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TheNextAmericanUpgrade:

TheRoleofHigherEduca3oninProvidingtheUnitedStatesa

StrategicBandwidthAdvantage

BlairLevinExecu3veDirector,Gig.U

Presenta3ontotheNewEnglandBoardofHigherEduca3on

Boston,MassachuseFs

March2,2012


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AGENDA

2

Introduc3on:Thewhatandwhyof

astrategicbandwidthadvantage

BackgroundandStatusofGig.U

StepsMovingorward


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INTRODUCTION:THEWHATANDWHYOFASTRATEGICBANDWIDTH

ADVANTAGE


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4

AStrategicBandwidthAdvantage

Whatdoes

aarmer

anda

Doctor

need?

25yearsago

Today

Dialtone DialTone

MobileDataEnoughBandwidthfor

real3mecollabora3on

withanMRI


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5

AStrategicBandwidthAdvantage

Aregionorcountryhasastrategicbandwidth

advantagewhenitsresidentshavetheappropriate

bandwidthtomosteffecJvelycollaboratewith

othersinimprovingeconomicgrowthandsocial

welfare,withafuncJonalityandatapricesuperior

tothoseinotherregionsorcountries


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DoesAmericaneedastrategic

bandwidthadvantage?

No Gotobeach

Yes.Insomeplacesbutnot

everywhere

Willcurrentmarketforces

provideoneina3melymanner

Yes Gotobeach

NoWhatisthepathfora

3melyupgrade?

Yes.Everywhere Goodluck

Ay,theres

therub

DoesAmericaneedastrategicbandwidth

advantage?Aques3oninthreeparts

6


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Ques3on1:DoesAmericaneedastrategic

bandwidthadvantage?

Impactofbandwidthonproduc3vity Othercountriesarenotwai3ng Thecomingdatadeluge

7


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1800s

Accesstonewformsofpower(steamengines) Accesstonewformsoftransporta3on(canals,then

trains)

1900s

Accesstonewformsofpower(electricity) Accesstonewformsoftransporta3on(cars,trucks

andplanes)

2000s

Accesstocompu3ngpower Accesstodatastorage Accesstodigitalcommunica3ons

Newinputsdriveeconomicgrowth

astestgrowingpartsoftheeconomyarethose

thatbestusenewinputs

Produc3vity

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Suchchangesarekeytoproduc3vitygrowth

Technological

changeandotherfactors

Improvedlaborquality

Capitalinvestment

Data:USBureauofLaborStaJsJcs

Contribution to long-term productivity growth

52%

7%

11%

Produc3vity

9


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Reboo3ngtheeconomyrequiresinnova3on,for

whichbroadbandplaormiskey

Analyzeinforma3on

ActonitRevise

courseofac3on

Gatherinforma3on

Thebiggestleapsingrowtharedrivenbymeta-ideas

Improvingtheexchangeofinforma3on

improvesthecondi3onsforinnova3on.

Produc3vity

10


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Broadbandisthecommonplaormfor

knowledgeexchange

Networks

Devices

Applica3ons

Users

Improvementsineachelementoftheecosystem

driveimprovementsinothersinavirtuouscycle.

BroadbandEcosystem

Produc3vity

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Thebenefitsofworldleadingnetworks

Gr8forJob

Crea3on@JohnDoerr

TwiFer7/28/11

Economicgrowth,

investmentandjobcrea3on

Improvedplaormfor

research

Improvedplaormfor

smallbusinessdevelopment

Newwaystodistributethe

benefitsoftheinforma3on

revolu3ontoallpartsofthecountry

Newapproachestohealthcare,

educa3on,jobtrainingandother

cri3calsocialneeds

Produc3vity

12


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Othercountriesarenotwai3ng

HomeInternetMayGetEvenFasterinSouthKoreaByMarkMcDonald,ebruary21,2011

Othercountriesinves3nginGigabitconnec3vitythroughpolicydrivenac3ons...

Cheap,UltrafastBroadband?HongKongHasItByRandallStross,March5,2011

SouthKoreaalreadyclaimstheworldsfastest

Internetconnec3onsthefastestgloballybyfarbutthatishardlygoodenoughforthe

governmenthere.

