ECI Telecom

Marconi Partner Confidential - not for external disclosure

Anouska Burrage Competitor Intelligence Optical Network anouska.burrage@marconi.com

Marconi Competitive Intelligence Marconi Partner Confidential Not for external disclosure

ECI Telecom October 2000

1. General Overview
ECI is a small Israeli company who has been involved in the Telecommunication industry since 1957. They are an international manufacturer of public and private telecommunications equipment for the transmission of voice, data, and video over fixed networks. They have over twenty-eight facilities in Asia Pacific, Eastern Europe/CIS (commonwealth of Independent States), Europe, Latin America, and North America. ECI Telecom's products are deployed in over one hundred and forty countries worlwide. They offer a strong range of SDH products and make themselves more competitive by offering everything from cost-effective expanded capacity to new profit-generating subscriber services. The product portfolio is shown below.

ECI Product Portfolio

SDH DXC DWDM Syncom SDM SDH range STM-1/STM-64 (including a micro SDM-1 and an SDM-1c) T::DAX narrowband A::DAX e::DAX wideband & broadband (data centric) Medium 40 channels @ 2.5/10 Gbps Long 40 channels @ 2.5/10 Gbps Submarine spans 300 km XDM Multi service platform

MSP

ECI are perceived as an innovative company who are reliable and deliver on time. Presently their main downfall has been the late entrance into the DWDM market. However, this is an area, which is currently under reviewed.

2. Product Overview
SDH
STM-1
Broadgate ECI Broadgate SDH range is an area which ECI pride themselves upon. This range combines SDH transmission units with service delivery units: Date and Channel Service Units, Ethernet switches and bridges, primary multiplexers. This line has two main products: Consolidation functionality cards which provide downstream distribution capabilities, consolidation and grooming of traffic upstream. Network termination units located on customer premises. These SDH units connect end user equipment to the network. The nNT is optical fiber based and the pNT is copper based.

SDM-1 The SDM-1 operates at the 155 Mbit/s rate and is an ideal building block for local Access subnetworks. Other versions of the SDM-1 include the micro SDM-1 and the SDM-1c Micro SDM-1 The new SDM-1 miniature SDH multiplexer is a smaller more compacted version of the SDM-1. It is small enough to be placed on major customer sites and been a great benefit to ECI. It provides a gateway between the PDH Access layer and the SDH trunk or stand-alone Fibre-to-the-Building/curb provider. The architecture of the Micro SDM-1 allows the user to configure it either as a Terminal or Add-and Drop Multiplexer. It supports all major topologies including point-to-point, chain and ring. It's basic interface

Anouska Burrage

Marconi Competitive Intelligence Marconi Partner Confidential Not for external disclosure

ECI Telecom October 2000

capacity is 21 x 2 Mbit. This can easily be expanded to 63 x 2 Mbit/s, 3 x 34 Mbit/s, 3 x 45 Mbit/s and 155 Mbit/s. Unlike the SMA1000 this product does not support STM-4. SDM-1C ECI's SDM-1C supports a large variety of Access solutions including remote subscriber systems, Access Multiplexers, PONs wireless local-loop systems and service multiplexers. It supports all major topologies including point-to-point, chain, ring and star. It's basic capacity of 16 x 2 Mbit/s can easily be expanded.

STM-4
The SDM-4 is designed for regional or metropolitan networks especially as a gateway between local rings and regional backbones. The SDM-4 Is upgradable to the SDM-16. The SDM-4 reduces network-wide maintenance and a variety of spare parts as the share a common architecture. In addition the modular design provides for an accommodating pay-as-you-grow strategy. They can also be configured as Add/Drop Multiplexers, Line Terminals, Regenerators or Local Cross Connects.

STM-16
ECI's SDM-16 is ideal for regional/nation backbones, regional trunks or heavy traffic local trunks. It can also execute 4/4 and 4/1 cross connects. The SDM-16 can be upgraded to a SDM-64. The SDM-16 can be configured as Add/Drop Multiplexers, Line Terminals, Regenerators or Local Cross Connects. ECIs SDM16 is similar to Marconis SMA16 which also has 4/1 cross connect capability and the MSH51c.

