European Telcos' Multiplay Strategies

1. Multi-Play Services
Consumer Broadband Services Europe
Stockholm, November 4, 2008
Bernt S Östergaard, Research Director
Telekom Austria - Mobilkom Briefing Sept. 23, 2008
1
Washington DC / Paris

2. Multiplay: Bringing It All Back Home
Digital Home:
The
Bundle:
MultiPlay
Video
Digital Home
Single IP-
Wireline Wireless
platform,
single billing
Internet/Data
2

3. Presentation Agenda
News: How is the Financial Crisis going to
Breaking
affect Telcos?
Questions To Answer Before Going MultiPlay:
Is the Sum LESS than the Parts?

Providing MultiPlay without a fixed line phone

Provisioning strategy DSL vs. FTTx

How to differentiate MultiPlay offers?

Separating marketing spin from real MultiPlay

Do you actually have a choice?

3

4. The Carrier Competitive Consumer Revenue Structure
Services
Subscription
Best Business Models?
Base
Challenges:
Churn
Commoditization
Cable revenues
improving
Fixed line
revenues
sinking fast Broadband services on
Mobile revenues
fastest growth path
still rising
Challengers:
Transport Utilities
Revenue Content Providers
Base ISPs & VNOs

5. Defining our terms
Mul>play
Bundle FMC
Single device
2nd
Value‐add
service
Triple
1st play
Dual Value‐add Fixed Mobile
play service Network Network
Basic service
Single operator Single operator
A set of services A set of services Fixed & Mobile services
from a single on a single fixed infrastructure to a single device
provider on a single bill from a single provider from a single provider
on a single bill on a single bill

6. The Financial Crisis Realigns Telco Priorities
Down: CAPEX investments
Going
May make incumbents more amenable to separating from

infrastructure company
Provides more impetus to Virtualization, SaaS and CaaS

UP: R&D & Telco Customer Segmentation Focus
Going
Business case first, technology choice second

Telco focus on ʻresilientʼ industry verticals

Customersʼ ʻGreenʼ focus drives collaboration services

Building true FMC services on the NGN infrastructure

Recommendations
Launch new Green Services

Explore new relationships with telco vendors

Complete organisational realignments to customer segments

Focus on showing expense reduction of managed services

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7. Is The Sum Less Than The Parts? In Denmark
situation today in Denmark:
The
TDC prefers dual-play Internet+VoIP and Internet+IPTV

3 provides mobile phone+Internet+mobile TV

Telia offers VoIP+Internet+IPTV

Telenor at war with itself: Sonofon vs. Cybercity

Options For Tomorrow:
The
TDC could immediately launch quad and pentaplay

3 can form an alliance with the electrical utilitiesʼ FTTH

infrastructure
Telia would clearly like to add mobile to its triple play but requires

significant infrastructure alignment to do it properly
Telenor does not appear interested in pursuing a triple play solution

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8. The Italian MultiPlay Market
Italiaʼs Vodafone Station:
Vodafone
A quad-play device on the back of its acquisition of Tele2 with the

broadband play
A flashy, attractive and self-configuring device that allows VoIP

(although not when the HSPA module is plugged directly into a PC)
+ IPTV + three access technologies (WiFi, DSL and 3G)
Allows Vodafone to roll out new services and upgrades easily

Result: lower churn rates as well as boosted ARPU

response:
Strategic
Alliance between TIM & Fastweb to access each others FTTH for

improved bundled service competition
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9. MultiPlay without a fixed phone: Swisscom vs. Cablecom
Cablecom's home phone + broadband + TV
Driver:
Legal aspects
This has created enough of a stir with their rivals to prompt a

referral to the competition regulator. However, now the regulator
rules they may continue.
wisdom:
Received
Only the competitive operators, will market these kinds of offers.

