1. © Copyright Ovum 2007 www.ovum.com An International perspective on the status of Fibre investment in the access layer Stefano Nicoletti sxn@ovum.com +44 207 551 9178 14/12/2007

2. © Copyright Ovum 2007 2 Agenda Some figures FTTx plans IPTV case studies

3. Level 3Some data on fibre © Copyright Ovum 2007 www.ovum.com

4. © Copyright Ovum 2007 4 FTTP -10 leading countries –subscribers # FTTP = FTTH or apartment + Ethernet LAN; VDSL excluded

5. © Copyright Ovum 2007 5 FTTP – forecasts to 2011 Figures in % of Households; Asia expected to widen the gap

6. © Copyright Ovum 2007 6 Non-DSL connection vs FTTP as% of total broadband Infrastructure competition seems to favour FTTP take-up

7. © Copyright Ovum 2007 7 Availability of high-speed services is an issue Western EuropeNorth America Asia PacEastern Europe Total Households Households with copper access Households that can get DSL Households that can get DSL @ 2Mbps Households that can get DSL @ 10Mbps Key

8. © Copyright Ovum 2007 8 Monthly fee relative to monthly disposable income All countries except Russia and Norway have entry product below 3%; In line with prices of other technologies

9. © Copyright Ovum 2007 9 IPTV v consumer fixed voice Hong Kong – most successful IPTV country in the world France – most successful IPTV country in Europe

10. © Copyright Ovum 2007 www.ovum.com FTTx plans

11. © Copyright Ovum 2007 11 FTTH plans Source: Ovum research

12. © Copyright Ovum 2007 12 Korea and Japan U-Japan (ubiquitous Japan) 2006-10 program by MIC, revised every year Eliminate zero broadband coverage towns and villages by 2008 High speed broadband to cover 90% of population by 2010 Support investment through funding, tax relief, loans Support competition through open access to poles, ducts and physical infrastructure KII- Korean information Infrastructure Plan started in 1995 As of 2000 –Govt and operators invested W11trillion Broadband development in rural areas a main objective, KT forced to roll-out coverage in remote villages Incentives to invest through cheaper finance or extended loans Govt objectives to remove digital divide AS WELL AS improve broadband speed

13. © Copyright Ovum 2007 13 Australia, Singapore, UK…public money on the way! New Australian Labour govt.– broadband to the bush - AUS $4.7billion ($4.1bn) to invest in FTTN infrastructure and cover 98% Public private partnerships Tender process to allocate the money: Telstra, G9 consortium, Deutsche Telekom; 6 months only! Doubling Telstra money announced in its investment plan in 2005 UK – Stephen Timms – new minister for competitiveness Ultra-fast broadband …will allow our businesses to innovate, grow and create wealth. We need to be discussing today how we can put this new network into place, because delay could be a barrier to the future success of our economy. Estimated cost for FTTH in UK = £ 15 bn; FTTN £7bn (respectively 30 and 14bn$) Singapore Government and two new RFPs Netco to build and operate a Layer 1 passive infrastructure Operating co.(Opco) to deploy electronics, switches and routers, and offer wholesale broadband access to downstream Service provider Public funding for S$750mln ($520 mln) Public money for FTTN and infrastructure upgrades is coming

14. © Copyright Ovum 2007 14 The French fibre race Aggressive plans from incumbents as well as competitors Unique situation in Europe Re-use of public infrastructure essential (e.g. Paris, Marseille) Early start of LLU empowered competitors and provides financial strength for stepping the last step of investment ladder Source: Ovum research LLU FT retail Wholesale DSL

15. © Copyright Ovum 2007 15 KPN and its NGA plan KPN announces an all-IP investment plan in November 2005 From 21 local exchanges;1350MDF;28.000 street cabinets… …to14 central locations,150 Metro core exchanges, 24.000 street cabinets …and replacing copper with fibre in between the MDF and the street cabinets Plan To be carried out within 2011 This means LLU will disappear (2011 but optimistic) and Sub loop unbundling will be introduced OPTA taking into account SDF investment but also Revenues for selling MDF locations Savings from announced dismissal of 8,000 work force (about ¼ of KPN!!) Future prices for SDF expected to be in line with current MDF- Full LLU/Shared access OPTA assumes a 5 year pay back period for OAOs business cases for MDF, they have opened a consultation and received business cases whose life span was 3-5 years. A minimum of 2 years for phasing out exchanges Functional separation ruled out Is there a case for SDF access? OPTA considers option must be given

16. © Copyright Ovum 2007 16 ADSL v FTTCab v FTTP To deliver TV service over: ADSL from the exchange: ~$200 per year FTTCab: additional investment of ~$900* FTTH: additional investment of ~$1,800* If ROI is over a 3 year period, that is $25 and $50 per month In some cases FTTx brings cost savings in other areas Reduction in opex Reduction in churn * Based on Ovums modelling and operator financial reports

17. © Copyright Ovum 2007 www.ovum.com IPTV Case studies

18. © Copyright Ovum 2007 18 Verizon – throwing technology at the problem Fios TV built on FTTH technology 8.5 million homes passed, 18 million targeted by 2010. As over Q3 2007, 717 thousand Fios TV customers Probably the most technically advanced TV service in the world Largest choice of HDTV channels multi room PVR, up to 6 separate remote terminals Video on demand, tV channels, pictures Competes on price, quality, package flexibility and functionality, the whole package for around 60$ (different options 80% of Fios TV customers take triple play package Pick and mix menu: basic package, plus premium entertainment, plus hardware

19. © Copyright Ovum 2007 19 Now TV – a true media company - ARPU has increased from HK$57 to HK$166 in 3.5 years - 68% are pay TV customers - First to introduce HDTV - Quickly catching the competition - Exclusive content rights: UK Premier league, UEFA 2008,etc. - Flexible payTV channels -7 channels delivered on PCCWs quadplay -- pricing in between 20 -80 $ depending on the package

20. © Copyright Ovum 2007 20 Creating interactive services around premium content Sports Barker – viewers can watch promotional videos of sports programming and view live match fixtures of all now SPORTS channels Live Match Info – head-to-head statistics, team line-up, player profiles, team fixtures, Live match scores of all games available at a glance Player-of-the-Match Voting – instant voting and results available

21. © Copyright Ovum 2007 21 The future is Orange Build on existing satellite content Expand to multi-screen experience Expand into content creation and production Expand into consumer electronics

22. © Copyright Ovum 2007 www.ovum.com Thank you !! Stefano Nicoletti sxn@ovum.com +44 207 551 9178 14/12/2007

23. © Copyright Ovum 2007 23 Non -Network neutrality al Grand hotel Brun!