FTTHForum 2011 Thilo Kusch, Magyar Telekom

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FTTHForum 2011 Thilo Kusch, Magyar Telekom

  1. 1. FTTH - Quo Vadis ?Thilo KuschCFO Magyar Telekom, HungaryFTTH Forum 2011, Budapest
  2. 2. Market demand for TV and „real” high bandwidth RECAP FROM LAST YEAR Voice Broadband Pay TV Mobile operators Fixed operators Telco Cable players players Non-telco operators Short term demand Long term demand Multi-room TV with interactivity  Bandwidth of 300M down, 50-100M up Raised downlink speed  Traffic shifts towards short duration streaming It is not a question if we need the FTTH, but the question is WHEN, WHERE , HOW and to WHAT extend? Top secret business information of Magyar Telekom! 2 Magyar Telekom’s information requiring top level protection, to be used exclusively by the addressee.
  3. 3. Unforeseen events changed FTTH roll-out plan Decreasing HH consumption 2009-11 Regulation not supporting investment 5 Access to ducts and 1 GPON unbundling 2 3 Dark fiber 1,2% poles M4 0 Regulated backhaul Local GPON, cable Additional fibre -0,8% -0,8% 4 access 5 & copper bitstream 6 roll-out ! ! ! -5 -4,0% -5,7% -5,9% -5,0% -6,1% Technology neutral national- 10 -9,5% M5 bitstream access 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 Retail-minus based Low initial penetration takeup 250 30  MT started mass rollout in 2009 200 25  …but : 150 20  Macroeconomic downturn 15  Regulatory remedies implied 100 10  Penetration take-up is not so fast as it 50 5 expected 0 0 09.03 09.12 10.12 Top secret business information of Magyar Telekom! 3 Magyar Telekom’s information requiring top level protection, to be used exclusively by the addressee.
  4. 4. Rollout strategy changed but goals achieved ORIGINAL Goal set in 2008 for EoY 2012 ACTUAL, EoY 2011 FTTH FTTH 199 261 380 ED3 ED3 VDSL 1 162 HHs 1 093 HHs 783 ∑1 162k ∑1 093k 633 Higher penetration on new areas We learnt a lot:  New technologies and planning methods  New area selection criterias and sales techniques for a more successful migration -> RESULT Top secret business information of Magyar Telekom! 4 Magyar Telekom’s information requiring top level protection, to be used exclusively by the addressee. 4
  5. 5. Content/applications - the long-term drivers Masterplan for NGFA coverage in MT areas 25% 43% EoY 2011: 815 kHH* Partnering or Alone 3,3m HH 199k 359k 261k 240 EUR/HH 290 EUR/HH 430 EUR/HH 1 040 EUR/HH VDSL ED3** GPON 0% 20% 40% 60% 80% 100% Max FTTx investment limit* Total: 1,093m HH, country-wide** Total incl. LTO areas : 633 kHH FTTH Revitalize copper Mobile BB MAIN CONSIDERATIONS: •Hen and egg situation / Content or Infrastructure first? • Critical mass is necessary to make the whole thing fly • Huge amount of CX required in a short period… Top secret business information of Magyar Telekom! FTTH Forum 2011 Budapest / Thilo Kusch CFO Magyar Telekom 5 Magyar Telekom’s information requiring top level protection, to be used exclusively by the addressee. 5
  6. 6. Obstacles to be overcome for further FTTH development Lack of mass services on the horizon that require FTTH’s high speed and high upload capacity to support short-term demand Three major problems to Short term investments for a uncertain long term business cope with Regulatory uncertainty, less investment supporting measures Hungarian regulation is the most extensive and less investment supporting in Europe… Top secret business information of Magyar Telekom! 6 Magyar Telekom’s information requiring top level protection, to be used exclusively by the addressee.
  7. 7. Interactivity to reach critical mass - develop new applications From linear TV to full on demand entertainment /content – road to interactive TV Marketing challenges: Technical challenges:  Number of households reached  Bandwidths Interactive TV  Number of channels  Set top boxes  Exclusive channels as content Marketing challenges: Technical challenges:TV RPC distribution  Quality  Content: relevance, freshness  Unicast replaces multicast Interactive  Price  Relation to linear content  OTT delivery constrains: TV boom  Promotion tool,  adaptive streaming marketing resources  progressive download Linear TV  OTT competitors  Personalization of customer:  Enabled customers and devices recommend, targeted ads 2005 2010 2015 2020 New appliactaions to support need for FTTH Cloud services for customer Home security and personal E-learning, distance working Community and family video experience roaming healtcare services and e-gov solutions solutions Top secret business information of Magyar Telekom! 7 Magyar Telekom’s information requiring top level protection, to be used exclusively by the addressee.
