1. Cloud Services: Increasing ARPU

2. Special Research Session
Presenter:
Brett Sappington
Director of Research
Parks Associates

3. Trends in Service Provider Strategies
Initial Strategy Revised Strategy
Customer Acquisition Customer Retention
Access Provider Content Resource
Dumb Pipe / Channel Lineup Consumer Experience
Linear Content On-Demand Content
TV-based Video Delivery Multiscreen Delivery
Core Services Adding VAS Monetizing VAS
CPE-based Services Cloud-based Services
© Parks Associates, 2011.

4. % "Highly Likely" to use services
i.e., rating 6-7 on a 7-pt. scale
10%
15%
0%
5%
8%
3%
5%
6%
6%
U.S.
5%
6%
3%
5%
5%
5%
5%
7%
France
4%
8%
8%
10%
5%
7%
UK
5%
6%
7%
8%
4%
7%
3%
4%
(Among Broadband HHs)
5%
Spain
5%
2%
Premium Technical Support Services
6%
3%
5%
5%
7%
Italy
3%
6%
5%
6%
8%
10%
6%
6%
6%
Germany
6%
Likelihood of using Professional Technical Support Services
8%
9%
5%
4

5. Home Automation / Control
Smart home features have existed for years. Are they moving mainstream?
Options: Benefits:
• Lighting controls • Traditionally for high end homes
• Thermostat controls • Enables advanced features for
• Appliance / power controls security, energy, and health
• Vertical-specific controls • Hardware costs have fallen
• Other • Consumers more open to
convergence / control features
Challenges:
• Operators have tried before
• Limited as a standalone service
• Fragmented market among potential
vendors / partners
© Parks Associates, 2011.
5

6. Home Security Services
Demand for Security Value-added Services
“How interested are you in receiving any of the following services from your broadband
Internet service provider?”
Home monitoring service with a self-installed Home security service with sensors and
camera and ability to see home video online controller to receive alerts
Italy Italy
US US
Spain UK
Want Service
(6-7 rating)
UK Spain
Have Service
from BSP
France France
Germany Germany
0% 5% 10% 15% 20% 0% 5% 10% 15% 20%
% of Broadband HH % of Broadband HH
Source: Cloud-based Value-added Services
© 2011 Parks Associates

7. Health Services
Health and wellness services are a very early market with growth potential
Options: Benefits:
• Senior care • Valued by consumers who need such
• Routine care services
• Wellness / preventive care • Provides services for aging
• Chronic condition monitoring population
• Sports / active care
• Safety / baby monitoring Challenges:
• Fragmented market
• Multiple vendors with solutions only
for specific health issues
• Self-pay for services
• Sales channel
• B2B vs. B2C
© Parks Associates, 2011.
7

8. Convergence Services
Benefits:
• Encourages multiplay Companion Device Services
• Encourages higher service tiers • TV Listings
• Programming
Challenges: information
• More complex support issues • Remote DVR
programming
• Social Interaction
Combined mobile and broadband features available to those with both services.
Same ID and passwords for mobile and Internet features. Merged mail boxes. Access
My Unified
Services
online photo album via mobile or PC. Use virtual wallet on PC and mobile. Increased
e-mail storage.
Allows consumers to view landline voice mail via smartphone or PC. Requires
Voicemail Viewer
download of app to viewing device.
Internet parental controls application to allow parents to customize access and
Smart Controls activity permissions for online and television. Provided for free with broadband and
television services, respectively. Version for mobile phone available for $5 per month.
Displays fixed line caller ID on the TV or Internet connected computer. Allows calls to
Universal Caller ID
be pushed to voice mail. Requires triple play. No additional charge.
8
© Parks Associates, 2011.

9. Strategies for Value-added Service Pricing
VAS Offered For Free Fee-Based VAS
• Services that drive bundling • Services other operators cannot easily
• Services that minimize support calls / truck duplicate
rolls • Services with an ongoing cost or hardware that
• Services that minimize churn, particularly for must be subsidized
fiber services • Services with an incremental cost for content
• Services that minimize cord-cutting / cord- (music, gaming, video)
trimming • Mobile-specific services
• Services that drive usage of the service or • Premium tiers of free value-added services
push consumers to higher tiers of service • Technical support services that address “out of
• Low cost, network-based features that provide scope” issues for the operator
differentiation • Value-added services that are building a
• Basic levels of service that promote adoption business outside of core access services
of fee-based service tiers
• Services that enhance advertising
• Services that encourage new Internet users to
get online
© Parks Associates, 2011.

10. Growth of Value-added Services
Global Forecast: Annual Cloud-based
Value-added Service Revenues by Type of Service
9,000.0
8,000.0
Convergence Services
7,000.0 Health Services
Annual Revenues ($ M)
Monitoring and Smart Home Services
6,000.0 Entertainment (video, music, gaming)
Premium Technincal Support
5,000.0
4,000.0
3,000.0
2,000.0
1,000.0
0.0
2010 2011 2012 2013 2014 2015
Source: Cloud-based Value-added Services
© 2011 Parks Associates