STM-64
The SDM-64 is ECI's new ultra-high Bitrate transmission multiplexer, designed for heavy backbone networks. The SDM-16 can be upgraded to the SDM-64. The compact design supports all required interfaces in a single shelf cage. The SDM-64 is comparable to Marconi's MSH64

DXC
T::DAX ECI has two digital cross-connect products in its portfolio: the T::DAX and the smaller T::DAX1000. These products are claimed to be Narrowband, Wideband and broadband cross connects that are suitable for deployment within SDH and SONET networks. A::DAX ECI has also introduced the A::DAX, a cross-connect designed for data-centric networks based on the IP or ATM protocols. The product uses IBM's semiconductor technology and its 28.4 Gb/s Packet Routing Switch. Higher capacity versions of the product are also planned for later this year (2000). e::DAX The newly introduced e:DAX is a digital 4/3/1 non blocking cross connect system which offers unparalleled capacity in a single unit. The system supports up to 384 STM-1 equivalents in any customizable configuration. Due to its combined ADM/DXC functionality the e:DAX enables ring closure and fast protection switching as well as fast end-to-end SNCP or MS-SPRing protection switching.

Anouska Burrage

Marconi Competitive Intelligence Marconi Partner Confidential Not for external disclosure

ECI Telecom October 2000

Photonics
Medium DWDM

ECI's Medium DWDM range is a solution for regional and metropolitan transmissions. The multichannel transport system can multiplex up to 40 STM-16/OC-48 or STM-64/OC-192 channels, i.e. has a maximum of 40 channels with 2.5/10 Gbps capability. The platform includes optical transmitters and receivers, transponders, mux/demux units, optical-in-line boosters and pre-line amplifiers. Its in-line optical add/drop lets you add and drop channels at any network or intermediate amplification site. ECI's Medium range transports up to 400 Gbit/s of traffic up to 160km over a single fiber pair. ECI's Medium range can be compared to Marconi's Line System. In theory ECI's product could more cost effective for the customer due to the technology being based on two different platforms. However, this does make upgrading problematic and expensive, unlike Marconi's Line System Long Range

ECI's equivalent to Marconi's Ultra Long Haul product, is their Long Range. It is a fully managed Multichannel transport system which can multiplex to 40 STM-16/OC-48 or STM-64/OC-192 channels, The platform includes optical transmitters and receivers, transponders, mux/demux units, optical in-line boosters and pre-amplifiers. It transports up to 400 Gbit/s of traffic up to 700 km over a single fiber pair and fully supports SDH, SONET, PDH, ATM, and fast IP with its open architecture. ECIs Long range product is an expansion of the Medium range. The main difference between the two is their amplification rate. The Long range has a stronger amplification and therefore can transport data further. Submarine Range

ECI's submarine range has no real comparison to Marconi's products. All components are land based, ensuring easy access for maintenance and upgrading. This range can be upgraded to a multichannel DWDM system with a standard dry land installation. Their system is fully configurable with their SDH SYCOM network equipment and the protocols share a common management platform. Their Submarine range spans more than 300km however this is with amplification.

Multi Service Platforms

XDM

ECI's XDM multi service platform is a single XDM which delivers the same capacity of an ADM, whilst in the same platform adding Optical ADMs and maintaining all the capabilities of previous generation ADMs. In a basic shelf, a single XDM delivers Multiple ADMs: 4 40-channel OADMs (upgradable to 80) 6 STM-64 coloured, long-range ports 24 STM-16 coloured, long-range ports 192 STM-1 ports 924 E1 ports (All upgradable tp 3072 STM-1 Equivalents)

XDM's Add-and-Drop and Optical multiplexers are an integrated multi-service platform, providing increases in capacity through simply placing capacity cards in existing units instead of deploying new equipment. This facilitates cost-effective scalability which allows operators to roll-out bandwidth quickly with fast, non-traffic affecting upgrades, offering the flexibility and scalability to expand networks and meet subscriber needs- just in time. Marconi is currently developing a similar product.

