1. IPTV development as a vehicle for Broadband adoption : Role of Governments Dr Slim Saïdi, QSat COO, QSat Communications Expert Managing Partner, The Expert Associates ® Joint ITU - AICTO Workshop on Interoperability of IPTV in the Arab region (Dubai, UAE, 20 – 21 September 2011 )

2. 2 Whats the Buzz? Reaction ranges between two extremes: Telcos cant do video Insufficient infrastructure Pay TV market is too competitive Service wont be differentiated Cable is already doomed Telcos will attract bundled subscribers Cable architecture is inferior Future is IP and telcos are there first Dubai, UAE, 20-21 September 2011

3. Where are the Customers ? No cable TV operator provides IPTV an opportunity and vice versa But the S and T TV is very popular, almost every household receives TV program through satellite and terrestrial antenna. Target customer can be divided into two types: subscribers with/without Broadband. Mid or high income households More possibility to acquire IPTV service Mid to lower income households Little current possibility to acquire BB service DTH TV subscribers Without broadband With broadband

4. 4 Television Today and Tomorrow Broadcast TransmissionTwo Way Networks TodayTomorrow Mostly AnalogAll Digital Same Media for AllMedia is Targeted, Personal On-Demand is Add-OnOn-Demand is Integral Delayed & Inferred Viewing Stats Real-Time Viewing Statistics Proprietary EncryptionOpen Encryption Business Models Limited by CASFlexible Business Models Dubai, UAE, 20-21 September 2011

5. 5 Connected TV Connected Services Common network architecture Common back office interfaces and operations Connected Devices Access to personal content from multiple devices in the home Select and schedule content Connected Content and Applications Deliver the same media and applications across devices Cross-promote services in broadband bundle Integrated Experiences Reduce Churn Dubai, UAE, 20-21 September 2011

6. 6 What does it mean to you? Content protection with open standards Flexible rights management Connected TV experiences Robust Protection Windows Media high quality video Independent of number of services Scale from mobile to SD to HD High Quality Wide Distribution Re-use of existing content assets Multiple on-demand options New business models Dubai, UAE, 20-21 September 2011

7. 7 Why IPTV? Broadband Market Drivers Telcos Severe erosion of core telephony business: Decline of lines and minutes Losses to cable, wireless, VOIP Need to grow ARPU Subscription TV VOD Triple-Play bundling Planned expansion of broadband footprint Increasing bandwidth ADSL2+, VDSL, fiber Cable Financial: ROI on network upgrades VOD as differentiator Increase ad revenues Regulatory: All digital mandates HDTV consuming new spectrum Analog legacy Strategic shifts Satellite Competition Retail STB Eliminate proprietary CA Dubai, UAE, 20-21 September 2011

8. 8 IPTV Market Drivers: TELCOS Severe erosion of core telephony business: Decline of lines and minutes Losses to cable, wireless, VOIP Must grow Average Revenue Per User (ARPU) Pay-TV and VOD Need differentiated offering Triple-Play bundling savings Expanding broadband footprint Increasing bandwidth Major Telcos embracing IPTV, with consumer deployments underway Momentum building in the last 6m Operators engaging vendors today Source: Ovum Research Worldwide DSL Dubai, UAE, 20-21 September 2011

9. Global view in IPTV Most of the Top operators have launched IPTV 20012002200320042005 2006 …. 2010 Source: Gartner, Forecast IPTV Subscribers and Service Revenue, Worldwide, 2006-2012 CAGR(2007-2012) 35.5% CAGR(2007-2012) 51.9% Dubai, UAE, 20-21 September 2011

10. 10 IPTV Market Drivers: CABLE Free, 8 SD Digital, 12 HD Digital, 6 VOD/SVOD, 4 HSDVoice Analog, 80 Financial: ROI on network upgrades VOD as differentiator Increase ad revenues Regulatory: All digital mandates HDTV consuming new spectrum Analog legacy Satellite Competition Aggressive pricing DVR Strategic shifts Retail STB Embracing IP for VOD (backbone) Eliminate proprietary CA Unify on IP network Where? North America Dubai, UAE, 20-21 September 2011

11. 11 The Value of IPTV Value added by infrastructure Low High Value added by incumbents client relationships/brands Video on Demand Data-sensitive ASPs Online training Online games IPTV Home networking Billing relation- ships with utilities… E-commerce Instant messaging Home video conf IP music/radio 13 24 LowHigh Sources: McKinsey analysis, 2002-2005 Estimated Monthly Revenue from IPTV Services Digital TV Programming $35 Premium Channels$12 PPV/VOD$8 Interactive Services$10 TOTAL$65 Source : In-Stat/MDR 3/03 Strategic Value: Leveraging Infrastructure & Customer Relationship Dubai, UAE, 20-21 September 2011

12. 12 Devices: Services: Networks: SwitchedBroadcast VideoDataVoice Broadband IP Triple Play IPTV Broadband: New Opportunities Dubai, UAE, 20-21 September 2011

13. Key Drivers for IPTV success Pertinent Government Policies Broadband Development and generalized access Developed Attractive Content Improved Business Model Paradigms Key drivers Dubai, UAE, 20-21 September 2011

14. 14 5% 45% $314Bn $497Bn $Bn Packaged Content (Video, Music Games) Broadband/Internet Access Mobile Content & Broadcasting Subscription TV & Radio* 10% 12% Annual Consumer Spend Source: U&S Digital Distribution Of Entertainment Service Global Entertainment Media Expenditure Scenario Box Office -3% 45% Online Content * Basic & Premium, excludes receiver licenses & advertising 10% CAGR % Dubai, UAE, 20-21 September 2011

15. Fixed Operators are Facing Revenue Loss Threats Fixed operators are facing the challenges not only in the value added service but also in the basic broadband access services 4. Competition in internet access a) Other FBB operator b) Cable operator c) Mobile broadband 3. Being pipelined in internet services by service provider 2. Increased BW doesnt bring increased revenue 1. Decline in traditional voice revenue a) Mobile substitution b) VoIP substitution BW ARPU Cost China Telecom 30 USD 18 USD 256Kbps 2Mbps 20022009 Dubai, UAE, 20-21 September 2011

16. Home network increased rapidly in worldwide The number of home network has reached 145 million families in 2009, the access speed is further enhanced, and moving to FTTH fast. When the home node (storage, processing, media, etc.) increase, the needs to M2M and network sharing will appear. in 2011, the global number of nodes in the home network is expected to reach 920 million, of which 13% share of NAS, Media node of 23%, entertainment node of 48%. Subscribers of home network worldwideDev of equipment node of home-network 193 268.3 357.7 485.6 590.7 720.8 915.8 Unit: million Dubai, UAE, 20-21 September 2011

17. *Source Gartner Analysis,, Business Insight Analysis IPTV maintains ARPU and improves use of broadband bandwidth ARPU Broadband MaintenancesUpgrade the utilization of broadband Price rate vs. Penetration of BroadbandHD Users Scale vs. Penetration E Dubai, UAE, 20-21 September 2011

18. 18 MarketDynamics Forces Shaping IPTV FutureRegulation MarketOpportunity Broadband IP Networks MooresLaw Content, Ad Models Better Video Compression

19. Government Roles Facilitator Investor Arbitrator Stimulator Content Provider