ftth council europe webinar 20 november 2012

Julija Jurkevic

Analyst

Marketing Fibre to the Global

Consumer

November 20, 2012

SNL Kagan & FTTH Council Europe Webinar

© 2012 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved. 2

Presentation Outline

Case Study 1: Telefónica

Case Study 2: France Telecom - Orange

Case Study 3: TeliaSonera

Comparison with United States

Strategy Comparisons

Factors Determining FTTH Deployments

1

2

3

4

5

6

Data Sources: SNL Kagan estimates, Operators, FTTH Council Europe


Telefónica

Present in 25 countries; Over 313.8 million customers at September 2012.

Fixed Broadband Services – Spain, UK, Germany, Ireland, Czech Rep., Brazil,

Argentina, Chile, Peru, Colombia

Commercial FTTH Services (residential) – Spain, Brazil, Chile

Global Brands:

Global Presence:


Telefónica - Spain

7,166 7,734 8,392 8,670

1,778 1,863

1,954 2,083 10 16

56 171

0

2,000

4,000

6,000

8,000

10,000

12,000

2008 2009 2010 2011

DSL Cable FTTH

(000)

Spain Major Fixed Broadband Platforms Spain Broadband Net Adds by Platform

DSL 79.6% 80.0% 80.2% 78.7%

FTTH 0.1% 0.2% 0.5% 1.6%

887

568

657

278

145 85 91

129

9 6 40

116

0

200

400

600

800

1,000

2008 2009 2010 2011

DSL Cable FTTH

(000)

Telefónica’s Home and largest market

Incumbent Nationwide Fixed Line Operator

Networks: xDSL, FTTH, Wireless

4 Play services – Fixed phone, IPTV, Internet, Mobile voice/data

http://www.1000flags.co.uk/ekmps/shops/1000flagsuk/images/spain-flag-button-pin-badge-6154-p.png


Telefónica - Spain

58.3 56.7 54.7 50.9

14.2 14.3 13.8

13.7

12.9 11.2

10.7 11.5

5.2 5.1 8.1

10.1

0

20

40

60

80

100

2008 2009 2010 2011

Telefónica ONO Orange (FT) Jazztel(%)

Spain - Major ISPs by Market Share



BB Mkt. Share 56.7% 54.7% 50.9%

% of Total Subs 0.2% 0.9% 2.9% 4.1%

% of FTTH Mkt. 71.3% 87.8% 95.0%

Telefónica - Spain

5,292 5,331

5,424

5,477

5,579 5,620

5,672

5,722 5,749

5,669

5,607 5,609 5,600 5,613

4 7 9 11 19 25 32 49

66

93

126

163

200

232

0

100

200

300

400

5,000

5,200

5,400

5,600

5,800

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Total Broadband

FTTH

(000)

Telefónica Total Broadband and Fibre Subs

2009 2010 2011 2012



Telefónica – Spain: FTTH Services

FTTH services launched 2008 in 12 cities, speeds up to 30 Mbps

Deployments alongside VDSL

Response to cable threat

2011 - FTTH speeds increased to 100 Mbps

Regulation requires Telefónica to unbundle all connections under 30

Mbps

FTTH Network Coverage – about 12% of HHs in mid-2012

Target – 50% of premises by 2015

Main cities nationwide

FTTH Take up rate – over 11%

-> 4% of total broadband subs


Telefónica – Spain: FTTH Marketing & Pricing

Both xDSL and FTTH require a phone line

FTTH is marketed as a premium service :

FTTH only available at 100 Mbps -> the most expensive service

at €40/mo

HD IPTV is only available with FTTH

Upgrading from ADSL to VDSL costs 20% more; upgrading

from VDSL to FTTH – 30% more (speed x3 with every upgrade)

Price/MB of data is cheaper with FTTH

However, bundles present good savings:

100 Mbps 4 play is only 12% more expensive than 10 Mbps

ADSL 4 play

FTTH bundles are only a little cheaper than comparable HFC

services

Movistar Fibre 4 Play is 10% cheaper than Ono cable 3

play with 100 Mbps + comparable mobile plan


Telefónica –Europe: Other Markets

UK

Alternative operator

Only 3% market share

Decreasing subscriber base

Small FTTH market

Germany


10% market share

Decreasing subscriber base

Telefónica aims to sell 20% stake

Czech Republic

Dominant Incumbent operator

VDSL deployments offering up to 40 Mbps speeds

Sole IPTV provider

Fragmented telco competition

Sole 4-play provider; largest fixed and mobile network

Historically small FTTH market

However: strong cable growth and local fibre network roll-outs putting pressure

on the Incumbent

xDSL Services


Telefónica - Brazil

7,028 7,678 8,975 10,398

2,454 3,130

3,824

5,011

8 32

78

160

332 403

627

829

0

5,000

10,000

15,000

20,000

2008 2009 2010 2011

DSL Cable FTTH Fixed Wrls.

(000)

Brazil - Major Fixed Broadband Platforms Brazil - Broadband Net Adds by

Platform

DSL 70.6% 67.4% 65.0% 61.9%

FTTH 0.1% 0.3% 0.6% 0.9%

543 650

1,297 1,423

764 676

694

1,187

8 24 46 81 48 71

224 202

0

400

800

1,200

1,600

2008 2009 2010 2011


(000)

Telefónica’s Second-largest market, largest Latin American Market

One of 2 Incumbents


4 Play services – Fixed phone, Internet, Mobile voice/data, CATV, DTH, IPTV in

Sao Paulo

Long-term regulatory ban on telco IPTV services (lifted 2011)

http://www.1000flags.co.uk/ekmps/shops/1000flagsuk/images/brazil-flag-button-pin-badge-6463-p.png


BB Mkt. Share 23.2% 25.7% 21.7%

Telefónica - Brazil

2,659 2,729 2,580 2,638

2,801 2,974

3,139 3,319 3,394

3,487 3,568

3,648 3,700 3,732

2,000

2,500

3,000

3,500

4,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2(000)

Telefónica Broadband Subs

2009 2010 2011 2012

20.3 37.0 31.6 29.3

22.3

25.3 23.7 25.4

25.7

23.2 25.7 21.7

0

20

40

60

80

100

2008 2009 2010 2011

Oi Net Servicos Telefónica

(%)

Brazil - Major ISPs by Market Share

100,000 FTTH subs 500,000 Homes Passed Q3 2012

http://www.1000flags.co.uk/ekmps/shops/1000flagsuk/images/brazil-flag-button-pin-badge-6463-p.png


Telefónica – Brazil: FTTH Services

FTTH services available to 500,000 homes in Sao Paulo region,

speeds 15-100 Mbps

Response to cable threat, competitive FTTH deployments

Infrastructure upgrade for IPTV

FTTH Network Coverage – about 500,000 HHs in Q3 2012

Target – 1 million subs by 2015

About 100,000 FTTH subscribers at Q3 2012

Cherry-picked deployment to densely populated upscale residences

FTTH Take up rate – 20%

-> less than 3% of total broadband subs


Telefónica – Brazil: FTTH Marketing & Pricing

xDSL and FTTH available in bundles or naked

FTTH is marketed as a premium service :

Marketed to upscale households

FTTH only available at top speeds 15 -100 Mbps

-> the most expensive service starting at $R90/mo

in a combo pack

IPTV is only available with FTTH

Only Fibre IPTV offers advanced services: Interactive

services, Multiroom , Pic in Pic

Price/MB of data is cheaper with 10Mbps DSL

than with 15Mbps FTTH service (but lower at higher speeds).

One of the cheapest 100 Mbps offer on the market

30% cheaper than 100 Mbps on HFC from NET

Other speed tiers – comparable

FTTH Services have higher ARPUs


Telefónica - Chile

Incumbent and largest operator


4 Play services – Fixed phone, Internet, Mobile voice/data,

IPTV, DTH

Chile Fixed Broadband Market (2011)

DSL – 50% market share; Cable – 48% share

Cable: faster growth than DSL, gaining market

share

Nascent Fibre market

Telefónica dominates with a 42.5% market share

Main competitor: MSO VTR: 37% market share


Telefónica – Chile: FTTH Services

FTTH services available in Biobio Region , containing the

capital Conception; Speeds 4- 80 Mbps

Launched in Q2 2011

Response to cable threat , competitive Fibre deployments

Network upgrade for IPTV

FTTH Network Coverage – about 50,000 HHs

Target – 700,000 (80% of HHs) by end-2014

Deployment in selected areas around capital, but target –

urban areas nationwide


Telefónica – Chile: FTTH Marketing & Pricing

xDSL and FTTH available in bundles or naked

FTTH is marketed to a wide audience

Fibre services are available at all speed levels

ADSL and Fibre at 4Mbps and 15 Mbps speeds cost same;