Bytheendof2012,SouthKoreaintendsto

connecteveryhomeinthecountrytotheInternetatonegigabitpersecond.Thatwould

beatenfoldincreasefromthealreadyblazing

na3onalstandardandmorethan2003mesas

fastastheaveragehouseholdsetupintheUnitedStates.

HongKongresidentscanenjoyastoundinglyfast

broadbandatanastoundinglylowprice.Itbecameavailablelastyear,whenascrappy

companycalledHongKongBroadbandNetwork

introducedanewop3onforitsfiber-to-the-

homeservice:aspeedof1,000megabitsasecond--knownasagig--forlessthan$26a

month.IntheUnitedStates,wedonthave

anythingclosetothat.Butwecould.Andwe

should.

...OtherswithGigabitnetworksincludeJapan,Sweden,Spain,Turkey

Compe33on

1


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Otherinterna3onalefforts

Osborneannounces10superconnectedciesByMaijiaPalmer,November0,2011

Englandhasdifferentstrategiestobuildfasterbroadband

LondonsCityFibretobuilda$800milliongigabitnetworkByOmMalik,November,2011

Thechancellorhaspledgedanaddi3onal100m

fundtohelpcreate10super-connectedci3esacrosstheUK,whichwillhavebroadbandspeeds

of80to100megabitsasecondItmeans

crea3ngnewsuperfastdigitalnetworksfor

companiesacrossourcountry.Thesedonotexisttoday.SeewhatcountrieslikeChinaor

Brazilarebuilding,andyoullalsoseewhywe

riskfallingbehindtherestoftheworld,Mr

Osbornesaid.

Whenitcomestofiber-basedbroadband,the

U.K.lagsbehinditsEuropeanneighbors,whichhavebeenaggressiveinrollingoutreallyfast

networks.Manycri3csblameBri3shTelecom

draggingitsfeetmostlybecauseitdoesnthave

anyrealcompe33on.

Compe33on

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Researchfacili3esaremovingto100Gbps

connec3ons

NaonalLambdaRailprovides100GigabitConneconfor

NOAAatSupercompung

2011.NextGeneraon

ResearchCapabiliesWillBe

DemonstratedUsingCisco

TechnologyandNLRTransport

NetworkByBizjounrals.com,November7,2011

Researchinstutedeploys100GigabitEthernetfromcore

toclosetByShamusMcGillicuddy,November28,2011

Compe3on

15

l


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WeknowthereareboFlenecksahead

DNASequencingCaughtinDelugeofDataByAndrewPollack,NewYorkTimes,November0,2011

BGI,basedinChina,istheworldslargestgenomicsresearch

ins3tute,with167DNAsequencersproducingtheequivalent

of2,000humangenomesaday.

BGIchurnsoutsomuchdatathatitoencannottransmitits

resultstoclientsorcollaboratorsovertheInternetorother

communica3onslinesbecausethatwouldtakeweeks.Instead,itsendscomputerdiskscontainingthedata,via

FedEx.

DataRevolu3on

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Ques3on2:Willcurrentmarketforcesprovideone

ina3melymanner?

TimingmaFers Whatthecurrentmarketistellingusabout

thenextupgrade

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Acceleratedpaceofdevelopment

meansless3metoreactsotheslowloseout

IncrementalValueAdd

Winner

Loser

Electricity

Telephone

Internet

Mobiletelephone

Inven3on Ubiquity

high

valueadd

mediumvalueadd

lowvalueadd

INNOVATION

Actnow

Poten3alfor

compe33veadvantage

Actlater

Television

Time

Earlyac3onleadstoleadership

18

b f k

Ti i


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irst,3mingmaFersbecauseifwewait,werisk

losingleadership

Timing

19

Ti i


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wewillaccelerateoureffortstoimproveouroverall

growthprofile.Wewilldothatbylookingatopportuni>estoeitherdivestorrestructurelow

performingandnonstrategicassets.

