Fibre rollout project examples –

Lyse and Altibox partners

Eirik Gundegjerde CEO Lyse Tele AS Content

„ Lyse, moving towards multiservice approach

„ The Market

„ Choosing infrastructure

„ Sales strategy

„ Network Buildout

„ Geographical coverage

„ Developing services

„ Key figures

„ Conclusions The Market & infrastructure Lyses strategic position

„ Providing broadband services to regional customers

„ Going for a lasting position in this emerging market, and offering high quality competitive services

„ The infrastructure evaluation 10000 0

3 5 9 „ The fiber choice r -10000År 1 År Å År 7 År Serie1

„ Economical consequences -20000

-30000 „ What about the services?

„ No single service could give us sufficient ARPU to finance this infrastructure

„ We decided on FttH and a full set of 3P services The competition before and after FttH

„ Coax: Get, Telenor

„ Satelite: Viasat, Telenor

„ xDSL: Telenor and others

„ DTT: Riks-TV

„ Mobile (HSPA ++): Telenor, Netcom, ICE, NwN

The customer choice: several infrastructures and several services Key Question: How to introduce a new infrastructure and compete with the excisting vendors? Sales strategy Sell, then build

„ Targeting residential areas in Stavanger region

„ Customers already signed up on ISDN, DSL and cable- TV/satellite-TV from other vendors.

„ How to reach the penetration goals?

„ Detached houses, slightly above medium income.

„ 42% signed up for triple play during our 4 week test sales.

„ Our sales pitch was one-stop- shopping

„ Future proofing the home. Cover the households needs

„ From a marketing point of view, we address the household with our bundle.

„ Next generation infrastructure

„ Highspeed internet

„ ”Magic” TV

„ Lots of convenience

„ And some discounted services like fixed line telephony

„ Next to 100% hitrate if there are teenagers in the household Our offering

„IPTV „ SD and HD, 32-130 channels „ VoD, +400 films, major studios „ PoD, local news etc „ PVR „ Games, webcams etc. „Internet access „ 10 to 100Mbps symmetrical „VoIP „ 2 fixed lines (alarm/fax compatible) „ Multiple phone services „ Free calls in the Nordic countries „One contract, vendor, invoice, call center. The process ….

„ Analyse area

„ Sell

„ Build

„ Deploy services 80% are doing their ”homework” The Network Buildout The buildout –

Access Metro SME Core Network Network Network

Residential POI

Multitennant Services

10 GB ethernet 10/100Mb ethernet Gigabit ethernet Fiber Multiple Gbps Regional Metro & access network

„ Ethernet all the way

„ Capasity, latency, jitter

„ Applications

„ Fully symetrical services

„ Standard 100/100 Mbps

„ Easily upgradeble

„ Network Neutrality Geographical Coverage Regional – National - International

„ Our operation are very regional, with 80k subscribers at maximum in the Stavanger area

„ The services can scale to a mill subscribers without any problem

„ We decided to use a franchise model, and have franchisees sell and build in all other regions than our home market.

„ Several utility companies, municipalities and private companies has signed up with the same model

„ Today we have 33 franchisees that build in 186 counties in Norway, and 1 that builds in 9 counties in Denmark.

„ Total customer potential Lyse and Partners is over 1 mill subscribers The Core structure

„ 10Gbps ring in South-Norway

„ 2,5Gbps ring in Mid-Norway

„ 2,5Gbps ring Stockholm & Copenhagen

„ 1Gbps ring in Northern Norway

Metro network POI Core Main links Core „ Building FttH based on „ Altibox Franchisees Altibox in red areas Developing Services Whats this about?

„ ”Fiber to the people”

„ Minimum capex and aquisition cost

„ Maximum uptake and service penetration

„ Volume and reduced opex

„ Long term investment

„ How to deal with competition?

„ Service innovation – you simply have to be best! From Triple to Multiplay…..

TV- Internet- Telephone- Mobile- Alarm- Gaming- AMR- Sensor- services services services services services services services services

IP

New Services – Competition – Convergence Services – the big picture

Regional services

Converged Multi-play services services

Intra services TV-services

51662233 (farmor) ringer Avvis Talepost Altibox subscribers can choose

Basispakke 1: Viasat Gull Basispakke 2: Altibox

Her ønsker jeg å Oppdatere med Flervalgspakken vår Regional Services

„ Examples from this region Popular services on your cellular

Manage your PVR through your cell phone Security & surveilance Figures Customer focus and sales methodology

„ Before selling

„ Segmentation & field studies before opening a new market

„ The right customers

„ The right area due to cost

„ Average CAPEX is 2.600 Euro, mostly civil works

„ Average sales cost is 150 Euro

„ Totalt investments 200 mill Euro

„ Average penetration 60%

„ Among these we contract:

„ 100% Internet (mandatory)

„ 80% IPTV

„ 80% Telephone The main benefits of multi-play:

„ Market penetration where offered; 60%

„ Churn: <1%

„ Average monthly ARPU pre VAT: 90 Euro and increasing

„ 115.000 subscribers at present

„ Delivering 700 – 1000 new subscribers per week

„ 135.000 Set-Top-Boxes

„ Bandwidth consumption: next to 100 Mbps per High- usage family Conclusions Package as a benefit

„ When doing initial market research and concept, we tested several levels of bundling

„ In our market, a majority would prefer single supplier of a bundled package of installation, services and billing

„ We concealed the fact that this service bundle was Internet, IPTV, and IP-telephony

„ Spesialized on providing regional content

„ We still focus on the content and user experience, and the fact that fiber is a high capacity longterm solution

„ Service innovation Economics

„ Sustainable economics:

„ Number of choosable services are high

„ Product penetration 10000 (100/80/80) Æ high ARPU 0 „ Area penetration > 60% 1 5 9 r 3 r 7 -10000År Å År Å År Serie1 „ Same services, technology and topology all over means -20000 lower OPEX -30000 „ Time-to-market for services

„ IP – facilitates new service bundles and convergence

„ Bandwidth & symmetrics

„ Competes easily with incumbants and others Future Goals

„ The Challenger to the Incumbent

60,00 % „ End 2012 50,00 % „ 400k subscribers 40,00 % „ 50 Franchisees 2q05 30,00 % 2q06 2q07 20,00 %

„ Threaths 10,00 %

„ Content owners puts exclusive 0,00 % r o a e n ox TM iv dr NGT Get b BKK n Tele2 lti A rights to popular content Tele Ventelo A Eids

„ Regulation models that will decrease customer uptake and economics in the first fase The key question

„ How to ensure that fiber infrastructure are beeing built?

„ Commercial models

„ Competition between several infrastructurs providing ”same” services

„ Several service vendors competes on the FttH infrastructure as well

„ Our experience from ”open” networks

„ A rich uncle

„ Low penetration of services

„ In the future: Internet pipe will serve most services The customer choice …

„ Why did they sign up, and what makes them stay and pay?

„ Competitive

„ New services - innovation

„ Single point of contact

„ Fiber and future proof technology Thank you for your attention!