Higher speeds – only with FTTH

IPTV is only available with FTTH

Basic IPTV subs access more channels, incl HD, than DTH

subs

Matching and undercutting VTR cable prices


Telefónica – Latin America: Other Markets

Argentina

DSL dominates w. 67% share

Until 2010, cable market grew slower than DSL

Almost no competitive Fibre deployments

3 strong operators (Telefónica, Telecom, Cablevision)

BUT: telco competition and DOCSIS 3.0 driving Fibre trials and

greenfield deployments

Colombia

Telefónica has regional monopoly

Fragmented DSL and Cable markets

Almost no competitive Fibre deployments

Low broadband penetration

Peru

Telefónica dominates the broadband market w. >90% share

Very low broadband penetration

Little or No FTTH, but deployments starting


France Telecom - Orange

Present in 33 countries; Over 227 million customers incl 15 million broadband at

September 2012.

Fixed Broadband Services – France, Spain, Belgium, Poland, Slovakia, Moldavia,

Romania, Jordan, Egypt, Ivory Coast, Kenya, Mauritius, Cameroon, Tunisia

Commercial FTTH Services (residential) – France, Slovakia, (planned in

Spain)

One Global Brand:

Global Presence:


France Telecom – France

17,309 18,586 19,858 20,982

1,007 1,160

1,217 1,415

48 69

118 198

0

5,000

10,000

15,000

20,000

25,000

2008 2009 2010 2011

DSL Cable FTTH

(000)

France - Major Fixed Broadband

Platforms

France - Broadband Net Adds by

Platform

DSL 94.2% 93.7% 93.6% 92.8%

2,504

1,277 1,272 1,124

295 153 57 198

20 21

49 80 0

500

1,000

1,500

2,000

2,500

3,000

2008 2009 2010 2011

DSL Cable FTTH

(000)

FT’s Home and largest market



4 Play services – Fixed phone, IPTV, Internet, Mobile

voice/data

http://www.1000flags.co.uk/ekmps/shops/1000flagsuk/images/france-flag-button-pin-badge-6167-p.png



45.3 44.8 43.0 42.4

21.2 22.4 23.0 22.2

22.9 22.5 21.4 21.4

0

20

40

60

80

100

2008 2009 2010 2011

Orange (FT) SFR Iliad(%)

France - Major ISPs by Market

Share



BB Mkt. Share 44.8% 43.0% 42.4%

% of Total Subs 0.4% 0.6% 1.0% 1.3%

% of FTTH Mkt. 50.7% 45.8% 48.0%


8,540 8,639

8,763

8,880 8,879 8,925

9,016

9,128

9,308 9,371

9,478

9,598 9,671

9,749

24 29 31 35 37

42 45 54

65 73

82

95

108

123

0

50

100

150

200

8,000

8,500

9,000

9,500

10,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Total Broadband

FTTH

(000)

France Telecom -Total Broadband and Fibre Subs

2009 2010 2011 2012



France Telecom - France: FTTH Services

FTTH rollout started in 2007 in 6 major cities, speeds up to 30 Mbps

Primarily, response to competitive Fibre deployments

Slow speed of rollout due to lack of clear FTTH regulation

FTTH Network Coverage – over 900,000 homes in 20 cities at end-2011

Target – 2 million homes by 2015, 15 million (60% of HHs) by 2020

across 3,6000 districts 50% of premises by 2015

Infrastructure sharing agreements with competing telcos (SFR,

Iliad-Free, Bouygues)

FTTH Take up rate –11%

-> 1.3% of total broadband subs


France Telecom - France : FTTH Marketing & Pricing

FTTH are marketed as a 3 or 4 play bundle only

ADSL is available as solo at lowest speed (8Mbps)