AT&TChairmanandCEORandallStephenson,January

26,2012

VerizonhasstoppedtheiOSBuild

AndAT&Tislookingtosell

wirelineassets

Second,marketforcesarenotprovidingcri3cal

massofworldleadingnetworksinU.S.

Timing

20

Market orces


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Itisnotthefaultofthecompanies

ItisasimplemaFerofmath:

ortheinvestorinthenetworks,themathusuallydoesntwork

Marketorces

21

Market orces


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Thebasicequa3ons

Benefitsaccruingto:

Investorinthenetwork Contentandapplica3ons Equipmentanddevices Localcommunity Theregion Thecountry

Total

benefits

of

highspeed

networks

ButtheonlybenefitsthatmaFerfortheinvestmentcasearethebenefitsthatmaFertotheinvestor

Marketorces

22

Market orces


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C+O>(r)R+SB+(-CL)

CCapitalExpenditures

OOpera3ngExpenditures

rRisk

R-Revenues

SB-SystemBenefits(Benefitsthatdriveincreasedrevenuesoutsidethecommuni>eswhere

theneworincrementalinvestmentsaremade.)

CL-Lossesduetocompe33on

ortheinvestor,theequa3onusuallylookslikethis:

2

Marketorces

Thereturnsdonotjus3fytheinvestment

Market orces


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Sector/

opportunity Ecosystemchange CapEx OpEx Risk RevenueCompeJJve

Losses

Telco GrantofmonopolyLower Raise

Cable Grantofmonopoly,poleaFachmentlaw,

compulsory

broadcastlicense

Lower Raise

Ruralareas US Lower Lower

Wireless Limited#oflicenses Lower

DBS Limited#oflicenses,programaccess Lower Raise

Broadbandupgrade

Deregula3on,twowirepolicy

Raise Raise

Wirelessupgrade

Morelicenses,loweredTAC,

oversightofsi3ng

authority

Lower Raise

Marketorces

Historically,investmentsaremadewhenthis

equa3onisaltered

24

Market orces


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C+O>(r)(.5)R+SB+(-CL)

Revenuesforunderlyingwiredinfrastructurespiltbetween

twofacili3es,crea3nggreaterriskforlong-termfinancing,but

compe33veforcesnotstrongenoughtocompelinvestment

Today,theequa3onisworseforbroadbandinthe

UnitedStates

Marketorces

25

Market orces


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C+O>(r)R+SB+(-CL)

Rwontincreaseun3lnewapplica3onsdevelop,butthe

newapplica3onswontdevelopun3lnewnetwork

investmentsaremade.

Marketorces

Andtheresthechickenandeggeconomics

26


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Ques3on:Whatisthepathtoachievean

upgrade?

Keyelements Biggestbarrier

27

Key Elements


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C+O


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TheonlybenefitsthatmaFerfortheinvestmentare

benefitstotheinvestor

Notrelevanttoinvestment

decision

Analysisofexpectedbenefit

determinesinvestment

Investorinthenetwork Contentandapplica3ons Equipmentanddevices Localcommunity Theregion Thecountry

Otherbeneficiaries,par3cularlylocalcommuni3escan

drama3callyaffectthemathoftheprovider

KeyElements

29

h h fKey Elements


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Communi3eshavedevelopedcrea3vepartnershipstoreducingOpEx,CapExwhileraisingexpectedrevenues.

Therearepathsforcommuni3estoimprove

investmentmath

McGinn:UW,Sealewantgreatideasfor

unusedfiberByToddBishop,GeekWire,November14,2011

HowKansasCity,Kan.,WonOverGoogleByJessicaMulholland,Governing,April19,2011

KeyElements

0

Key Elements


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Tomoveahead,weshouldfocusoncommuni3es

wheremathiseasiest

AdvantagesofUniversity-communi3es

Demandfor

Bandwidth=

Greatest

CostofDeployment

=

Least

Posi3veImpact

ofNetwork

AccessDueto

Innova3on

Cultureandirst

MajorUseCase

(HealthCare)

=

Greatest

KeyElements

1

KeyElements


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Universitycommuni3esarethebirthplaceofmany

network-basedinnova3ons

AccesstoKeyInputs

Search:Google(Stanford),Lycos

(CMU)

