IPTV. Philip King General Manager Video Services Telecom NZ

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1 IPTV Philip King General Manager Video Services Telecom NZ

2 Defining IPTV IPTV = delivery of both broadcast and on demand TV and video services over an IP network Does not mean TV over the PC Typically delivered by DSL Sometime referred to as: Way better TV Interactive Personal TV

3 NZ Industry Context Sky - expanding services through Prime and My Sky set-top top box/pvr Free-to to-air broadcasters expanding their channel line up through Freeview Delivery to homes via satellite (DTH) initially; Subsequent deployment of digital terrestrial DTT (timing to be confirmed) Content owners segregating post-theatrical theatrical release rights; Internet based content availability: incursions on traditional television territory High definition TV emerging New Video-on on-demand models emerging

4 The Telco View TV and video over broadband makes more sense than ever due to Higher bandwidth availability Well supported by IP network architecture Better compression Lower costs: servers, STB s s etc Strong retention and ARPU benefits H.264 is the key enabling technology for DSL SD = 1.5 Mbit/s HD = 6 8 Mbit/s But me2tv is not enough Very competitive market Telcos need to capitalise on inherent 2-way 2 IP network

5 Overseas Telco Trends Widespread deployment of IPTV in Europe and North America is happening now Ovum predict that by 2009 there will be: In Europe, in the top 5 markets: 7M subscribers Total revenues of US$2Bn ARPU s of US$285 (video related revenues only) In North America: 21M subscribers Total revenues of US5Bn Video ARPU s of US$232

6 Way better TV: Adding to the user experience Personalisation and Interactivity Trials and research have shown strong customer interest around: Video on demand Catch-up TV Pause and rewind Rich, intuitive electronic program guide (EPG) Easy recording and storage (PVR) capabilities

7 Further possibilities with IPTV Integration of TV and communications services: Caller ID and SMS on TV screen Video calling Integration with mobile for remote access Picture in picture, multiple camera angles, channel and movie previews on EPG Self service: change programming, bill presentment Photo and music sharing Content storage Health and education Security Placeshifting

8 Telecom s s IPTV strategy is evolving IPTV models are in their infancy so there is investment uncertainty IPTV is about selling broadband and triple play not about selling TV or acquiring exclusive content We will position around an open strategy - nonexclusive content and platform arrangements with multiple parties Strategy provides a low risk entry based on hybrid services, partnership/cooperation with digital broadcast platforms (DTH/DTT) and a staircase of IPTV services on top of the broadcast TV proposition

9 Strategy overview IPTV delivered services by Telecom Traditional broadcast content FTA channels delivered over DTT and/or Interactive Services Deep EPG Branded Set Top Box Pay TV channels delivered over Satellite Real-time services Trickle Content plus Pay or FTA channels delivered over DSL (later) Bundled, simple and complete offer to the customer TIME

10 Longer term: a fully integrated proposition Communications Services Entertainment Services Platforms and Devices Across communications services to form a converged commutainment proposition - eg, , video calling or message management on the TV Across other entertainment services Music, Gaming, Photos, Sharing User Generated Content Across multiple devices/platforms allowing customers to access the content they want in the environment they choose Technology capability is relatively immature in this market fully integrated solutions will take time to emerge

11 Other issues to consider Content: the long tail Home reticulation Wireless Via household wiring Drilling holes Network versus device based PVR Digital rights management and access control Subscription versus pay per view models Geographical deployment Advertising models Content arrangements sourcing, exclusivity

12 Case Study: BT Microsoft TV platform with Hybrid Phillips PVR STB Sub 100 retail model DTT for TV services DSL for on demand VoD push and pull Offered initially to broadband customers only Major focus on signing content deals Paramount Concerts on demand Football on demand Yesterday s s TV

13 Case Study: PCCW No 1 IPTV operator in the world Launched with flexible, a la carte offerings Upsold customers around thematic packages linked to a la carte choices All channels sold on a subscription basis, not pay-per per- view World s s most successful IPTV system 600k subs and growing Average ARPU = $14 Short range DSL Interactive ecommerce Launching MPEG4 HD this year Key is mini packs a la carte packages Premium content incl. Sports and films

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