Broadband: Triple Play in Europe

IECP, January 28, 2004

Adam Peake

Executive Research Fellow

GLOCOM

Defining Broadband

What do we mean by “Broadband”

From point of view of consumers From point of view of policymakers

Broadband Triple Play

Fast Internet (IP) + Voice + Interactive Video, over 1 connection

Integrated, not add-ons

e.Biscom (Italy) – the first integrated broadband provider

B2 (Sweden) – nearly there!

1SEK = ¥14.5, 1Euro = ¥132

Bredbandsbolaget / Bredband / B2

B2 (ブレーバンスボラーゲット ) Established 1998 – 10Mbps to the apartment Target: 1 million apartments @ 200 Swedish

Kroner/Month by 2005 Internet - - - then Video and Voice 2.5Gbps backbone (upgrade to 10Gbps), metro area

1Gbps rings, multiple rings in large cities: future proof B2 standard throughout Built heavily on Stokab and other municipal fiber

Bredbandsbolaget / Bredband / B2

10Mbps anywhere on B2 network Live Ethernet in all apartments in the connected

building Anchor deal with HSB: access to 400,000

apartments in 51 cities

No IPO – Change of Plans

October 2000 – IPO called-off Cancelled international plans Scaled-back and slowed-down in Sweden Raised prices from 200SEK to 400SEK/month

B2 Target Household Type / Homes Installed & Subscribers (10Mbps service)

HouseholdsMDU

HouseholdsSingle

HouseholdsB2 cities (51) 2,128,563 1,599,994 544,205Total in Sweden 4,357,000 2,259,000 2,098,000

Homes Installed SubscribersQ4-00 81,000 7,000Q4-01 220,000 70,000Q1-02 229,000 79,000Q2-02 239,000 80,000Q3-02 246,000 85,000Q4-02 260,000 90,000Q1-03 275,000 105,000

Current: 287,000 homes, 120,000 fiber subscribers, 30,000 DSL, 40,000 Voice

No IPO – Change of Plans

New business plan Business customers DSL (city-by-city rollout)

February 2003: Video-on-Demand, but PC oriented PAL-Quality TV and MPEG2 Video: Summer 2004

(focus on the TV) Challenge:

Cheap and popular cable Other broadband IP providers

No IPO – Change of Plans

February 2003: Nationwide IP telephony Non-PC customers on the socket 20,000 first 3 months 99SEK/month (advantage: 20% under Telia) Full service, ordinary telephone number

March 2003: DSL launched (0.5Million new homes) 8Mbps and 12Mbps: carry all current and planned

services Big city focus: Stockholm, Gottenberg and Malmo Triple play on the way

Selected Swedish broadband packages by speed and price (source DotEcon, Oct 2003)

e.Biscom – First in Broadband?

Established in 1999: Silvio Scaglia Broadband services over Internet Protocol, a network

of routers: “a single IP network for all services to both business and residential customers.”

A new utility serving the home enabling: Voice Video Internet And services over IP

e.Biscom – Vertical Integration

Building on Omnitel’s success: control vertically Metroweb: dark fiber Fastweb: local network and services

Cites served: Milan, Rome, Genoa, Turin,

Bologna, Naples and Reggio Emilia e.Bismedia: content

RaiClick

Models :

NETWORK(Backbone and Access)

CONTENT

PHISICAL INFRASTRUCTURE(Dark Fiber)

e.Biscom – Vertical Integration

MunicipalityService Provider

StokabStokab

Municipality

e.Biscom – Reasons for Success

Integrated from launch First mover advantage Successful IPO: $1.5 billion (March 2000) Big city focus Limited competition Business customers bring revenues (and sometimes

new services) DSL carries all services and is an upgrade path to

fiber when available

Technology - Fastweb in the apartment

Broadband Fiber 10Mbps DSL up to 6Mbps (4Mpbs)

Simultaneous connection Telephone Internet TV/Movie Interactive video-comms

Streaming Video Unicast - MPEG2@4Mbps Multicast - MPEG2@2-4Mbps

e.Biscom – Services

Fast Internet TV (2Mbps stream) Movies on Demand (4Mbps stream)

Universal, Fox, DreamWorks, MTV, Discovery, BBC, etc.

Voice Telephony Video Telephone (to the TV, 1.5Mbps stream) Show My Video Recording and storage IP home services (security to lights)

Fastweb services: subscription packages and fees

Package Monthly sub. Internet Telephone TV Video-communication

TV di FastWeb E30 (E25, Jan 04)

E1.5/hour (fastweb free)

Call charges Included Extra

Mega Internet 500 E35 500 min free, then E1.5/hour

1.2cent/min (Fastweb free)

E10/month Extra

Voce Senza Limiti E41 E1.5/hour (fastweb free)

Included E10/month Extra

Internet Senza Limiti E67 Included 1.2cent/min (Fastweb free)

E10/month Extra

Tutto Senza Limiti E85 Included Included Included Extra

Tutto Fastweb E110 Included Included Included Included

Fastweb TV Interface

26 Satellite Channels

2 VoD Channels

Program Guide

7 Free Channels

Preview

Customers & Revenues

3q ‘02 4q ‘02 1q ‘03 2q ‘03 3q ‘03

Subscribers (thousands)

131.5 176.1 213.0 249.0 290.2

Fiber 76.6 99.7 115.6 127.8 141.7

DSL 54.9 76.4 97.4 121.8 148.5

Revenues (million Euro)

61.7 63.3 75.0 108.1 118.7

EBITDA 6.2 8.3 15.6 24.5 34.5

Future

Customer growth steady Financial targets being met and money to build $865 ARPU vs. $385 for Telecom Italia copper Additional $140 ARPU from video-on-demand

customers Still innovating

http://www.ebiscom.it/ (e.Biscom) http://www.fastweb.it/ (Fastweb) http://www.casacomoda.it/ (Cisco Internet Home)

http://www.bredband.com (B2)

Thank You!