Strategy – to sell an STB providing access to 3 basic

play and encourage upgrades

FTTH 3 play is €5 more expensive than ADSL 3 play but

frequent timed promotions often make it cheaper

ADSL to FTTH upgrade increases speed x 5

HD and 3D IPTV channels only available with FTTH


France Telecom – Slovakia

Slovakia - Major Fixed Broadband

Platforms Slovakia - Broadband Net Adds

by Platform

DSL 56.0% 45.8% 41.7% 38.8%

330 368 398 405

62 80 94 119

66

178 200

238

82

147

236 262

0

200

400

600

800

1,000

1,200

2008 2009 2010 2011


(000)

52

38 30

7 11 18

14

24 18

111

22

38

8

65

89

27

0

20

40

60

80

100

120

2008 2009 2010 2011


(000)


5% broadband market share at end-2011

Networks: FTTH, Wireless


voice/data


France Telecom – Slovakia

Orange Slovakia FTTH Subs

BB Mkt. Share 4.6% 4.9% 4.9%

25 29

32 37

41 43 45 47 49 49 50 51

55

62

10

20

30

40

50

60

70

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2(000)

2009 2010 2011 2012

57.5 48.7 44.5 44.4

9.0

7.8 4.2 9.1

3.4

4.6 4.9

4.9

0

20

40

60

80

2008 2009 2010 2011

Slovak Telekom UPC Orange

(%)

Slovakia - Major ISPs by Market Share

21.4% FTTH market

share at end-2011


France Telecom - Slovakia: FTTH Services

FTTH 3 play launched in 2007, up to 100 mbps

FTTH deployed to supplement wireless network, enable 4 play to

compete with Incumbent‘s DSL and UPC‘s cable services

Access to Incumbent’s network is very expensive

FTTH Network Coverage – 20% (<400,000) of HHs as of Sept. 2012

Launched DSL services in late 2011 over Incumbent’s network (access

to over 80% of HHs)

FTTH Take up rate – over 12%


France Telecom - Slovakia : FTTH Marketing & Pricing

FTTH is available as solo or 3 play package

ADSL is available as solo or bundled with home phone

FTTH is prices nearly as low as ADSL (€15 vs.

€12, respectively)

Fibre 3 Play costs only 30% more than solo Fibre

broadband

IPTV is available only over FTTH


France Telecom – Other Markets

Spain

FT provides DSL services over Incumbent’s local loop

Cheaper alternative to Incumbent’s services

FTTH and cable competition heating up

June 2012: €300 mln investment in FTTH over 4 years to cover 1.5 mln premises

Poland

FT operates nationwide DSL network, focus on VDSL

Historically: fragmented cable and LAN market, little DSL competition

Small FTTH market

Cable, telco consolidation, nascent Fibre FT losing subs to competition

UK, Belgium, Egypt, Tunisia

FT provides DSL services over Incumbent’s local loop

Cheaper alternative to Incumbents’ services

Little or no FTTH

Egypt, Tunisia – no cable broadband

xDSL services

BUT: FTTH is gradually being rolled out in hypercompetitive markets

Other AMEA countries (Jordan,

Kenya, etc)

FT operates its own DSL network

Little competition

Little or no FTTH

Virtually no cable broadband


TeliaSonera

Present in 17 countries; Over 180 million customers at September 2012.

Fixed Broadband Services – Sweden, Finland, Norway, Denmark, Lithuania, Latvia,

Estonia.

Incumbent operator – Sweden, Finland, Lithuania, Estonia, (Latvia – 49%)

Alternative operator - Norway, Denmark

Commercial FTTH Services (residential) – all markets where fixed broadband is offered,

exc. Denmark (HFC)

Uses strong local brands:

Global Presence:


TeliaSonera – Sweden, Finland

1,737 1,666 1,591 1,515

563 579 596 612

590 687 794 906

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2008 2009 2010 2011

DSL Cable FTTH

(000)

Sweden - Major Fixed Broadband

Platforms

Sweden - Broadband Net Adds by

Platform

DSL 59.8% 56.6% 53.1% 49.7%

FTTH 20.3% 23.3% 26.5% 29.7%

21

-71 -75 -76

27 16 17 16

81 97

107 112

-100

-50

0

50

100

150

2008 2009 2010 2011

DSL Cable FTTH

(000)

