Tavola rotonda “Reti fisse: quali prospettive?” Guido Garrone - Fastweb Research Partner Program Alcatel & Politecnico di Milano Mercoledi’, 10 maggio 2006

Italian Fixed-line Telecom Market Italian Annual TLC Fixed Spend (€ Mln) 2002-2005 CAGR% Broadband is the only fast growing segment in a broadly flat fixed telecom market Broadband growth provides opportunity to gain share of other components of business and residential telecom spending (Access, Voice, Business data services) Broadband connections should reach around 50% of market coverage by 2008 1% +30% -19% -3% -3% Italian Broadband Connections (‘000) 2002-2005 CAGR% +84%

Company profile FASTWEB: an Italian worldwide-recognised pioneer in Broadband NGN Network Technologies and triple play services Strong focus on Service and Technology Innovation Customer orientation Business sustainability Tight relations with primary Italian and international ICT competence centers Technology Manufacturers Research Centers

Market penetration and IPTV leadership Market Shares of Total Broadband Market 2005 Broadband Penetration on Covered Market (Sept. 2005) 100% = ~ 6.8 Mln BB Connections 100% = Number of households passed TI ~ 20% Alice Tin.it ~ 21% (*) FASTWEB ~ 17% (**) ~ 9% (***) All Other Operators ~ 6% Source: FASTWEB’s estimates based on companies’ financial reports TI Retail includes Tin.it customers since 1Q 2005 TI Wholesale includes Other OLOs (*) FASTWEB Penetration on Areas Covered since 2000 (**) FASTWEB Penetration on Areas Covered since 2002 (***) Overall FASTWEB Penetration World IPTV Top 5 ranking list World second largest IPTV provider in terms of customer penetration … …first for TV ARPU… TV ARPU: 140 €/year World IPTV Top 5 ranking list TV ARPU: > 300 €/year IPTV pay subs penetration on broadband customer base* * Customers with at least one pay-TV service/broadband customer base; Data at December 2005 except PCCW at June 2005

FASTWEB’s numbers 2005 EoP Figures Home Passed 8,500k (= 40% coverage) Customers 714k Revenues € 967Mln EBITDA € 305 Mln Market Cap (current) € 3,250 Mln Cumulated Investments 2000-2005 Over € 3,000 Mln Metropolitan areas covered 113 Network extension 20,000 km

2000-2005: Revenue* Growth and Milestones May 2001: Nationwide service expansion June 2002: EBITDA breakeven Mar 2003: VoD over ADSL launch Oct 2000: Consumer services launch July 2001: xDSL service launch Sept 1999: Foundation Jan 2000: First business customers Nov 2001: Access to Socrate and € 955 Mln financing Aug 2003: Full TV over ADSL launch Feb 2005: € 800 Mln Rights Issue Nov 2002: Videocommunication service launch Dec 2004: Merger between e.Biscom and FastWeb and change of company name in FASTWEB Mar 2001: VoD services launch * Revenues from Italian operations (€ Mln) - Pro-forma figures equal to Group revenues net of HanseNet revenues

IT Convergences NETWORK FIXED & MOBILE ACCESS CONTENT & MEDIA CONSUMER ELECTRONICS VIDEO NETWORK FIXED & MOBILE ACCESS PORTALS ULL ASP MVNO

National Network Development + 140% EOY2004 1H2006 4.000.000 homes passed 18% of population 304 Central Offices in ULL 14 Metro Areas 15.600 km cable infr. 9.560.000 homes passed 45% of population 827 Central Offices in ULL 130 Metro Areas 21.500 km network infr. 3 Bln € of investments since 1999 for creation of own infrastructure

FASTWEB Broadband Network: Streamlined Architecture and Protocols Services Voice, Video, Internet, VPNs, VAS IP Transport DWDM Fiber infrastructure Copper Physical Media

How is triple play possible on an all-IP Network How is triple play possible on an all-IP Network? QoS enforcement: end-to-end requirement GR F O P C R M E A L N B G TO BO GE RM NA MI FI BA RE VR BG PD Customer CPE Access B/Bone In a packet network, different traffic components compete for shared communication resources Each communication trunk and network element contributes to determine the overall quality level of services offered to the Customer base QoS enforcement policies must be implemented in both the Backbone and Access Layers Best Effort Data Hi Voice Video

How is triple play possible on an all-IP Network How is triple play possible on an all-IP Network? QoS enforcement: end-to-end requirement GR F O P C R M E A L N B G TO BO GE RM NA MI FI BA RE VR BG PD Customer CPE Access B/Bone Traffic Classification at the Edge (source) Traffic Marking IP (TOS Byte) Ethernet (Tag Control Info) MPLS (EXP Bits) ATM (CLP Bit, ATM Class) Forwarding classes Identification Traffic Matching Per Hop Behavior Enforcement Congestion Avoidance/Congestion Management Marking mantenance, extension, modification Best Effort Data Hi Voice Video

