Redback Networks Expands Broadband Horizons in 1999.

SUNNYVALE, Calif.--(BUSINESS WIRE)--Dec. 7, 1999--

Redback Networks, Inc., (Nasdaq:RBAK) announced today that it will close 1999 with a client base of more than 120 provider customers and more than 1,200 Subscriber Management Systems(TM) (SMSs) shipped, enabling mass broadband deployments in North America, Europe, Africa, and Asia.

Redback, which enjoyed one of the most successful IPOs in history, dramatically expanded its market base in 1999, extending operations globally, and moving into the cable, wireless, fiber-to-the-curb, dial offload, and multi-dwelling unit markets. With its announced merger with Siara Systems, Redback will also extend its service creation and management capabilities into the optical and SONET markets.

"A year ago, Redback was a new start-up company with an interesting vision. Today, Redback is a de facto component of most major broadband implementations," said Daniel D. Briere, president at TeleChoice, Inc., a strategic telecommunications management consultancy that closely tracks the broadband markets.

"The company's products have played an integral part in the deployment of high-speed Internet access worldwide and in developing paths to next generation revenues over those networks -- on a mass-market scale. Redback's aggressive, leading edge stance has brought it tremendous success so far and promises to serve the company well in 2000."

Redback Milestones

With strong backing from the investment community, Redback completed a successful IPO in the second quarter of 1999, ranked at the time the fifth best public offering in history.

Redback continued to build momentum in subsequent months, launching offices and sales forces in Europe and Asia and tripling the company's headcount to more than 270 employees, mostly in engineering and sales. Redback shipments for 1999 will total more than 1,200 SMSs to more than 120 service provider and carrier customers, with consistent revenue growth of more than 80 percent during each of the first three quarters of 1999.

In the final quarter of 1999, Redback announced its agreement to merge with Mountain View, Calif.-based Siara Systems. Siara is a leading developer of optical, ASIC and IP technologies designed to enable progressive service providers and carriers to deliver both traditional time division multiplexing (TDM) and IP-based transport and services.

"After a successful IPO, Redback has initiated a series of market initiatives such as entry into the European and broadband wireless access markets to address new markets with significant long-term growth potential," said Ron Westfall, Current Analysis. "At the dawn of the new millennium, Redback is poised to capitalize on expanding broadband access market opportunities on a global basis."

Several top-tier business publications highlighted the company's successes including USA Today, theStreet.com, and Worth Magazine, which placed Redback on their noteworthy companies lists. Redback also received a hot-startup award (pre-IPO) from Telecommunications Magazine.

Meeting the Demand for Broadband

Broadband became a reality in 1999. Pioneer Consulting estimates that by the end of this year, 760,000 DSL subscribers alone will be online. Forrester Research estimates that 25 percent of all online households will have some kind of broadband access by 2002. To connect and manage broadband subscribers on such a large scale, service providers need what Redback provides: rapid service provisioning and subscriber management.

"Redback has built its market share by filling the gap that prevented service providers from delivering broadband on a mass-market scale," said Dennis Barsema, CEO of Redback.

"We designed a four phase roadmap that charts a course for providers deploying broadband. In the first two phases, Redback helps providers connect and manage new broadband subscribers using the support systems already in place. The third phase takes service providers to mass deployment of broadband, provisioning thousands rather than hundreds of subscribers. In the final phase, we provide a critical roadmap for providers moving beyond connectivity to service creation and content delivery."

During 1999, Redback announced many new large provider customers standardizing on its SMS to deliver both wholesale and retail broadband services. Carriers and network service providers using Redback's SMS to wholesale access downstream to ISPs include Bell Canada, GTE, Qwest and UUNET.

Providers utilizing SMSs to offer retail services include Concentric, Earthlink and Verio. Today, Redback estimates that it owns in excess of 80 percent of the broadband subscriber and service management market worldwide.

In addition to enabling the growth of DSL, Redback also expanded into five new technology markets this year: cable, wireless, fiber-to-the-curb, dial offload, and multi-dwelling units (MDU). Redback customers announced in these new markets include Casema; Earthlink; Wireless, Inc.; Oz.net; O1 Communications; and InterQuest.

