Investor Questions on TEK DigiTel’s July 20 Release: 
TEK DigiTel Gateways to Help CentreCom Advance Low-cost Internet "Follow Me" Services

What does CentreCom do and are they related to Centrepoint?

CentreCom bears no relation to Centrepoint, which is TEK’s technology partner for integrating the PBX functionality into the upcoming V-Server Elite product. CentreCom Inc. is a private start-up based in Santa Ana, California. CentreCom is a registered Interexchange Carrier like Sprint and AT&T. They offer a number of services (i.e. 1-800, Voice Mail, Follow-me, etc) as well as very inexpensive long distance rates. However, CentreCom has currently deployed IP access and telephone switching equipment to become a leading player in the Internet Telephony marketplace. They have announced PC to phone service (competing with Net-2-Phone and others) and will soon be announcing phone to phone service using TEK’s iGATE product. By using TEK’s iGATE product, CentreCom does not have to invest in expensive dial-in/out gateway POP’s all over the world. CentreCom’s contract with TEK DigiTel for the iGATE enables them to sell their long distance service using phone to phone VoIP technology, with seamless transparency to their customers. CentreCom’s patented technology works as follows: the subscriber receives two telephone numbers from CentreCom including a personal 1-800 number and a local exchange number. Both these numbers are mapped to various numbers the client might have. For instance, these numbers can be mapped to a cell phone, business number, home number, VOIP Gateway number, fax number, etc.. The client can change the mapping at any time. All incoming calls are answered by an IVR system that will enable the caller to proceed with a voice call, fax or voice mail. The CentreCom switch attempts to reach the client simultaneously on all mapped numbers. As soon as the first device answers, let’s say the VoIP telephone, all other calls will be dropped. If for any reason the call needs to be transferred to another phone, the CentreCom switch enables the client to transfer the call without the caller even being aware. The subscriber can accept the call over IP, for example, and if the call quality deteriorates, the subscriber can then switch the call over to the traditional PSTN line in a process that takes only seconds and is transparent to the caller. In other words, this ability to switch to avoid the possibility of dropping the call removes the risk element in VoIP.

Why is CentreCom targeting this market and why did they choose TEK DigiTel as the technology provider?

CentreCom believes, in line with many telecommunications analysts, that the marketplace for flat-rate or free long distance calling (like flat rate or free Internet connectivity) will experience explosive growth. The only way for a provider like CentreCom to be able to offer flat-rate or free long distance services will be to cut their own cost infrastructure to the point where they can still make money. This creates the need for IP telephony. CentreCom’s choice in this regard is simple: invest in PSTN gateway POP’s all over the world…(this has been the trend so far) or install a CPE device that would enable Internet access as well as provide single step dialing , as well as eliminate the need for PSTN gateway POP’s. TEK is one of a very small group of Customer Premise Equipment suppliers. Within that group, TEK was the logical choice for CentreCom because of their lower cost device and their interoperability with Cisco routers and gateways. This is a major condition and one which the other potential TEK competitors were unable to fulfill.

What kind of revenues will this mean to TEK?

TEK’s revenues will be based on the number of subscribers that CentreCom manages to secure for this specific VoIP service. CentreCom’s subscribers will be able to buy the TEK iGATE directly from CentreCom at a rate that is significantly discounted from the $1299 US retail price. This rate has not yet been finalized and the proposed range cannot be disclosed for competitive reasons. The manufacturing will be done by TEK’s volume manufacturer, LOOP Telecom.

CentreCom will place orders in response to subscriber demand. CentreCom’s projections are to attract roughly 10,000 – 100,000 subscribers over an 18 month period. These projections are to be treated as forecasts only, but are based on attracting a small percentage of what the phone-to-phone VOIP marketplace is anticipated to be. The PC to Phone market is estimated at 3-4 million subscribers currently, with Phone to Phone technology producing far superior call quality. CentreCom considers these estimates extremely conservative.

Is this kind of service a new offering?

VoIP is fairly young, and the current most popular model is PC to PC calling, an example of which is Microsoft Net Meeting to Net Meeting. The next advance is PC to phone where the call is initiated at a caller’s terminal but can be received on a regular telephone handset. TEK will enable CentreCom to provide the next advance which is Phone to Phone VoIP.

When is this revenue stream likely to start?

We are expecting to start shipping units to CentreCom within the next several weeks. CentreCom is currently testing the telephony, management, and billing systems. They currently have 500 subscribers using PSTN as well as PC to Phone services. We have deployed several iGATEs within their network and to date, the iGATEs are working flawlessly. CentreCom’s initial PO commitments to TEK are expected to be in the order of 1000’s of units. The service is targeted to small to medium sized business users, who are responding positively so far.

Go to the News Release:
"TEK DigiTel Gateways to Help CentreCom Advance Low-cost Internet "Follow Me" Services"