1. DSL Residential Services ITU/BDT Arab Regional Workshop on “DSL Technologies and Services” Cairo - Egypt, 4-6 March 2003 ITU/BDT Arab Regional Workshop on “DSL Technologies and Services” Cairo - Egypt, 4-6 March 2003

2. All rights reserved © 2002, Alcatel An incremental evolution  Grow the market in 3 major waves 1) High Speed Internet access (HSI): increase ARPU from existing PC customer 2) Business access: start with underserved SoHo segment with same infrastructure 3) Residential entertainment: gaming/video/entertainment to everybody today Residential Entertainment Address new audiences (TV, console) Business Access Build on existing infrastructure TIME High Speed Internet access $ Move aggressively into HSI

3. All rights reserved © 2002, Alcatel Making the maximum out of the PC world High Speed Internet Access Fast Surfing Narrow-Band streaming High Quality Music & Video Hi-Speed Games Video Chat Conferencing

4. All rights reserved © 2002, Alcatel Use the same infrastructure for business TeleworkingVPN Video- Conferencing FiletransferFirewall Business Access

5. All rights reserved © 2002, Alcatel Residential Entertainment TIME Address the whole population: more than PCs BroadcastInteractive TV NVoDVoDPVRGaming

6. Stream 1: Residential High Speed Internet Access

7. All rights reserved © 2002, Alcatel STEP 1 Expand on high speed internet access > WHY Internet access is greenfield for all players, low step-in barriers Able to build on existing voice client base – ADSL can reach more than 70% of the voice customer base of most Western European countries Potential market coverage of 30% by 2004 (McKinsey) ADSL installed base can be leveraged to make incremental business case for multimedia Once market leader, always market leader (cfr. Mobile) TIME High Speed Internet Access $

8. All rights reserved © 2002, Alcatel Heavy users – Behaviour and requirements > Chatters Personalized interfaces Trendy communication applications such as video mail,.. > Gamers and gamblers On-line purchase and Game subscriptions High-bandwidth features i.e. interactivity and virtual reality

9. All rights reserved © 2002, Alcatel Right commercial for the right segment! > Singtel (ISP SingNet) is targeting “Heavy users”, being predominantly gamers and spending 43.9 hours per month on the Internet...

10. All rights reserved © 2002, Alcatel Moderate users – Behaviour and requirements > Entertainment junkies – Multimedia content > Researcher and hobbyists – Productivity/home-management devices – Virtual conferences and discussion boards

11. All rights reserved © 2002, Alcatel Right commercial for the right segment!

12. All rights reserved © 2002, Alcatel Light users – Behaviour and requirements > E-mailers and readers E-books, on-line photo exchange, Email notifications with attachments > News seekers Customized headlines Internet radio Video clips

13. All rights reserved © 2002, Alcatel Right commercial for the right segment! > Singtel (ISP SingNet) is targeting “Light users”, spending 5 to 9 hours per month on the Internet..

14. All rights reserved © 2002, Alcatel Telecom Italia

15. All rights reserved © 2002, Alcatel Telecom Italia

16. Stream 3: Multimedia and Broadband Entertainment

17. All rights reserved © 2002, Alcatel lean back: interactive entertainment lean forward: speed versus price family: enhanced education communication with distant relatives teenagers: gaming & enhanced chat Elderly: communicate with distant family gamblers: gamble any Time, online bingo, lottery Living in the broadband world What consumers expect from Broadband...

18. All rights reserved © 2002, Alcatel TIME Business Access High Speed Internet Access Broadband Entertainment $ PC based Game console TV STEP 3: Broadband Entertainment: TRIPLE PLAY > Get full service coverage of residential market Increase ARPU per residential customer Expand addressable market Counter triple threat from other network competitors

19. All rights reserved © 2002, Alcatel... Broadband Entertainment Services for Residential Market Any Service / Any Terminal

20. All rights reserved © 2002, Alcatel Broadband Entertainment Service Offering Broadband Portal including some free interactive and rich multimedia content - movie trailers, newscasts, music clips, game teasers, etc Automated Content Management System TV Services (for trial) TV-centric services: near VOD and pay-per-view, video-on-demand, enhanced/interactive TV, personal video recorder, broadcast TV and interactive program guide, TV-based email multiple content sources Music Real-time thematic audio (Radio Stations, Digital Music Stations) Games interactive PC games, downloading games to devices, edutainment games. TV on demand for the PC (PC VOD) non-scheduled video (video clips, movies on demand, etc…) Broadcast TV on the PC Real time video (TV on my PC) Priority 2Priority 1Priority 3Priority 4 Charged content Included with service TV Middleware iMagic, Thirdspace, etc PC Based Services TV Based Services

21. All rights reserved © 2002, Alcatel How will network operators be able to generate new revenues in this context? Media groupsTerminals Application Servers A major opportunity for Telecom Operators: To be the multimedia service aggregators Network Much more than a simple pipe!

22. All rights reserved © 2002, Alcatel Today’s Internet content delivery … e-learning games video Video conferencing Internet Service Provider Network Management Accounting Consumer Network Operator / Access Provider Accounting Portal Content Delivery & Hosting Network Content/Service management Network management Accounting Portal Broadband Content and Applications Content Provider / Application Provider

23. All rights reserved © 2002, Alcatel The walled garden approach... Network management Accounting Content Delivery & Hosting Network Content/Service management Network management Broadband Content and Applications e-learning games video Video conferencing Portal Network Operator / Access Provider Content Provider / Application Provider Consumer

24. All rights reserved © 2002, Alcatel Broadband Content and Applications e-learning games video Video conferencing Content Provider / Application Provider The Gated Garden... Service Provider Network management Accounting Consumer Network Operator / Access Provider Portal Content Delivery & Hosting Network Content / Service management Portal Service Control Element

25. All rights reserved © 2002, Alcatel Smart Service Aware Network Value Proposition Access Provider Service fee Subscription fee should not be the only base of income for the Broadband Access Provider Service Providers Residential Business End user IP Gateway Subscription fee with Smart Service Aware Network Alcatel 5742 Personalised Service Selector  Pre-portal for selection of services/Applications  Bandwidth on Demand  Provides permanent reach-ability of DSL user A5742 PSS

26. All rights reserved © 2002, Alcatel Conclusion : Residential Services > New revenue streams will be generated from new and innovative services Multi-player Games – Xbox, Sony PS-2, Nintendo games Cube The “Intertainer” model Music download – Stereo Systems, MP3 Non-real time multicast services – PVR, video, business > Service delivery must be cost effective with costs and revenues viewed as incremental > Consumer technology convergence will inevitably help drive broadband demand as more and more devices are connected Stereo Systems, Appliances, PC based devices, Sensors, Still Cameras, Movie Cameras, Video Conferencing tools, Home Networking

27. www.alcatel.com