Largest Markets




voice/data


BB Mkt. Share 38.2% 38.3% 37.7%

TeliaSonera - Sweden

1,132 1,132 1,132 1,125

1,130 1,131 1,124

1,129 1,135 1,134

1,138

1,149 1,156 1,159

1,100

1,120

1,140

1,160

1,180

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2(000)

Telia Sweden - Total Broadband Subs

2009 2010 2011 2012

38.6 38.7 38.9 39.5

17.4 18.0 18.5 19.0

21.4 19.9 18.5 18.4

0

15

30

45

60

75

90

2008 2009 2010 2011

TeliaSonera ComHem Telenor

(%)

Sweden - Major ISPs by Market Share

420,000 FTTH Homes Passed Q2 2012


TeliaSonera - Finland

1,277 1,205 1,132 1,144

215 223

241 264

98 100 159

180

0

300

600

900

1,200

1,500

1,800

2008 2009 2010 2011

DSL Cable FTTH(000)

Major Fixed Broadband Platforms Broadband Net Adds by Platform

DSL 60.9% 77.0% 72.6% 71.2%

-38

-72 -73

13

5

8 18 23 21

2

59

21

-100

-80

-60

-40

-20

0

20

40

60

80

2008 2009 2010 2011

DSL Cable FTTH(000)

http://www.1000flags.co.uk/ekmps/shops/1000flagsuk/images/finland-flag-button-pin-badge-6496-p.png


TeliaSonera - Finland

TeliaSonera Finland Total Broadband Subs

BB Mkt. Share 21.8% 22.7% 23.4%

472

465 460 458 458 459 458

476

470 470

484

491 494 493

450

460

470

480

490

500

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2(000)

640,000 FTTH Homes Passed Q2 2012

2009 2010 2011 2012

22.8 21.8 22.7 23.4

9.1 8.6 13.9

23.7

23.9 22.3 22.3

18.6

0

20

40

60

80

2008 2009 2010 2011

TeliaSonera DNA Elisa

(%)

Finland - Major ISPs – Market Share

http://www.1000flags.co.uk/ekmps/shops/1000flagsuk/images/finland-flag-button-pin-badge-6496-p.png


TeliaSonera – Sweden, Finland: FTTH Services

Mixed technology NGN strategy:

FTTH, VDSL, ADSL

Partnerships with muni/utility & property owners

Residents pay for Fibre installation or self-install

Response to cable threat, competitive Fibre deployments

Sweden Finland

•Telia leader in broadband

• But: accounts for <25% of Fibre

HP in Sweden (Q2 2012)

• Unbundling obligations

•Target - 1 mln HHs by 2014

• Gov. target: 100Mbps speeds for

90% of HHs by 2020

• Sonera #2 in broadband

• Early Fibre investment

• >550,000 HH covered in main cities in 2011

(30% of HHs)

• Sonera accounts for 95% of Fibre HP in

Finland (Q2 2012)

• Gov. target: 100 Mbps to everyone by end-

2015


TeliaSonera-Sweden and Finland: FTTH Marketing & Pricing

FTTH services are marketed as solo or bundled services

Service offers vary depending on type of subscriber: direct or housing assoc.

Limited Video options on xDSL

Sweden: HD available only to HH close to exchange

Finland: IPTV is not offered on ADSL below 24Mbps

FTTH is cheaper than or same price as comparable DSL services

Low-speed FTTH services priced cheaper than comparable cable services

Sweden Finland

• FTTH: 10Mbps – 1000 Mbps

• xDSL: 2-60Mbps

• 30 Mbps DSL is 14% more expensive than

100/10 Mbps FTTH service

• Fibre-based 3 play is at least 2% cheaper

(start at SEK 428) than DSL-based (start at

SEK 439)

• Telia’s 100Mbps FTTH pack priced similar

to ConHem HFC 100 Mbps pack

• FTTH – up to 100 Mbps

• ADSL – up to 24 Mbps

• FTTB + LAN (EuroDocsis 3.0) – up to 100

Mbps

• Price is same for all high speed (over 10

Mbps) broadband services

• FTTH is x2 cheaper at 10Mbps than DSL

• Sonera 10Mbps FTTH priced similar to

DNA cable 10Mbps service


TeliaSonera - Lithuania

222 202 187 173

64 52 48 45

155 244 296 343

0

100

200

300

400

500

600

2008 2009 2010 2011

DSL Cable FTTH

(000)

