2nd International Telecoms Forum

Intervention by Thierry Dieu ETNO Director for Communications and Public Policy

Moscow, 25 April 2012

About ETNO

The voice of Europe’s leading telecoms operators since 1992.ETNO’s 40 full members and 10 observers from Europe and beyond represent world leading telecoms operators and ICT manufacturing providers.ETNO members and observers account for an overall turnover of €600 billion and 1.6 million employees.Promote its members’ common interests by developing ETNO positions and communicating them to European Union policy makersFacilitate cooperation and coordination of activities between Members

*

* T-Group companies who are members of ETNO: Deutsche Telekom, Hrvastki Telekom, Magyar Telekom, Makedonski Telekom and Slovak Telekom,

ETNO observers

Main challenges for Europe telecoms operators in a changing landscape:

Commercial trends: continued internet traffic growth and fall in out of bundle revenues

• 4- fold growth within next 5 years. Traffic from wireless devices will exceed traffic

from wired devices by 2015 60% increase on fixed networks/ 100% on mobile

networks

(source: CISCO)

Global Consumer Internet Traffic

4968 6017 7277 8867 11040137974672

8079

12146

17583

24357

33620

2888

3771

5054

6523

8375

10797

0

10000

20000

30000

40000

50000

60000

70000

2010 2011 2012 2013 2014 2015PB

/mon

th

File Sharing Internet Video Other

6% revenue decline between 2008 and 2011

Source : IDATE

0

50

100

150

200

250

300

2007 2008 2009 2010 2011

Fixed telephony Mobile services Fixed Internet & data

Source: IDATE

Europe’s Telecom service in decline declining for second yearin a row

Telco’s business models at cross roads

Saturation of traditional markets

Competitive pressure on prices

Evolution towards data-centric business models

Regulatory constraints

Data traffic benefits OTT

Most of traffic growth is coming from OTT applications. Traditionalbusiness models do not allow operators to monetise on trafficincrease.

Découplage trafic / revenues

Disconnect between those who generate the trafficand those who bear the costs

Telcos’ investments up but revenue decline puts long terminvestment capacity at risk

ETNO members: main investors in the sector

Source: IDATE

FTTH/B VDSL FTTLA FTTx+LAN Total FTTx Europe de l'Ouest 17 293 26 897 38 168 0 82 358 Europe centrale et orientale 22 450 5 402 3 840 4 220 35 912 Amérique du Nord 23 990 33 850 65 440 123 280 Amérique Latine 1 227 0 0 0 1 227 Asie 112 335 1 624 2 000 na 115 959 Moyen orient et Afrique 1 549 1 400 0 0 2 949 TOTAL 178 844 69 173 109 448 4 220 361 685 Source : IDATE

EU: not leader anymore in hihg speed networks deployment

Opportunities for change

• Need for new business models:

• Move from flat rate to tiered pricing (pay per usage, pay per service)

• Commercial agreements with OTT for premium services

• Exploit potential of e-services (healthare, energy, security, payments, …) and online content

• Cloud computing

Up to 5% additional revenue by 2015 (ADL)

Challenge for policy makers: let new business models emerging and stimulate investment• No need for additional Net Neutrality law

• Level playing field

• Remove obstacles to single market for online services and content

• Facilitate cross-sector co-operation

• More targeted regulation of new networks

• Pricing flexibility• Maintain value of current access (no reduction of copper prices)• Rules that reflect platform competition• Use of public funds for new networks in non-commercially viable areas only

More information…

www.etno.eu

#ETNOAssociation

Back up slides

Continued progress and substitution in access take up (1)

Continued progress and substitution in access take up (2)

ETNO members’ revenues down…