Casema, the leading Dutch cable operator, purchased Redback SMSs to deploy cable Internet access, as well as online gaming and video services, while Earthlink is deploying Redback's SMS to serve its cable, fiber-to-the-curb, and DSL subscribers. Wireless, Inc., is integrating Redback's SMS line of products into the network design and build-out of wireless-DSL (W-DSL) solutions.

Oz.net and O1 are utilizing Redback's innovative dial off-load functionality to outsource modem management and increase the quality of the dial-up Internet service they offer to customers. InterQuest, a San Francisco Bay Area-based service provider, is incorporating Redback's SMS into its network to provide high-speed Internet access to its clients' MDU tenants.

Redback's announced merger with Siara Systems will expand the company's opportunities to offer integrated solutions across the entire New Access Network, a network that will span all layers of transport and services from the edge of the optical core to global corporate networks and individual broadband subscribers.

Utilizing Siara's expertise in optical, silicon, and IP technologies, Redback expects to accelerate providers' plans for leveraging the New Access Network to increase revenue and decrease operational costs.

Diversifying Services

If 1999 was the year of broadband connectivity, the new millennium marks the emergence of value-added services. In anticipation of this shift from connectivity to services, Redback built into its product architecture the ability to manage and deliver value-added services.

In early 1999, Redback tasked TeleChoice with surveying consumers, service providers, and businesses about the particular broadband-enabled services they would purchase. TeleChoice indicated in its report that service providers will need to layer value-added services to their offerings in order to meet subscriber demand while staying ahead in the highly competitive market.

"It is clear that planning and development efforts must begin now on services and packaging that will add value and appeal to segments beyond the early adopters of high-speed access," noted the report.

"Connectivity is quickly becoming a commodity. Service providers must focus in the coming year on what services they can offer to consumers and businesses to increase revenue and customer fidelity," said Larry Blair, vice president of marketing at Redback.

"Redback recognized early on that the success of service providers will hinge on their ability to diversify their service offerings and continues to play an integral role in helping its customers define and deliver these essential services."

Redback enables this shift from basic connectivity to services and has already begun seeing service providers deploy specialized services from the SMS platform. DirectLink, a leading Dallas broadband Internet Service Provider (ISP), is differentiating its service to customers by offering content filtering for consumers and telecommuter applications for business customers.

Advanced TelCom Group Inc. (ATG), a California-based Integrated Communications Provider (ICP), uses Redback's SMS to offer Virtual Private Networks (VPNs), telecommuting applications, and wholesale services in under-served, middle-sized markets across the U.S. DigitalSelect, a Southeastern ISP, is growing its customer base by offering tiered-pricing and distance-learning applications from the Redback platform.

Redback's SMS is also being utilized in the content world -- Jump.net is utilizing Redback to offer a broadband portal, the first of its kind to focus specifically on providing a content-rich experience for broadband users.

About Redback Networks, Inc.

Founded in 1996 and headquartered in Sunnyvale, Redback Networks, Inc., is a leading provider of advanced networking solutions that enable carriers, cable multiple system operators (MSOs), and service providers to rapidly deploy high-speed broadband access to the Internet and corporate networks.

The company's Subscriber Management System(TM) (SMS) connects and manages large numbers of subscribers using any of the major high-speed access technologies such as Digital Subscriber Line (DSL), cable, and wireless. The SMS received Best of Show honors for WAN and remote access equipment at NetWorld+Interop, Las Vegas, in May 1998, and was honored by Telecommunications Magazine as one of the "Lucky 13" hot products in telecom at the SUPERCOMM '99 show in Atlanta.

The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding Redback Networks' expectations, beliefs, intentions or strategies regarding the future. Forward-looking statements include statements regarding future sales and business opportunities. All forward-looking statements included in this document are based upon information available to Redback Networks as of the date hereof, and Redback Networks assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These and other risks relating to Redback Networks' business are set forth in documents filed by Redback Networks with the SEC, specifically the most recent reports on Form 10-Q.

Note to Editors: Redback and the Subscriber Management System are trademarks of Redback Networks, Inc. Other trademarks, service marks, and trade names belong to their respective owners.