1. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 1 Ericsson Business Consulting on: IP TV 25 September 2008 George Tsitouras, Business Advisor & Associate Principal

2. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 2 1.Market situation 2.Strategic considerations 3.Evolving business models 4.Consumer expectations 5.IP TV service potential Content

3. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 3 IP TV today Almost 600 IP TV launches worldwide. Total number of IP TV subscriptions grew by 117% in 2007 reaching 12,34 million, up from 5,71 million at the end of 2006. Source: EBC analysis, vnunet.com Mar 2008

4. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 4 OperatorsCE vendorsNetwork vendorsSet-top boxMiddle Ware/other The Open IPTV Forum is a pan-industry initiative with the purpose of producing end to end specifications for IPTV that will take the next generation of IPTV to the mass market. 37 strong members today, more to come, (including Access Systems Europe)

5. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 5 Open IPTV Features Covering evolving market needs Advertising User Generated Content Interactive TV Integration with Conversational services User Profiling Service Continuity Service Portability User centric & user experience Linear TV & VOD Home Networking

6. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 6 France Telecom -France Iliad / Free –France Despite of strong growth, IP TV is in its early phase in the market IP TV subscribers  Huge growth potential as most of the markets have less than 10% IP TV penetration.  The IPTV operators leading by subscribers include: –France’s Iliad (Free) –France Telecom –Hong Kong’s PCCW  As of January 2007, Western Europe lead with 68% share of total global IPTV subscribers, followed by Asia with a share of 28%  Asia is expected to experience more rapid growth compared to other regions through 2011  By the end of 2008, the number of IP TV subscribers in Asia is expected to be higher than in other regions. Japan, China and India are expected to be the major contributors Source: Parks Associates April 2008, Evalueserve analysis

7. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 7 IP TV Strategic drivers for operators  In the launch phase, the most common strategic drivers for offering IP TV services are concerned with customer acquisition and protecting broadband churn.  Services bundling is a mainstream trend in x-play services offered by converged operators  An expanding range of offerings are centered on broadband for 2 main reasons: –Broadband subscriptions comprise the fastest growing sector of the telecoms market –With broadband, it is possible to deliver all the fixed-line elements of a service bundle over the same access technology

8. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 8 Case description  BT’s business model for IPTV is dependent on Video on Demand purchases to make a profit.  As a stand-alone product, BT’s IPTV offering makes £5 per month per subscriber. The SAC is £270 - £300 per subs. Considering the SAC, an IPTV subs would have to remain with BT 4-5 years in order for BT to recoup the cost.  When IPTV is combined with other triple-play services, the business model makes more sense.  Churn in the broadband sector is high (as much as 36% annually); if combining the IPTV offering with the broadband service cuts the broadband churn in half.  At the end of the fourth year, the reduction in churn would result in BT Vision (triple-play) customers contributing more margin per head than the equivalent number of BT broadband-only customers (including acquisition costs) Operator name  British Telecom, UK BT Vision Subscribers Key considerations for operator  In a short term, IP TV alone might not be a profitable service.  Scale benefits: OPEX & CAPEX do not increase linearly. Negotiation power towards content providers will increase as the operator increases the subs base.  Group synergies based on the dominant position in the mobiles. Case BT: churn reduced 50% by combining IP TV offering with broadband 40,000 60,000 80,000 20,000 Q1 2007 Q2 2007 Q4 2007 (projected) 100,000 Q3 2007  As of Q2 2007, BT Vision was adding 2,000 subs per week  BT predicts total Vision subscribers will reach 100,000 by year-end 2007 (there were 60,000 subs at Q3 2007) Case Source: Factiva 2007, www.telcotv-view.blogsopt.com

9. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 9 Case description  PCCW is leading operator in the HongKong, where the IP TV penetration ~59% is the highest in the world.  PCCW has shown how to develop a viable business model that includes a basic free service. It is also a leader in IPTV advertising and IPTV interactive services.  PCCW’s service offering includes a huge variety of innovative IP TV services:  Subscribers can book movie tickets, from Now shop channel, order food, control subscription using their TV remote and restrict access using parental control Key effect:  PCCW ended 2007 with 882 thousand IPTV subscribers up from 758 thousand at the end of 2006.  PCCW's IPTV ARPU grew from $18US at the end of 2006 to $US26 at the end of 2007. * Operator name  PCCW Hong Kong Now TV subscribers & ARPU Key considerations for operator  Case examples shows the potential of innovative IP TV offerings.  PCCW has found that its premium sports and HD offerings are important reasons for subscriber and ARPU increase.  Also advertizing revenues are starting to gather momentum. Case PCCW: Premium sports and HD offerings are important drivers for subscriber and ARPU increase *Source: Telco IP TV view Q1 2008, pccw.com, nowbbtv.com, 28 Dec, 2007pccw.comnowbbtv.com

10. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 10 Case Details France Telecom  FT financially sponsors the creation of content that is made exclusively for its networks and devices  FT launched a new affiliate called Studio 37 to seek out and invest in film co- production and rights to existing films. Studio 37 intends to invest in 10-15 European movie projects each year Yahoo!BB  Softbank, owner of Yahoo!!BB in Japan, purchased the Daiei Hawks baseball team in order to have ownership and control of all content regarding the team (including IPTV and other Internet-related content)  Yahoo!!BB now creates its own content surrounding the team and distributes it throughout its network of Internet-based properties Verizon  Launched FiOS1 channel in Washington DC market in March 2007  Through FiOS1, Verizon produces and distributes local high school and college sporting events, human interest stories, interviews with local politicians and celebrities To differentiate, some IP TV players have begun to create their own content Operator or Service Provider Name  France Telecom  Yahoo! BB  Verizon Approach  Some IPTV providers have begun creating their own content in an effort to differentiate, without the need for expensive bidding wars and strong-arm content providers  This is the most extreme content approach, and is not expected to be adopted widely Success Factors Differentiation Expense Consumer Appeal 1. 2. 3. $ $ $ Stats and Other Info Gross Margin ~ 35% Royalty Collection 5-10% Platform 2-5% Promotion Cost 5-10% Content Cost 40-60%  France Telecom earns approximately 35% gross margin on its Video on Demand offerings, after content production and acquisition costs, promotions costs, and platform costs. Case Source: Pyramid Research 2007

11. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 11 The content producers have distribution and monetization opportunities that were previously unavailable. They can also sell directly to the end-users. New players are entering the market with device centric offerings: Apple TV and iPhone have the potential to change the dynamics of the market. Google is also widely reported to be preparing its own mobile phone service. In the US alone, there are 30,000 – 40,000 semi-professional & professional producers of video content. Thousands more in Europe and India. Fundamental need for service differentiation (long-tail content). Business models are evolving Strategic Considerations Market situation Source: iSuppli Corporation 2007, Infonetics Research 2007 Strategic considerations: IP TV offering: double, triple or quadruple play bundle Competition: Cable, satellite, webTV Content mgmt: Content partnerships: Linear, VoD, UGC, advertizing Device: TV, PC, mobile Interworking services such as mobile as an extension to remote control Operator role in the value chain: AT&T and Verizon have hired Hollywood executives. HBO veteran Dan York went to AT&T. (Infonetics Research 2007) Operator comment: we probably need to take stronger role in the value chain than we originally wanted to, but that seems to be necessary in order to build the market

12. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 12 Viewers want TV to be more personal Me TV My favourite shows My friends & family My videos & pictures My download libraryMy town My weather My news My favourite movies Source: Ovum 2007

13. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 13 Viewers want TV to be more interactive Engage me Watch when I want to Vote & take part in competitions Play games while I watch Comment on the show Affect what happens in the show Search for what I need Browse for new stuff Watch what I want Source: Ovum 2007

14. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 14 Global village (at last) Viewers want TV to be more social Watch other people’s videos Talk to my friends while I watch IM with my friends while I watch Discuss the shows & movies ‘Interact’ with TV & movie stars Use TV & video in my profiles Meet people who like the same things as me Post my videos for others to see Source: Ovum 2007

15. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 15 IP TV is much more than ’TV’ Communication Entertainment Information Transaction Personal & Home Management Information storage Pets Home Security & maintenance Laundry, cooking, cleaning Family and community services

16. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 16 IP TV: Summing up  IPTV is a new set of services that needs to be handled with great care since it is in a position to bring significant revenues to the operators.  IP TV services have a direct positive impact on customer acquisition and broadband churn.  There will be significant growth in the IPTV subscribers numbers, worldwide, in the next few years  Consumer understanding is now, more than ever, essential for the success of the IPTV opportunity.  The complexity of IPTV requires from all players in the value chain, innovative thinking and development of extended partnerships that can bring to the customers unprecedented value that is worth paying for!  Technologies and Professional Services companies are in place and in a position to help operators getting the maximum out of this service.

17. Top right corner for field-mark, customer or partner logotypes. See Best practice for example. Slide title 40 pt Slide subtitle 24 pt Text 24 pt Bullets level 2-5 20 pt E-Business Forum Digital Interactive TV25 September 2008 17