SocialNetworking:acebook(Harvard),

Newsgroups/USENET(UNC,Duke)

WWW:Gopher(UMinn),Web

Browser:Mosaic,Netscape(UofIll)

AudioandVideo:CUSeeMe(Cornell),SIP(ColumbiaU,

BrailleMusic(UofAriz)

Worksta3ons(SunMicrofromBerkeley,

Stanford)

Routers(CISCOfromStanford)

Largescaleintegratedcircuits

(CalTech)

Photoshop/ImagePro(Umich)

Security/IDS(ArborNetworksfromUM)

y

2

BiggestBarrier


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BuildtoDemandModelAccesstoROWs,acili3esReduceRegulatoryTimeReduceCapEx

AccessPaymentsReduceOngoingRegulatoryCosts

U3lizeExis3ngBillingPlaorms

ReduceOpEx

BuildtoDemandStandardizeunc3onsAcrossAreas,

VendorsReduceRisk

DemandAccelera3onMarke3ngPlaormNewServicesIncreaseRevenues

DistributedInnova3onSeedingLong-TermGrowthIncreaseEcosystemBenefits

Thenextstepistoorganizecommunityeffortto

changethemath

gg

BiggestBarrier


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Asymmetryiskeytochangingthemathinlocal

policy

Largeoutofpocketdollarbenefitsforprovider

Verysmalloutof

pocketcoststocommunityins3tu3ons

gg

4

BiggestBarrier


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HawaiiAGigabittoAnchors

Ini3a3ve

Illinois GigabitIncen3veund

Ohio 10xincreaseinstateresearchbackbone

Statescanalsoplayaroleinchangingthemath

gg

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BACKGROUNDANDSTATUSOFGIG.U

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Needforcri3calmassofnextgenera3ontestbedsNa3onalBroadband

Plan

Demonstratedcommunityabilityanddesiretoorganizetoimprovenextgenera3onbusinesscase

GoogleiberIni3a3ve

Needforseamlessexperiencebetweencampusandcommunity

Placewhereinnova3onhappensHistoryofUniversi3esandInternet

Leadto

BackgroundforGig.U

7

h


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TheUniversityCommunityNextGenera3on

Innova3onProject

Overthespringandsummerof2011,7leadingresearch

universi3es,workinginpartnershipwiththeirlocalcommuni3es,

formedGig.U

OurMission

OurStrategy

Acceleratethedeploymentofworld-leading,

nextgenera3onnetworksintheUnitedStates

Useuniversitycommuni3esastestbedsfortheaccelera3onofdeploymentofultra-highspeed

networkservicesandapplica3ons

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Gig.UMemberIns3tu3ons

ornewtest-bedstofosterexperimenta3onandinnova3on,itmakessensetowork

withcommuni3esthathavestrongtradi3onsofexperimenta3onandinnova3on

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Effortstodate

40

July2011ProjectLaunch

September2011

RIReleased

ReviewRImaterials:

Dec/Jan

Presenta3ontomembers:

1/2/12


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GoalsoftheRIProcess

Promotethedeploymentofnext-genera3onnetworksandservicesacrossmembercommuni3estos3mulateeconomicdevelopment

Iden3fycrea3veapproachestodesign,operateandfinanceself-sustainingnext-genera3onnetworksformembercommuni3es

whileevalua3ngthetrade-offsbetweenthesedifferentapproaches

Gainanunderstandingofhowdifferencesbetweenmembercommuni3esinfluencethelevelofprivatesectorinterestin

workingwithanyindividualcommunity

Considerwaysinwhichmul3pleProjectcommuni3escanworktogetherbeyondtheRIprocesstoimprovetheprivatesector

businesscasefornext-genera3onnetworksandservices

41

I t t i ki ith i i3 d


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Interestinworkingwithuniversi3esand

communi3estobreaktradi3onalmolds

42

TypeofRespondent Number

Operators&serviceproviders 24

Networkequipment 14

Consultant,content&services,user

equipment8

Research&educa3onnetwork 2

Other 9

Gi U idi i lid t d b th RI


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Gig.UsguidingpremiseswerevalidatedbytheRI

process

Premise1:Universitycommuni3esareincubatorsofnetworked-basedinnova3ons

4

Validated:numberandqualityofresponses

Validated:contentofresponses

Premise2:Thecurrentmarketwillnotproduceworld-

leadingnetworksinthenearterm


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Importantthemesacrossresults