Lithuania - Major Fixed Broadband

Platforms

Lithuania - Broadband Net Adds

by Platform

DSL 41.1% 34.6% 29.9% 26.2%

19

-20 -15 -14

1 -12 -4 -3

65

89

52 47

-40

-20

0

20

40

60

80

100

2008 2009 2010 2011

DSL Cable FTTP

(000)


Networks: xDSL, FTTH

3 Play services – Fixed phone, IPTV, Internet

http://www.1000flags.co.uk/ekmps/shops/1000flagsuk/images/lithuania-flag-button-pin-badge-6498-p.png


TeliaSonera Lithuania

TEO Total Broadband and Fibre Subs

BB Mkt. Share 53.7% 55.3% 56.3%

% of Total Subs 20.0% 30.0% 37.7% 40.0%

% of FTTH Mkt. 25.7% 35.1% 40.9%

305 304 308 313 319 327

335 346 353

358 367 372 374 377

32 42

51 63

74 85

93 104

113 119 131

140 147 151

0

50

100

150

200

200

250

300

350

400

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Total Broadband

FTTH

(000)

2009 2010 2011 2012

TEO - Dominant broadband provider –

56% market share in 2011

Fragmented competition:

LRTC (FWA) – 8.7% share

Cgates (FTTH) – 5.3% share

http://www.1000flags.co.uk/ekmps/shops/1000flagsuk/images/lithuania-flag-button-pin-badge-6498-p.png


TEO LT: FTTH Services

FTTH rollout started in 2007

TEO historically controlled close to 99% of all DSL connections

Telecom monopoly expired in 2003

Fibre deployed as response to cable threat and competitive

Fibre deployments (by telcos and MSOs)

Now available in 100 cities nationwide, speeds up to 300

Mbps

TEO FTTH Network Coverage – about 62% of HHs in Q3 2012

Rapid deployment due to predominance of MDUs and small

country size

FTTH Take up rate – close to 21%

-> 40% of total broadband subs


TEO LT: FTTH Marketing & Pricing

Both xDSL and FTTH available as solo or in 2-3 play

bundles

TEO provides some of the cheapest FTTH services and

bundles in Lithuania

Comparable FTTH services from MSOs are up to 20%

more expensive

Pay-TV programming inferior to MSOs

FTTH is cheaper than DSL services

FTTH and DSL bundles are similarly priced

1 Mbps DSL pack costs as much as 10 Mbps Fibre pack

50Mbps Fibre pack costs as much as 4Mbps DSL pack

10 Mbps Fibre pack is up to 400% cheaper than 8 Mbps

DSL pack or 10 Mbps cable pack

Comparable top-tier DSL and FTTH 3-play services cost

same (but fibre offers x25 faster bb)

Subscribers are encouraged to switch to FTTH


TeliaSonera – Other Markets

Norway

NextGenTel - alternative operator

Small market share

Fibre available in some areas, deployed in partnership with utilities

Utilities lead in Fibre deployments

Estonia

Elion – fixed line incumbent

Leader in FTTH deployments

ADSL – only up to 5 Mbps, FTTH – up to 100 Mbps

5 Mbps ADSL and FTTH priced the same; 12 Mbps DSL priced same as 50

Mbps FTTH

Government investment: Nationwide 100 Mbps FTTH network rollout for 90% of

the population by 2012 and 100% by 2015, developed by an independent entity

comprised of all major telcos

Mix of NGN technologies


Comparison with United States

2011 Market Data:

Broadband Penetration: 68.5%

Cable share: 56.8% - stagnating (56.4% in 2008)

Cable broadband net adds peaked in 2011

Telco Broadband (xDSL+FTTH) share: 39.3% - decreasing (41.5% in 2008)

Telco broadband net adds falling

Wireless broadband – strong gains

Main telcos (4 play):

Main competitors – Cable MSOs (3play)

Cable and Telco 3 play service offers are similar

Wireline: FTTH, ADSL

FTTH – Greenfield + ADSL upgrade in

main cities

FTTH expansion is effectively over exc.