Anouska Burrage

Marconi Competitive Intelligence Marconi Partner Confidential Not for external disclosure

ECI Telecom October 2000

NMS
ECI's Network Management System (eNM), allows complete control of all NM facets under one roof: configuration, fault detection, performance management, administrative procedures, maintenance operations, and security control. Configuration control exists from the topology level down to tributary connections. ECI's NMS allows the power to define both high and low order trails and their protection schemes manually or automatically. The eNM also covers all major alarm types: Hardware, Transmission, QoS and Timing. Its advanced MOTIF-based Graphical User Interface (GUI) makes it simple to use.

3. Market Positioning
ECI, even though a relatively small telecoms player, are perceived within the market as an aggressive, innovative, competitively priced supplier. Within the market place they are seen as reliable and quick at delivering. ECI prides themselves on being a fresh forward thinking company.

Key Selling Messages ECI markets themselves as a company differentiated from their competitors by having the ability to offer customers innovative and customized products e.g SYNCOM products were redesigned for Deutsche Telekom. They can exceed over their bigger competitors by being able to provide flexible systems based on existing technology at the CPE. ECI have adopted an open architecture for their NMS which will support any transmission scheme (i.e. their entire product range) and will also inter-operate with other vendors equipment.

Competitive Positioning ECI's customer base includes mainly incumbent telcos, but they have positioned their Micro SDM1 with new emerging operators (mainly cellular). The company aim is to be first to market with its new products, which are generally always cheaper than the competition, as was the case with their SDH. They are very good at retaining customers as they continually develop newer, cheaper products, which integrate into the existing infrastructure. ECI are now beginning to leverage WDM sales from their existing SDH customers. Even though the entered DWDM as a laggard with nothing to differentiate themselves they have managed to customise products for customers as the market is segmented, this will allow them to be successful.

Anouska Burrage

Marconi Competitive Intelligence Marconi Partner Confidential Not for external disclosure

ECI Telecom October 2000

4. Customer Wins
Customer
Thailands Communications Authority 2000 network

Date
05/10/99

Value/Size
$5.2m

Notes
Sole supplier for SDH SDM1/4 + NMS, WDM also offered.

ETB (Colombia Bogota)

07/08/99

$13.7m

Metro SDH rings

ONSE Telecom (Korea)

07/16/99

$3.5m

SDH backbone

Israeli Defence Force

07/22/99

$6.8m over 3yrs

SDH rings

European Service Provider

08/18/99

$11m

SDH ADM rings + NMS

NTL (UK)

10/12/99

$165m over 5yrs

Integrated SDH + WDM. Previously awarded $100m contract in 1995

Banverket Telecom (Swedish Railway)

11/17/99

+$30m over 3yr renew of previous

SDH-SDM4/16, WDM, NMS SDM1. Previous customer

and

Hansol (Korea)

03/22/00

$6m

WDM following on from previous contract for an SDH backbone

Landstingt Gavle (agents acting for a group of energy companies)

03/23/00

+$15m

WDM, NMS and SDM1 + BroadGate for residential access

ONSE Telecom (Korea)

04/05/00

$6m

WDM following on from previous contract for an SDH backbone

Casema (Dutch CATV)

05/08/00

$1.3

HFC infrastructure

Globe Tel (Philippines)

06/08/00

$12m

WDM, T::DAX and SDH radio

Telemach Solvenian CATV

07/06/00

$15

DWDM and video over SDH and WDM

Korea Tel + SKT

07/13/00

$11m

$7m - T::DAX Korea Tel $4.2m - for SKT Immediate availability of 32 channel bidirectional DWDM solution

Major European Service Provider

08/09/00

Anouska Burrage

Marconi Competitive Intelligence Marconi Partner Confidential Not for external disclosure

ECI Telecom October 2000

5. Mergers & Acquisitions

DataKinetics (June 2000)
DataKinetics and ECI successfully teamed up to integrate DataKinetics Signaling System 7 solution with ECI's Carrier-Class ITX IP Telephony product family. The integration will allow ECI's IP Telephony to offer a more diverse range of Voice over IP/SS7 signaling solutions.

