges
• Low risk, other providers available
• Ultimately as our subs per exchange build, we
  can look at different solutions

We have saturated two Cities, no other provider
has the reach. The TWE contract length (3 yrs)
gives us time to model other transmission
solutions
Cisco 10k (250k per pair)
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Challenges Telstra Wholesale

• We use Telstra for many services
• Open process, Telstra are generally the most
  competitive supplier for contestable services
• We are a significant wholesale customer
• Many firsts in terms of joint products
  development (Dial Solution, Managed Ethernet and
  ADSL Migrations)
• Developing into something more that a
  traditional vendor relationship

At the end of the day you either build it
yourself or buy it from Telstra. As scale
improves, the business cases present themselves
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Challenges Telstra (incumbent)

• As we lead the way, we need to develop new
  processes and solutions.
• Telstra technical teams are very cooperative, we
  have solutions in place that other carriers are
  yet to achieve.
• Delays and obstructions are due to incumbents
  processes and procedures, not a deliberate attack
  on iiNet.
• We continue to work with Telstra on new
  opportunities and solutions (eg Mobile, Content)

We value our relationships with Telstra and we
will continue to work closely with them
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Opportunities Toll Bypass

• Once we have infrastructure in place, we bring
  the long distance component onto out network
• We already do this is NZ
• Natural Progression from a Switchless Solution
• Relatively simple build (extension of VoIP
  network)

Yes Solution in the design phase
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Opportunities ADSL Wholesale

• As we achieve scale on our DSLAM build, we could
  look to Wholesale high-speed ADSL to other
  providers
• We are approached on a weekly basis
• We already WS dial, network has functionality
• Would require significant expansion based on
  forecast rather than actual

No this breaks our internal governance model,
we cannot build capacity based on forecasts from
other providers. With our own customers, we can
guarantee the savings.
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Opportunities ADSL 2, 2

• Our network can support this now, the difficulty
  is quantifying the volume of CPE problems we will
  experience
• Many vendors rushed to meet spec, do not do so
• 1000 user trial running now (collecting stats)
• Signing an exclusive CPE deal that will see us
  retail premium (2/2, VoIP, Wireless) solutions
  at market leading prices (encourage migration to
  approved CPE)

Yes we need to maintain our lead in the speed
stakes, but with 28k customers on the network we
need to be considerate to customer impact
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Agenda

• Snapshot of today
• Where are we at, what are we doing
• The road ahead
• Challenges and Opportunities
• Future directions
• Where are we going and why we are going to
  succeed

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Where do we see ourselves

• There are four types of companies
• Those that make things happen
• Those that watch things happen
• Those that wonder what happened
• Those that dont know anything happened

• There are four types of companies
• Those that make things happen
• Those that watch things happen
• Those that wonder what happened
• Those that dont know anything happened

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Where do we see ourselves

• There are four types of companies
• Those that make things happen
• Those that watch things happen
• Those that wonder what happened
• Those that dont know anything happened

• There are four types of companies
• Those that make things happen
• Those that watch things happen
• Those that wonder what happened
• Those that dont know anything happened

No apologies for being brash but we intend to
keep changing the market for Telecoms in Australia
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We are quick to respond

• Jan 04 DSLAM strategy defined
• May 04 Vendor selected
• Jun 04 Construction starts
• July 04 First customers
• Oct 04 5,000 customers on iiNet DSLAM
• Nov 04 10,000 customers on iiNet DSLAM
• Dec 04 20,000 customers on iiNet DSLAM

Australias fastest ADSL rollout to date, largest
after Telstra
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We are driven

• From the MD to the most junior Engineer, we are
  not attracted by shiny things - everything we
  do must have a business case attached.
• Flat structure
• Bigger picture view of the industry
• Innovation from the shop floor
• Very low staff turnover
• The need to succeed

Business based approach to our Network
Development build as you grow mentality
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Future - the Triple play

• Multiple options being investigated now
• Engage other Providers (FastWeb, Iliad,
  TeliaSonera, B2)
• Preserve analogue primary line to the home (MSAN)
• Network can support
• Unified CPE, get broadband into the lounge

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Future iiMobile

• Do we need to offer Mobile services, currently
  being looked at.
• Dual Mode, compliments our VoIP offering
• Differentiation