Naked DSL benefits over the top VoIP players.
Conclusion:
If a competitor is successful, incumbents are nimble enough to

respond by adjusting product strategy to maintain their market
position
if the mobile pricing is sufficiently cheap, and includes enough

bundled minutes, then a consumer will see no need to add a home
VoIP service to their naked DSL service
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10. Differentiate MultiPlay offers: Incumbents vs. Value-adds
Challenger BSkyB multiplay offering:
Content
STB/PVR for TV, broadband and fixed telephony

Challengers offering ʻFreeʼ Mobile Laptops:
Mobile
Mobile Operator
Bundle Description
Mth. Price/Mth. Contract
3 UK ʻLaptop HP 550 Notebook (£329], £30 / 24 mths
Packageʼ (one of three)
USB modem stick, data Subscription minus PC: £15
plan 5GB
O2 UK ʻInternet ASUS EeePC 910 (£299) £25 / 24 mths
Everywhere Laptopʼ
USB stick, data plan 3GB
T-Mobile UK ʻGet a Acer Travelmate 5320 £30 / 24 mths
Laptopʼ
(£349), USB stick, data
plan 3GB
T-Mobile Germany
Acer Aspire A150X for €1
€39.95/18 mths
Subscription without PC: €39.95
Telenor has a partnerships with Lenovo and Ericsson to offer customers a wide
range of laptops with built-in HSPA radios at standard street prices
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11. Carrier Differentiation Strategy
fast (>100Gbps) QoS Ethernet NGN video
Super
delivery for compelling quad play solutions
Aggregation point close to consumer
Digital Home provider
11

12. Provisioning Strategies DSL, FTTx, Hybrids and DVB
Infrastructure Build-out Strategies:
FTTH with Active Ethernet or Passive Optical Network

– AE: Free (FR), Citynet & Reggefiber (NL), B2 & Telenor Sweden (S),
– GPON: Fastweb (I), Neuf & Orange (F), Energi Midt (DK), Sonera
(SF)
FTTB or FTTC AE/PON +VDSL/VDSL2 to the subscriber

– AE: DT (D), Belgacom (B)
– GPON: Orange (F), Fastweb (I)
– GPON+VDSL2: TI (I)
HFC Hybrid Fiber/Coax to subscriber

– DOCSIS 2.0: The standard delivery
– DOCSIS 3.0: Commercial services beginning to arrive. Trials at UPC
(NL), Telenet (B), Virgin Media (UK) and Cablecom (CH)
DVB-T2 High Definition DTT Broadcast Infrastructure

– Early stages, but BBC has a working TX/RX
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13. Separating marketing spin from real MultiPlay: Illiad FreeBox
A fiber-connected
Technical:
Freebox home
Unbundled ADSL2+

FTTH in 80 cities

IPTV/MPEG-4

Financial:
Capex: €70/€400 apartment/

house
CPE Cost: €300

APRU / sub: Not disclosed

Subscribers:
Q1 07: 2,1 mill

Q1 08: 3,1 mill (400K FTTH

households passed)
Power line Connec>ons for HDTV
connec>ons in‐house
Base subscription €29.99 per

month for both ADSL and
FTTH
Source: Free www.free.fr
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14. Recommendations
buy services and content not technology
Consumers
Consumers want choice – in content, devices & prices
There is a pressing need for service integration on an
all-IP platform
The video-audio quality demands is going up
Incumbents need to combine breadth of service
delivery capabilities with content provider openness
to differentiate from the challenger competition
14

15. Do Telcos Have A Bundling Choice?
Need to drive up ARPU and justify heavy infrastructure
investments
Telcos Losing Wireline Voice to MSOs with Wireless
Substitution
Broadband becoming commodity
Cable, MSOs, broadcasters and others offering triple play
services
FTTx rollouts gathering speed (France, Nordics)
Advertisers looking for more detailed audience data
Need to make services ʻstickyʼ – see BT
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16. Competitive
Intelligence
levels the playing field…
Competitive
Response TM
enables you to
Win.
Current Analysis is the only competitive research firm that provides solutions to improve
your companyʼs Competitive Response TM
For more information, please contact…
Bernt Stubbe Østergaard
Research Director
+45 45 50 51 83
Bernt Stubbe Østergaard: bostergaard@currentanalysis.com
16

17. Consumer Module Analysts & Main Responsibility Areas
Östergaard (Research Director)
Bernt
Bernt provides content services analysis to both WSE and CBSE

Mohr-McClune (Principle Analyst – Mobile
Emma
Services)
Anchor person on the Wireless Services Europe front

Tudor (Senior analyst – Broadband Services)
Ben
Anchor person on the Consumer Broadband Services Europe front

Rybak (Senior Analyst)
Natasha
Natasha has responsibility for our Company Assessments

and publishing with other CA Modules,
Joint-research
notably Business Telecom Services Europe, Digital
Home & Mobile Devices modules