PRESENTATION: What are the market and technology drivers for the connected home?

Dowshan Humzah – CONFIDENTIAL – Not for distribution. 29th
Nov 2005
What are the market and technology drivers for the
connected home?
Dowshan Humzah
Director, Strategy and Planning - Products
Wireline & Wireless Broadband Access Technologies, Prague
29th
November 2005

2
Nov 2005
Agenda
1. The UK Broadband Market
2. Connected Home Drivers
3. ntl network assets – a Cableco and a Telco
4. ntl Technology Trials – Update
5. The Home of the Future
6. Broadband Packaging Strategies

3
Nov 2005
1: The UK Broadband Market
 Broadband Growth
 Internet Penetration
 Q3 2005 Residential Market Share
 Intense Competition

4
Nov 2005
Broadband Growth
Sources: Oftcom, National Statistics, Enders Analysis, Forrester, Jupiter, Strategy Analytics and ntl analyses. Note: Business ADSL included
UKBB/DUHomes(million)
1.3
3.1
5.7
8.5
12.7
14.2
15.5
16.5
9.2 9.4
8.2
6.8
5.6
4.6
3.9 3.4 3.0
10.8
2002 2003 2004 2005 2006 2007 2008 2009 2010
Broadband Dial-Up
 2005 – a record year for new subscribers
 A third of UK homes now have broadband
 Strong growth expected

5
Nov 2005
Internet Penetration
UKInternetPenetration(%ofUKhomes)
43%
51%
56%
61%
5%
11%
22%
34%
2002 2003 2004 2005
Total Broadband
35%
23%
29%
Cable areas Non-cable areas UK average
 Infrastructure competition
and choice has aided
increased broadband
penetration
 35% in cable areas vs. 23%
in non cable (i.e. DSL only)
areas

6
Nov 2005
Note: Other DSL includes residential ISP’s only
Sources: BT, Telewest, Tiscali & Wanadoo results; AOL press releases; ntl estimates; ntl accounts
BT Retail
20.5%
AOL
15.4%
Telewest
11.6%
Tiscali
8.4%
ntl
21.7%Wanadoo
10.4%
Other DSL
12.0%
670
826
920
1,220
1,625
1,721
954
Tiscali Wanadoo Telewest Other DSL AOL BT Retail ntl
%MarketShareCustomers(‘000)
Q3 2005 Residential Broadband Market Share
 ntl remains market leader

7
Nov 2005
Intense Competition
*Based on select leading ISP offers. Media source: Thomson Intermedia
£66.65 £66.65 £67.48 £67.48
£60.08
£50.59
£37.73 £36.16
£19.54 £19.54
36 35
31
46
44
50
29
31
58
30
Q1-03 Q2-03 Q3-03 Q4-03 Q1-04 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05
Price per Mb* Media Spend £m
 Prices down, speeds up and media spend up

8
Nov 2005
2: Connected Home Drivers
 Access Competition Impact – Connected Home Drivers
 Broadband User Behaviour (ntl Broadband Base)
- Average Time on Broadband Service
- PC Penetration
- Home Networking
- Always-On PCs
- Frequency of Internet Use
 Bandwidth Consumption

9
Nov 2005
Access Providers Impact – Connected Home Drivers
 Providers bundle networked
services to drive ARPU/retention
 Wireless networking
 VOIP
 Home security
 IP TV
 Online storage
512k 10Mb
Song 1min 20 4 secs
CD 12 mins 36 secs
Movie 3.5 hours 9 mins
 Higher speeds make audio/video
transfer feasible
 Access provider competition is helping to drive home connectivity
 The future is the ‘multi-play’
 One very high speed connection, one bill, multiple integrated services
 UK cable operators (ntl and Telewest) already provide this

10
Nov 2005
Average Time on Broadband Service
19
22
23
1Mb 2Mb 3Mb
Averagetimeonbroadband(months)
 Early majority have higher speed connections