Interestinworkingwithuniversi3esandcommuni3estobreaktradi3onalmolds

Investmentanalysisdependsonmarketadvantages,assets

Needformorecommunityinforma3on,usecasesandinvolvement

ValueinGig.Uasaplaormfornewtechnologies Importanceofscale,scopeandwelldefinedorganiza3on

44

I t f l d ll d fi d


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Importanceofscale,scopeandwelldefined

organiza3on

45

Asconsumers

Economiesofscale Influenceonthevaluechain

Asinforma3on

holders

Loweredtransac3oncoststhroughstandardizedopera3ons

Asalearningorganiza3on

Sharedexperiences Bestprac3ces

Asavoice Outreachtovendors Communityengagement

Clearorganiza3on

iscri3calfor

success

CollaboraJon,doneright,iseffecJve

InSummary


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C+O


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Which,astheGooglefiberprojectdemonstrates,isoen

withinthepowerofthelocalcommunity

Sector/

opportunityEcosystemchange CapEx OpEx Risk Revenue SystemBenefits

Google DealswithCity,State,

andU3li3esLower Lower Lower Raise Raise

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STEPSMOVINGFORWARD

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Thepathahead

Presenta3ontomembers:1/2/12

CommunityConsulta3ons

VendorMee3ng:March20-21

BeginPhaseTwo

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Mul3plePoten3alUpgradePaths

50

Mul3-vendorCompe33on

Localvendorpartnership

U3liza3onofExis3ngAssets(U3li3es)

Consor3umPilots

HighBandwidthHealthCareModel

OpenBusinessModels

Innova3onHub

WhiteSpaces


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WhiteSpaces

51

DynamicAccesstoSpectrumTrialsUnderwayNewWireless

Technology

UnderservedAreasHighDemandCommuni3esewTVBroadcasters/LotsofSpectrum

StrongestPoten3alfor

SpecificCommuni3es


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Innova3onHub

52

AreasofGreatestStrength AreasmostlikelytobenefitfromadventofBig

DataRevolu3on

Exis3ngCentersofExcellence

Areasofbusinessandresiden3alconcentra3on AreasofnetworkassetsMapping

Exercise

TypicalexerciseinorganizingcommunitytoaFracteconomicdevelopmentasset Non-typicalexerciseinthattherearemul3ple

technologicalpathstoachievingsuccess

PartnershipBuilding


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WhatNowontheLocalLevel?

5

EveryGig.Ucommunityhasnewop3ons Areanyappealing? Whatmoredoweneedtolearn?

Canyourcommunitydefineitspreferences? Networkingobjec3ves Procedural/organiza3onalpreferences?

Community and university preferences will define


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Communityanduniversitypreferenceswilldefine

theuniverseofacceptableop3ons

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Referencearchitecture&opera3ngmodelArchitecture

Municipal,privateorotherOwnership

Total1sq.blockortodemandin10sq.milesGeography

Micro-trenching,sewersystems,etc.Construc3on

Streamlinedperming,rightsofwayIncen3ves

Healthinforma3onexchange,communityservicesUsecases

Dataonly,tripleplay,wireless,etc.Services

Desiretofocusonwhitespaces,lasersTechnologies


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WhatNowonANa3onalLevel?

Na3onalEffortstoAssistLocalOrganizing

Na3onal

Messaging

Na3onalAssistancewith

Transac3ons

PhaseTwoofGig.U

TobeResolvedatandImmediately

AerMarch

Mee3ng

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Inclosing,theworldiswondering.

1GbpsGigUHeadlinefromChineseNewspaperdayaGerig.Ulaunch

GigU Next American Upgrade-3

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