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Tropos – Selected number 1 for Smart Grid communications in 2010

Five key trends driving significant Smart Grid market growth for 2011

January 10, 2011 - Today, Tropos Networks announced that last year the company was selected by more utilities as the company of choice for their smart grid communications infrastructure than any other vendor. New utility customers announced by the company during 2010 include: Avista, Burbank Water and Power, City of Duncan, Glendale Water and Power, and Silicon Valley Power. In addition to these, five other utilities also selected Tropos last year to meet their current and future smart grid networking needs; announcements will be made over the next few months. With Tropos’ private IP networks, utilities are building a highly reliable and secure smart grid and economical foundation for aggregating communications for multiple smart grid applications. Examples of smart grid applications for which Tropos is used today include: AMI backhaul, distribution automation, substation security, and mobile workforce.

Tropos is experiencing a surge in demand that it believes signals the emerging smart grid market is accelerating and this growth will fuel the company for years to come. This trend is confirmed by many independent industry research analysts as well as the investment banking community, e.g. Pike Research, GTM Research, and Deutsche Bank.

There are five key trends the company believes are drivers that contributed to Tropos’ growth last year and will continue to drive its market success in 2011 and beyond.

1. Smart Grid Communications Are Being Built as a Network of Networks – Today, smart grid communications are being architected as of a network of networks, comprised of multiple layers and technologies. From the customer home all the way to the utility headquarters, a mix of technologies will be required in order to be successful. The mix of technologies used will be unique to each utility based on planned applications and the communications requirements of those applications as well as the composition of the service territory (mix of urban, suburban and rural).

2. Distribution Automation (DA) Rollouts Will Significantly Increase – While AMI was the initial smart grid application for many utilities, DA applications provide significant benefits to utilities by increasing power quality and reliability. Unlike AMI, DA does not impact customers directly, making it easier to deploy. Utilities are discovering that wireless networks are clearly the most cost-effective way to deliver connectivity to millions of distribution endpoint devices (capacitor banks, transformers, switches, etc.) as connectivity because they can be rolled out quickly. The requirements for wireless networks connecting DA devices are stringent as of applications are critical and require low latency (sub-20 millisecond) plus high reliability (99.999%). The wireless networks must also deliver end-to-end visibility and management for communications to millions of devices across hundreds, even thousands, of square miles.

3. Private Networks Will Continue to Dominate as the Network of Choice for Smart Grids – Reliability, security, control and cost of ownership are the key reasons utilities are choosing private networks. With a private network, utilities can prioritize individual applications, assuring the most critical or time sensitive are unaffected during a crisis or unusual event versus less critical traffic. Utilities have been vocal about their preference as evidenced by their formal public filings with the FCC. Additionally, based on Tropos’ analysis, there is a compelling business case for private distribution area networks when both capital expenditures as well as operating expenses are taken into account. Tropos estimates that the breakeven point for public vs. private networks is just under four years where AMI backhaul is the initial smart grid application deployed. As additional smart grid applications are added which leverage the same network, the breakeven point is reduced dramatically.

4. Distribution Area Networks Are Being Architected to Aggregate Communications for Multiple Smart Grid Applications – As utilities design their smart grid strategy, building an end-to-end network for each application simply doesn’t make sense. A single private network infrastructure that can be securely and reliably shared across multiple current and future applications, both today’s and tomorrow’s, is far more cost-effective in the long run and easier to deploy and manage. An additional benefit of a private network is that, utilities have full control over coverage and capacity enabling them to easily expand as needed.

5. Mesh Network Technologies Will Continue to be a Popular Architectural Choice for the Smart Grid – There are different types of mesh network technologies commonly selected for smart grid deployments such as 900 MHz meshes for metering LAN networks and Tropos’ high performance mesh for distribution area communications. Mesh network architectures are self-healing and adaptive, uniquely providing the high resilience and reliability required for smart grid communications.

“More electric utilities selected Tropos technology for their smart grid communications infrastructure than any other in 2010, and I am delighted that Tropos emerged as the market leader”, said Tom Ayers, President and CEO, Tropos Networks. “These decisions were made across a wide spectrum of electric utilities - investor-owned, municipal-owned, and state-operated utilities in the U.S. and internationally, specifically to deploy a growing portfolio of multiple Smart Grid applications. Our customers, as they have done effectively for decades, have decided that the best way to prepare for their smart grid future is to invent it, and we are very pleased to be partnering with these market leaders. I expect that 2011 will be a banner year of growth for our company and smart grid deployments globally.”

Please visit Tropos at DistribuTECH in San Diego, February 1-3, 2011; booth #2335.

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