11
Nov 2005
PC Penetration
38% 39%
59%
68%
DU 1Mb 2Mb 3Mb
 Early majority and those on higher tiers are likely to have more than 1 PC
%customerswithmorethanonePCathome

12
Nov 2005
Home Networking
13%
26%
39%
DU 1Mb 2Mb 3Mb
Not
recorded
 …And to have a home network
%customerswithahomenetwork

13
Nov 2005
Always-On PCs
14%
23%
30%
45%21%
33%
36%
32%
66%
44%
34%
23%
DU 1Mb 2Mb 3Mb
Only when in front
of PC
Generally on when
at home
All the time, or
during the day
 …And more likely to keep the PC on all day
%customerskeepingPConallday/
whenathome/whenusing

14
Nov 2005
Frequency of Internet Use
52%
66%
77%
83%
DU 1Mb 2Mb 3Mb
 …And to use the Internet more frequently
%customersusingtheinternet
severaltimesperday

15
Nov 2005
Bandwidth Consumption
10.00
11.00
12.00
13.00
14.00
15.00
16.00
17.00
18.00
19.00
20.00
21.00
22.00
23.00
24.00
25.00
26.00
27.00
28.00
29.00
30.00
31.00
32.00
33.00
34.00
06/01/2003
03/02/2003
03/03/2003
31/03/2003
28/04/2003
26/05/2003
23/06/2003
21/07/2003
18/08/2003
15/09/2003
13/10/2003
10/11/2003
08/12/2003
05/01/2004
02/02/2004
01/03/2004
29/03/2004
26/04/2004
24/05/2004
21/06/2004
19/07/2004
16/08/2004
13/09/2004
11/10/2004
08/11/2004
06/12/2004
03/01/2005
31/01/2005
28/02/2005
28/03/2005
25/04/2005
23/05/2005
20/06/2005
18/07/2005
Access Speed uplift 1
Access Speed uplift 2
Bandwidth
Month
 Increasing speed – increases bandwidth consumption
 Not proportionate

16
Nov 2005
3: ntl network assets – a Cableco and a Telco…
 ntl’s network vs. BT’s network
 ntl’s speed advantage over BT (for ADSL2+)
 Distribution of Telephone (Local Loop) Length in the UK

17
Nov 2005
ntl’s network vs. BT’s network
 ntl already delivers triple play
 Sky, BT and Wanadoo/Orange are chasing this space in the UK
 BT (and LLU operators) can only match ntl in mass deployment of faster
DSL² with further significant investment in deeper fibre and shorter copper
 This is not currently planned
Depth of fibre
Network Asset ntl
• Deeper, therefore closer to customer
• All the way through to all street cabinets
Length of copper
• Shorter copper enabling higher speeds
• c.95% of homes <1km¹
Access architecture
• Dual access – triple play already delivered
• Both coaxial cable (DOCSIS) and copper
(ADSL)
• Only through to exchanges
• Then copper through to street cabinets
• Longer copper
• c.5% of homes <1km
• Copper (ADSL) only
BT
¹Source: ntl Networks analysis 2005. ²Defined as 18Mb+ services to homes with short copper i.e. c.<1km.

18
Nov 2005
Distribution of Telephone (Local Loop) Length in the UK
Source: Point Topic UK after BT,and ntl analysis Oct 2005
0
10
20
30
40
50
60
70
80
90
100
1.2 1.6 1.9 2.1 2.3 2.5 2.7 2.9 3 3.3 3.4 3.6 3.8 4.1 4.3 4.7 5 5.3 5.7 6.1 6.3 6.5
BT
ntl
BT average copper length is
c.3.25km
Copper Loop Length/km
Percentagecoverageofpopulation
 ntl has 95% of homes with short copper vs. BT at 5%