previous contractual obligations

77% of telco FTTH deployments (2011)

But: FiOS accounts for <6% of US

broadband subs (2011)

Wireline: FTTH, FTTN,

ADSL

FTTH – Greenfield only


Verizon FTTH Services

FTTH up to 300 Mbps

FiOS achieved 37% service take-up rate in Q3 2012

60% of Wireline Broadband subs are on FTTH

87% of FTTH broadband subs take IPTV

Consumer ARPU: upwards of US$100 in 2012

Little or no telco (xDSL or Fibre) competition

Targeted deployments, DSL shut off in fibre footprint

Leverage wireless network to offer value-added/TV

Everywhere services

Higher speeds than cable

Able to offer IPTV on Fibre to compete with MSOs

Able to match or undercut cable prices in some areas

Heavy marketing campaigns criticizing cable

Fibre is ‘cool’, ‘modern’, ‘the future’ (and nobody

else has it!)

Consumer dissatisfaction with cable

WHY AND HOW?

FiOS bb solo is 130% more

expensive than DSL

FiOS 2-play 43% more expensive

than DSL


Strategy Comparisons

Telefónica FT-Orange TeliaSonera Verizon

Geographic

Reach Spain: Nationwide

Lat. Am.: Cherry-picked

Nationwide Nationwide

Main cities, quite selective

Brands Several established Global brand Local brands Distinct brand for Fibre

Bundling • 1-4 play

• Large savings w. bundles

• ES: HDTV only on fibre

•Lat.Am: IPTV only on fibre

•FR: 3-4 play

•SK: 1-4 play

• FR: HD, 3DTV only

on Fibre

•SK: IPTV only on fibre

•1- 4 play

• Limited Video

options on xDSL

•1-4 play

•Large savings w. bundles

•IPTV only on fibre

Pricing •Fibre usually available at highest

speeds only

•More expensive than DSL (20-

30%)

• Cheaper (up to 30%) or

comparable to than HFC

• Premium service

• Fibre available only

at highest speed

• Priced similar or

cheaper than DSL

• Priced similar to HFC

• Fibre available at all

speed levels

• Priced similar or

cheaper than DSL

• Low-speed fibre

cheaper than cable

• Fibre available at all speed

levels

• More expensive than DSL

(130% more on solo, 43%

on 2 play)

• Premium service

Marketing • Better alternative to cable

• Price competition w. high-end

cable

• Price competition • Price competition •Better alternative to cable

• Price competition w. high-

end cable

Target

Consumer • HHs who need speed

• Wealthy HHs (esp. Lat.Am)

Everyone Everyone • HHs who need speed

• HHs unhappy w. cable

DSL -> FTTH

migration Spain: DSL decreasing

Lat.Am: DSL – primary business

DSL still growing

DSL subs decreasing DSL subs decreasing

No single global strategy

Telia comes close with Fibre deployments in most markets

Global Telcos leverage their wireless networks

Integration of Video strategy with Fibre

Fibre priced to make bundles more attractive


Factors Determining FTTH Deployments

Factors: Regulation Economy Market Size Competition Role of Public

Bodies

Promote

Fibre • DSL LLU ->

incumbent

deployments

• No functioning

LLU -> altnet

deployments

• High

purchasing

power, GDP

• Dense

population

• Smaller size

• Strong

cable market

• Competitive

Fibre

deployments

• National BB

Strategies

• Public-Private

Partnerships

• Regional dev.

Funds

Inhibit

Fibre • Fibre LLU

• Telco TV ban

• Uncertain reg.

• Large

Income

disparity

• Small

middle class

• Low

urbanization

• Predominance

of single homes

• No/little

cable, fibre

• No public

incentives

Fibre service take-up increases with time

Cherry-picked, targeted deployments usually have higher take-up rates

45

40 Ragsdale Drive

Suite 250

Monterey, California

USA 93940

Email [email protected]

www.snlkagan.com

Thank you & Q&A

mailto:[email protected]

http://www.snlkagan.com/

ftth council europe webinar 20 november 2012

Documents

ftth services ftth services

snl kagan estimates

ftth subs2

division of snl financial

play ftth bundles

phone line ftth

telefnica spain

ftth marketing pricing