Next Level Demonstrates New Equipment That Delivers TV-over-DSL and Broadband Faster, at a Lower Cost, to More Users

Business Wire, March 5, 2003

Business Editors/High-Tech Writers

Full Service-VDSL Committee Meeting

ROHNERT PARK, Calif.--(BUSINESS WIRE)--March 5, 2003

FCC Changes, BSAM-SSE Equipment Clear Path for Baby Bells to

Bundle Television and Broadband with Telephone Services

Next Level Communications (Nasdaq:NXTV), the leader in TV-over-DSL deployments, today announced that it will demonstrate new equipment to many of the world's largest telephone companies at the Full Service-VDSL (FS-VDSL) committee meeting March 4-6 in Toronto.

Next Level's new Broadband Services Access Multiplexer - Single Shelf Enclosure (BSAM-SSE) will make it cheaper and easier than ever for telephone companies to deliver television services over their existing networks, without discarding existing equipment. The BSAM-SSE is a simple overlay to existing equipment telcos use to deliver local phone service that allows delivery of television and high-speed Internet services. This addition to Next Level's platform is expected to be particularly appealing to U.S. incumbent local exchange carriers (ILECs) like the Regional Bell Operating Companies (RBOCs), who, because of the FCC's rulings last week, are no longer required to share hybrid copper-fiber networks used to deliver broadband services with other service providers. Under the FCC's rule changes, telephone companies will be able to use the BSAM-SSE to deliver a voice, video and data bundle more cost-effectively than was previously possible.

"The BSAM-SSE is a significant innovation, and a timely one," said Michelle Abraham, senior analyst, converging markets and technologies for In-Stat/MDR. "This extension to the Next Level platform enables telephone companies to overlay television and high-speed Internet services on top of their existing networks in densely populated areas without buying new land or throwing out old equipment. Next Level is demonstrating the product at a time when new FCC restrictions on local phone service should make TV and broadband far more attractive revenue opportunities for telcos."

Next Level will introduce the BSAM-SSE at the last meeting of the FS-VDSL committee before the expected issuance of full service standards by the International Telecommunications Union (ITU) this summer. The meeting will be attended by representatives from SBC, Qwest, Bell Canada, British Telecom, Deutsche Telekom, France Telecom, Korea Telecom, Telenor, Telecom Italia and others.

"The FCC's ruling and the FS-VDSL's standardization effort should be significant catalysts for 'telco TV'," said Elroy Jopling, principal analyst, public services worldwide for Gartner. "As voice revenues plateau, an increasing number of major telephone companies will turn to digital television for both additional revenue and as the most effective means to defend their subscribers from cable competition. The technology that will allow telephone companies to deliver cable-competitive video services over their own networks is available and proven, they need only deploy it."

The BSAM-SSE is a compact device that can be attached directly to the remote cabinets that telcos place throughout their service areas to provide telephone services. The Yankee Group estimates that 28 million U.S. telco subscribers receive voice services delivered through these remote cabinets, often called Digital Loop Carrier (DLC) cabinets. The Yankee Group also estimates that nearly 21 million of these subscribers, or 75 percent, do not yet have access to broadband services. Thus, a unique opportunity exists for the BSAM-SSE as the only proven broadband overlay device that allows telcos to deliver high-speed Internet and cable-competitive broadcast and on-demand digital television services quickly, simply, and cost effectively.

"The BSAM-SSE, as part of the Next Level Full Service Access System, can serve six to seven times as many homes as equipment from vendors who claim that they can deliver television services -- each of our remote cabinets can serve 144 homes with cable-competitive digital TV and high-speed Internet services," said Bill Weeks, chief technology officer of Next Level. "This equipment allows large phone companies who previously only delivered DSL out of their central offices to extend digital television and high-speed Internet services out into suburban neighborhoods, where demand for them is greatest. For telephone companies, the BSAM-SSE significantly extends the reach and increases the potential scale of bundled TV and broadband deployments."

Manitoba Telecom Services will be one of the first telcos to deploy the BSAM-SSE. The product will contribute to the rollout of its large-scale deployment of the Next Level Full Service Access Platform in Winnipeg.

"The BSAM-SSE is an efficient, high-density method for TV-over-DSL delivery," said Roy Sherbo, vice president of MTS TV Services. "It will be particularly effective for delivery of television and broadband services in Winnipeg, and should help to enhance the cost-to-revenue ratio of our deployment."

The BSAM-SSE's compact size -- it measures approximately 1 foot long, 2 feet wide and 3.5 feet high -- also allows telephone companies to save considerable costs on new TV and broadband service deployments, because the equipment can be bolted onto their existing cabinets. Instead of incurring additional "right-of-way" (ROW) costs, which include the expenses associated with getting municipal approval and actually acquiring the space to build new neighborhood facilities to deliver these services, the BSAM-SSE allows telcos to utilize already existing facilities. Often, the costs of fiber and power required to serve new equipment are dwarfed by the ROW-associated costs that telcos must assume for new deployments. The BSAM's small size also makes it a perfect fit for the smaller equipment cabinets characteristic of European telephone networks.