19
Nov 2005
0
5
10
15
20
25
30
12 11 10 9 8 7 6 5 4 3 2 1
Loop Length (kilo feet)
DataRateMb/s
ADSL2+
ADSL2
ntl potential x5
speed advantage
95%¹
<1km
95%
< 5.6km
50%
< 3.25km
5%¹
<1km
ntl short loop copper: c.7.2m homes
Homentl Network
HomeBT Network¹
c.4.5Mb/s
up to 24Mb/s
ntl’s speed advantage over BT (for ADSL2+)
¹BT Evolving Access Networks Presentation 2005. Rates in practice will be lower than these theoretical performance figures
BT/LLU short loop copper: c.1.3m homes

20
Nov 2005
4: ntl Technology Trials - Update
 ADSL2+ Demonstration
 ADSL2+ Technology Trials – Update
 The Best of Both Worlds

21
Nov 2005
ADSL2+ Technology Trials - Update
 A ‘proof of technology’ trial to illustrate strength/flexibility of ntl’s network
 Key objective: determine technical potential for ADSL2+ over ntl’s short copper loops
 Trialists were provisioned across 3 cabinets
 Showcases premium broadband, full QoS VoIP across ntl network and HDTV
 Products incorporating ‘premium broadband services’ were trialled
 These included high speed services for SoHo workers, gamers and HDTV¹
 Resulted in ntl being UK’s first ISP to successfully trial ADSL2+ and HDTV
 Strengthens position given current cable DOCSIS architecture
 Provides choice if ntl wishes to exercise all of its network assets
Notes:¹HDTV broadcast satellite content provided by Euro1080.

22
Nov 2005
ntl has the Best of Both Worlds
 DOCSIS provides mass market opportunities
 BT/LLU cannot match ntl’s marginal cost structureDOCSIS
MPEG
Optical
Node
EdgeRouter
DOCSIS
IPDSLAM
GbEthernet
 ADSL2+ provides for more niche opportunities
 BT/LLU cannot match ntl’s performance

23
Nov 2005
5: The Home of the Future
 The Home of the Future
 Drivers
 The New Communications Environment
 Future Broadband Bandwidth Requirements
 Triple Play/Cross Product Propositions

24
Nov 2005
The Home of the Future
 The idea of the ‘home of the future’ has a long history
 But has always remained in the future
 Answers magazine (1893) enthused about the electrical home of the future¹
 "fitted throughout with electricity, electric stoves in every room…can be lighted by
pressing a button at the bed side…doors and windows fitted with electric fastenings."
 Designers of the 'miracle kitchen' (American National Exhibition - Moscow)¹
 "household chores in the future will be gone for the American housewife at the touch of a
button or the wave of a hand“
 The Internet and ‘digitising’ of information, communications and
entertainment is helping to re-ignite this vision
 Many companies have a vision of a ubiquitous value network, with all devices connected
so that you can enjoy content anytime, anywhere
¹ Economist Technology Quarterly 18 Sept 2004 – reported Moscow 1959

25
Nov 2005
Drivers
 There are 5 key elements to the emerging phenomenon of the digital ‘home
of the future’
Single high bandwidth pipe
Elements Key driving factors
 DOCSIS/ ADSL2+ provides high speed/dedicated services
 Carries multiple services of data, video and voice
Portable devices that connect
automatically
 Increased penetration of MP3 players, digital cameras, PDAs
 Drive to standardisation to aid simple, seamless connectivity
Content/applications migrate to portable
devices at edge of the network
 Rising bandwidth and shrinking storage costs leading to more
smart and fewer physical devices such as DVDs/CDs
Wireless channel
 Provides for mobile networking in home
 18% of European homes forecast to have connected home
networks by 2009¹
Closed wired network
 High bandwidth allows for HDTV entertainment services
 Quality of service can be guaranteed
¹Strategy Analytics