NetAmerica (RateXchange) (April 1999)

ECI and NetAmerica (RateXchange) have partnered together to supply and produce T::DAX Digital Cross Connect solutions. ECI Broadband/Wideband/Narrowband digital cross connect solutions will be deployed in 14 worldwide delivery hubs owned by RateXchange. This partnership allows both companies to offer their products on a global scale, regardless of whether their end users operate within SDH or SONET environments.

WavePacer (April 1999)

ECI wanted to enhance its position as a leader in the ADSL market. They placed themselves in a better position by acquiring WavePacer. This has played an important part of ECI's xDSL and Broadband Access market leadership strategy, as one of their goals was to enhance the xDSL market penetration in North America and broaden their DSL product portfolio. Through the purchase of WavePacer, this is starting to be achieved.

I-Link (Febuary 2000)

ECI and Utah-based I-Link have formed a partnership to joint;y develop IP solutions for enterprises and operators. ECI will benefit from increased IP telephony business with its ITX product line. I-Link will achieve part of its strategy from the agreement. This is to capture market share through new sales and marketing channels. The two companies also plan to co-develop carrier grade telephony services.

Hubbell (December 1999)

Hubbell sold its DSL unit to ECI. Hubbell produced broadband communications services to the residential and small-to-mid-sized business markets. ECI stated that the acquisition of Hubbell would help increase its presence in North America and improve its DSL product portfolio.

Terayon Communications Systems (October 1999)

ECI has formed a partnership with Terayon Communication Systems to sell and distribute Terayon's voice and data systems. The two companies intend to collaborate on the development of end-to-end voice-over-IP and other broadband access services. In addition, the combination of Terayon's access systems and ECI's gateway systems and SONET/SDH high speed network transport will ensure complete end-to-end solutions for the broadband carriers

Tadiran Telecommunications (Cecember 1998)

The merger with Tadiran is their first major step to achieving this goal. The merger aims to create ECI with a broader range of in-house advanced technology, covering areas such as Digital Circuit Multiplication, Digital Cross Connect, ATM/SDH, Digital Subscriber Line, Wireless Local Loop, VoiceOver IP, Video Compression, Wavelength Division Multiplexing.

Hangzhou Communications (March 1996)

ECI and China's Hangzhou Communications formed a marketing and manufacturing joint venture. They will both manufacture and market SDH equipment for the Chinese market. China is considered the largest SDH market in the world. This venture is a promising opportunity for ECI as they will form the backbone of the first national SDH project in China. This will establish ECI as a global company with a vast amount of opportunity throughout the world.

Anouska Burrage

Marconi Competitive Intelligence Marconi Partner Confidential Not for external disclosure

ECI Telecom October 2000

6. Deposition
SDH ECI's SDH products, STM-1, STM-1c, Micro-STM-1 can not support STM-4, as can Marconi's SMA 1000. ECI have recently introduced their STM-64 (2000). However, there are no customer deployments to indicate this is in a working form.

Photonics The medium LumiNet product is aimed at the Metro Market. ECI's product offers a 40 channel capacity, compared to Marconi's 16 channels. However, this is not necessarily an advantage as 40 channels may be too many for its application. ECI claim to have 10 Gbps on all their photonics solutions. There is doubt they currently have this capability at present. Although ECI's Metro solution offers 10 Gbps this is perceived as too much capacity for a metro system.

Network Management ECI Network Management System has problems inter-working with other vendors products. As a result the protection system will fail.

Anouska Burrage