Agnostic Access Point of Presence STM16 STM16 Backbone Layer Access MiniPoP Wi Max Gigabit Ethernet Residential Concentration Layer MetroEthernet Or SDH Link Central Office Gigabit Ethernet Residential Access Layer Customer Site Residential/SME FTTB - FTTH Customers FTTO Top/Medium Business Customers Residential/SME xDSL Customers

Agnostic Access Full parity in services offered on both access technologies, to both Business and Residential Customers Same Customer experience, different technology-dependent implementations Internet/ VPN Broadcast TV Video on Demand/VCR Video Comm Voice FTTx xDSL

Networks and Services: Services evolution path FASTWEB services evolution strategy Network-centric Services and Applications NGN network architecture (“a packet-based network able to provide services including telecommunication services and able to make use of multiple broadband, QoS-enabled transport technologies and in which service related functions are independent from underlying transport related technologies. It offers unrestricted access by users to different service providers. It supports generalized mobility which will allow consistent and ubiquitous provision of services to users”) Smooth transition to the IMS model Major building blocks Platforms Close integration of communication services (e.g. call control, user positioning and presence) with application logic Dynamic management of Customers’ service profile Integration with external applications (business partners) thanks to standard interfaces Terminals Commoditization (consumer electronics) User friendly interfaces, easy customer access to multimedia services Wireless connectivity Integration with Service Platforms thanks to the use of standard protocols (IP, SIP)

Fastweb’s NGN architectures evolution Phase 0: IP Backbone IP Creation

Fastweb’s NGN architectures evolution Phase 1: VoIP Infrastructure Creation IP Backbone H323 GW H323 GK PSTN Domain

Fastweb’s NGN architectures evolution Phase 2: Application Layer Creation IP Backbone H323 GW H323 GK PSTN Domain Customer DB SoftSwitch IP Centrex ® UM

Fastweb’s NGN architectures evolution Phase 3: SIP Introduction IP Backbone SIP GW SIP REG PSTN Domain Customer DB SoftSwitch IP Centrex ® UM

SIP MULTIMEDIA TERMINALS Fastweb’s NGN architectures evolution Phase 4: Enhanced SIP Applications IP Backbone SIP GW SIP REG PSTN Domain Customer DB SoftSwitch IP Centrex ® SIP IP-PBX SIP PHONE SIP MULTIMEDIA TERMINALS Presence UM FMC

Fastweb’s NGN architectures evolution Phase 5: Domains Interconnection IP Backbone SIP GW SIP REG PSTN Domain Customer DB SoftSwitch IP Centrex ® SIP IP-PBX SIP PHONE SIP MULTIMEDIA TERMINALS IP Domain UM Presence FMC

Broadband evolution: a Wireless Home W-HiFi WiFi PC WiFi Videophone GSM/WiFi Phone WiFi STB

Wireless Home: video distribution HAG Access Point WiFi MIMO Video Server Wireless Bridge WiFi MIMO

Wireless Home: convergence HAG Access Point WiFi MIMO Video Server SoftSwitch Telefono GSM/WiFi Wireless Bridge WiFi MIMO

Service and Technology Evolution Complete Wireless Home Network Prepaid option not only for traffic, also for monthly fees Automatic upgrade for all ADSL customers free of charge (both ADSL and ADSL 2+) New Full ULL Single/Double Play Offer Replay TV ADSL 2+ 20 Mb/s 1 Mb/s Upstream Last 3 days of TV programming available on demand 40% of COs already equipped, 70% by June, 100% by December Available for new and existing customers at a one-off extra fee, no monthly price differentiation Wi-Fi Video No access fee, Broadband only, optional voice with FASTWEB phone at mobile tariffs Fully Rechargeable Option

Service and Technology Evolution IMS compliant network - simple integration with mobile services Monitoring technology and regulation evolution HDTV Wi-Max ADSL 2+ provides sufficient bandwidth Monitoring real market demand Successfully trialled Opportunity to further expand coverage – Nomadic and mobile applications? Monitoring technology and licensing evolution FMC

Service Platforms & Systems OM Portal DWH IT Systems Siebel SAP NetDB Billing Provisioning Service Platforms Network Infrastructure Physical Infrastructure Transport Network IP Network CCS Class 5 S/S OCSC IN SCP Messaging SIP App Svr IP Centrex OCG Network Management SAS ITO

ipTV Service Infrastructures

Fastweb Labs Test Plant Full compliant network replica system Fiber and DSL Residential and business access System Test Automation triple play services IP Backbone Business e Personal SIP based Voice platform UM platform Voice IP-centrex Video Infrastructure Full compliant network replica system Exponential volumes and complexity testing growth

The role of service, systems and processes Support Content Richness Enhanced Customer experience Simplicity / Usability Multi-Terminal/Environment Accessibility End-to-end processes management Multichannel CRM Quality and performance monitoring BSS &OSS BSS &OSS Customer Satisfaction