26
Nov 2005
Source: Strategy Analytics, Emerging Frontiers Jan 2005
The New Communications Environment
 The current communications environment is not conducive for the
‘home of the future’
 Separate
 Incompatible
 Patchwork
 Seamless
 Converged
 Compatible
 Interconnected

27
Nov 2005
Source: Strategy Analytics, Emerging Frontiers Jan 2005
The New Communications Environment / cont.
 A shift to greater intelligence and interconnectedness will improve the
customer experience
 Standalone Devices
 Increasing Barriers to Use
 Limited Compatibility
 Minimal Intelligence
 Interconnected Systems
 Embedded Intelligence
 Seamless Content Access
 Adaptive Capability

28
Nov 2005
Future Broadband Bandwidth Requirements
Single Person home
Household Bandwidth Requirements Total
 4.5Mb
Two person home One broadcast TV channel being recorded 3.5Mb
One broadcast TV channel (live sports quality) 3.5Mb
Internet browsing (BBC media player) 1.0Mb
Music download in progress 0.5Mb
8.5Mb
Two parents with 2
or 3 children
One HDTV channel being viewed (MPEG4) 8.0Mb
One broadcast channel being recorded 2.0Mb
Multi-play online game via PS3 1.0Mb
Internet browsing (BBC media player) 1.0Mb
VoIP call in progress 0.5Mb
12.5Mb
Source: BT Wholesale presentation April 2005
One broadcast TV channel (live sports quality) 3.5Mb
Music download in progress 0.5Mb
Internet browsing (email/search) 0.5Mb
 Consumer segments and mass applications may drive demand for greater
bandwidth (for applications over IP)

29
Nov 2005
Triple Play/Cross Product Propositions
Internet
TV
Telephony
- CPE
-Video conf.
-Voice/video
Over IP
-Wifi/3G/
Bluetooth
‘mobility’
-FMC
-HDTV
-IP VoD
-Share photos/
music
-TV over wi-fi
Communication Entertainment
Information/Communication
-CLI/bill on TV
Traditional outward focus
Cross product / converged focus
 Evolving technology platforms
will help to support an increased
cross product / converged focus
 For e.g.
Photobox on
Internet and TV

30
Nov 2005
6: Broadband Packaging Strategies
 Unlimited vs. High Speed
 ntl Product Portfolio - 2006
 The Future
 So Who Lives in a Connected Home Today?

31
Nov 2005
Unlimited vs. High Speed

32
Nov 2005
ntl product portfolio - 2006
Adding value to access
Tier 1 £14.99 512Kb[1GB]
Tier 2 £17.99 10Mb[2GB]
1Mb[Unlimited]
Tier 3 £24.99 10Mb[30GB]
2Mb[Unlimited]
Tier 4 £34.99 10Mb[75GB]
 A market leading portfolio meeting needs of customers
 …high speed
 …unlimited usage
 …content and applications for high bandwidth

33
Nov 2005
The Future
What’s coming?
 Innovations in connectivity
 Continuing growth of wireless
home-networking
 Greater focus on VOIP
 Arrival of IP VOD
What’s needed?
 Even higher speeds – up & down
 Joint action on wireless security
 Clarity on broadband speed claims
 Video rights holders to embrace the
internet

34
Nov 2005
So Who Lives in a Connected Home Today?
 Mostly early-adopters
 Higher speeds, wireless (in-home) packages and bundled services are
helping attracting first timers
 We need to act together to sustain these new connected families
 Cable will continue to lead the way
 21st
century-network – already delivered
 Higher speeds and new services launched and on trial now
 Increasing popularity of the triple play
– UK Cable players provide triple play already
– Others are aiming to follow: Sky, Wanadoo, BT

Nov 2005
Thank you
Dowshan Humzah
Director, Strategy and Planning - Products
Tel: +44 (0)7976 202595
email: dowshan.humzah@ntl.com

PRESENTATION: What are the market and technology drivers for the connected home?

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PRESENTATION: What are the market and technology drivers for the connected home?