BROADBAND ON DEMAND Cable‘s 2020 Vision THE DIGITAL AGENDA Realizing the targets The European Cable industry … … already today covers 50% of EU households with 10 Mbps plus … by 2013 will cover 51% of EU households with speeds of 100 Mbps and more … will provide 100 Mbps services to a minimum of 27m, best case 51m subscribers by 2020 … reaches out to small and medium enterprises with ultra high speed offers … forces the competition to accelerate their NGA investments … is a major contributor to realizing the Digital Agenda broadband targets Source: Solon EUROPEAN CABLE Basic Facts Total EU households 203mn Television subs: 60.9mn analogue 35.6mn Cable homes passed: 112mn digital 25.3mn Cable homes served: 67mn Broadband subs: 23.2mn Revenues €18.8bn Telephony subs: 17.9mn Invested last 5 years €20 bn Source: HIS Screen Digest, year end 2010, EU-27 DAVID AND GOLIATH Why Cable Consolidation Is Needed Telco Incumbents Total Cable Industry € Bn 20101) € Bn 2010 D 27.3 8:1 3.5 F 23.3 14:1 1.6 E 19.7 10:1 1.9 UK 18.0 2,3) 7:1 2.5 3) NL 9.3 4:1 2.4 B 5.0 4:1 1.3 AT 2.4 4:1 0.6 IR 1.8 7:1 0.3 2000 2010 Note: Revenues include fixed telephony, mobile, telephony, internet access, and TV distribution 27 telcos1) Figures not fully consistent due to different revenue categories and 22 reporting telcos periods; 2) Exchange rates yearly average accounting period 10000Sources: Screen cable Digest, Annual Reports 2010 (where available), oanda.com, 7000 Booz & Companycable analysis BROADBAND TECHNOLOGIES Moving towards NGA Cable Incumbent Optical Coax / ADSL fibres Copper Gradual evolution Gradual evolution Typical Speed Levels Fiber to the Node (FTTN) . Cable / HFC >300 metres VDSL D 2.0: 32 Mbps Fiber to the D 3.0: 400 Mbps Today Curb (FTTC) . DSL / FTTB / FTTH <300 metres ADSL2+: 25 Mbps FTTB / FTTH FTTB / FTTH Fiber to the VDSL: 50 Mbps Basement FTTB: 200 Mbps (FTTB) FTTH: >500 Mbps Fiber to the Home (FTTH) Source: Solon BROADBAND COVERAGE Cable brings high speed to the home Cable coverage throughout Europe . Digital Agenda Target: m, households within EU-27 100% of citizens reached with least 30 Total EU households: 203m Mbps Digital Agenda Target (2020) Out of . Contribution of Cable cable % of Digital Agenda Target reach Homes upgraded to 2010: 41% 118 112 105 …30 Mbps plus 2013: 51% 112 …100 Mbps plus 101 103 2020: 55% 83 . Gap to be filled with technology mix: LTE, WiFi, Sat, greenfield Homes reached by cable Fibre and HFC Source: Solon Cable operators are leapfrogging DSL with DOCSIS 3.0 – Already now Cable 2-6 times faster than best Incumbent offering CABLE’S LEAD ON SPEED WILL FORCE TELECOM INCUMBENTS TO INVEST IN NGA Bandwidth of Broadband Infrastructures vs. Requirements of Applications Illustrative, Mbps Source: Solon ULTRA HIGH SPEED 100 Mbps will be cable standard Distribution of speed levels . 2010: 73% of cable users % of cable subscribers with respective maximum downstream bandwidth with > 10 Mbps, vs. 29% Low speed of overall broadband subs (<10 Mbps) . 2020: Majority with cable Medium speed broadband subscribers (≥10 Mbps) with > 100 Mbps High speed (≥30 Mbps) . By building in speed headroom, cable drives customers up the Ultra high speed broadband value chain (>100 Mbps) . This spurs innovation and stimulates counter investments by competitors Source: Solon EUROPEAN CABLE Speed Facts Cable Europa (ONO) Spain 100 Mb/s Cabovisao Portugal 120 Mb/s Canal Digital Norway 100 Mb/s Com Hem Sweden 200 Mb/s 1.2 and 1.4 Gb trials Get Norway 200 Mb/s Kabel Baden Würtemberg Germany 100 Mb/s in Hamburg and Kabel Deutschland Germany 100 Mb/s Zurich Numericable France 100 Mb/s Sanoma Television Welho Finland 200 Mb/s Tele Columbus Germany 100 Mb/s Telenet Belgium 100 Mb/s Liberty Global 120 Mb/s UPC Austria Austria 100 Mb/s UPC Czech Republic Czech Republic 100 Mb/s Unitymedia Germany 128 Mb/s UPC Hungary Hungary 120 Mb/s UPC Ireland Ireland 100 Mb/s UPC Netherlands Netherlands 120 Mb/s UPC Poland Poland 120 Mb/s UPC Romania *Romania 100 Mb/s UPC Slovak Republic Slovak Republic 120 Mb/s UPC Cablecom Switzerland Switzerland 100 Mb/s Virgin Media UK 100 Mb/s YouSee Denmark 50 Mb/s Ziggo Netherlands 120 Mb/s Zon Multimedia Portugal 200 Mb/s *100 Mbps service launched in Cluj, Romania Next Battlefield: Video Driven and Hungry for Bandwidth Cable Evolution – Competition Intensity of Competition 1995 2000 2005 2009/2010 Cable Evolution DSL Service Infrastructure Over-The-Top Competition/ LLU Competition / IP Competition Convergence Cable Evolution – Consumer Demand Intensity of Competition 1995 2000 2005 2010 Cable Evolution Technology defined Convergence and customer Brand, lifestyle, convenience care consumer decisions consumer decisions consumer decisions MAIN POLICY THEMES . Cable leads NGA deployment, forcing Telcos to invest at no cost to the taxpayer . Support infrastructure competition, reducing focus on access regulation and service competition . Disciplined use of public funds, in unserved areas only . Support cable in reaching critical size .