  8. 8. Alternative models to smoothen short term risk profile Incumbents, AltNets Marketing ServCo (deliver sufficient penetration) Sucessful Vendors, Incumbents, AltNets, Private alternative Technology OpCo Equities models should (provides efficiency in development) address all levels Government, Infrastructure Funds, Financing NetCo Incumbents, AltNets, Policy Banks (sharing long term investment)  Apply alternative models where every player take its most suitable risk  Search for a model which is to be financed also by actors ready to take longer ROI necessary to FTTH investments Top secret business information of Magyar Telekom! 8 Magyar Telekom’s information requiring top level protection, to be used exclusively by the addressee.
  9. 9. Lessons learned? / Challenges to be overcome  In long term the fibre access is mandatory  FTTH network deployment have to start as soon as possible and should be implemented in a systematic BUT prudent way  Implement new platforms and revitalize copper to win the fibre fight by quickly connecting costumers first: lock customers in (increase BB footprint) then: migrate them to fibre  Support Content development and usage:  Penetrate new type of interactivity usage  Mass education necessary to reach critical mass  New apps for fiber  Apply alternative models in further rollouts to smooth short term risk profile by risk sharing but maintain mid/long-term technology capabilities Top secret business information of Magyar Telekom! 9 Magyar Telekom’s information requiring top level protection, to be used exclusively by the addressee.
  10. 10. Q&A sectionTop secret business information of Magyar Telekom! 10Magyar Telekom’s information requiring top level protection, to be used exclusively by the addressee. 10
  11. 11. Rollout strategy & technology mix changed but short term goals to beachieved ORIGINAL Goal by EoY 2012, in 2008 ACTUAL, EoY 2011 ∑1 162k ∑1 093k Higher penetration on new areas FTTH deployment slowed down dramatically, but we learnt a lot  New technologies and planning methods  New area selection criterias and sales techniques for a more successful migration -> RESULT Top secret business information of Magyar Telekom! Magyar Telekom’s information requiring top level protection, to be used exclusively by the addressee. 1 11
  12. 12. MT rollout strategy is based on mix of solutions, content/applicationsshould be the long-term drivers MAIN CONSIDERATIONS:  Hen and egg situation / Content or Infrastructure first?  Critical mass is necessary to make the whole thing fly  Huge amount of CX required in a short CONTENT period… Copper revitalization Top secret business information of Magyar Telekom! FTTH Forum 2011 Budapest / Thilo Kusch CFO Magyar Telekom 12 Magyar Telekom’s information requiring top level protection, to be used exclusively by the addressee. 12
  13. 13. Revise Hungarian regulation remedies that are the most extensive andless investment supporting in Europe Obligation Austria Belgium Denmark Netherlands Malta Portugal HungaryCable modem and BB/fixed BB (EU average 30% 42% 30% 36% 51% 38% 51%app. 15%) +Cable distribution + + + - - + Substructure, poling +Network distribution + - - - - - Symetric, effective forcabling assymetric every operatorOptical local loop + - - + - - +unbundling virtual +Sötétszál + + On commercial ? - + + basisMigration transition 4th + + - + - - +market + + +Optical, HFC Bitstream Optical, business ? VDSL and HFC - - - both segment only bitstreamMigration transition 5th - + + - - + +marketInformation sharing on - - - - - - +network development All EU remedies are implied in Hungary, however extensive infrastructure based competition (in cable) makes the strict remedies unnecessary even development hindering Acknowledgement of risks in new infrastructure developments and implementation of a geographic segmentation would be reasonable Top secret business information of Magyar Telekom! 13 Magyar Telekom’s information requiring top level protection, to be used exclusively by the addressee.

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