PRESS RELEASE

CANAL+ Group Launches ADSL Offer Combining Television, High-Speed Internet Access and Telephone Service in Paris and Marseille
A new brand, CANALSATDSL, and CANAL+ Numrique Nearly 80 television channels, half of them exclusive A simple, affordable offering combining television, high-speed Internet access and telephone service Start-up in Marseille on March 22 Rollout in the Paris region on May 17 with two operators, France Telecom and neuf telecom
(Paris March 10, 2004) CANAL+ Group today presented and demonstrated its new CANALSATDSL television via ADSL offer at the Salon de la Rception Numrique digital broadcasting trade show in Paris. The highly attractive offer combining television, high-speed Internet access and telephone service will be launched in the coming weeks in Marseille and Paris. Beginning on March 22, Marseille residents will benefit from a triple play offer, including a package of pay-TV channels, high-speed Internet access and telephone service, designed for simultaneous use and accessible through a single conventional telephone line. CANAL+ Groups offer will provide city centers with nearly 80 digitally broadcast television channels, half of which are exclusive, including the different versions of CANAL+, SPORT+, Cincinma, Plante, MCM, Canal J and the four Disney channels. Thanks to the partnership signed with neuf telecom, Marseille residents will benefit from a particularly attractive introductory offer, combining television, high-speed, 512 Kbps Internet access and five hours a month of free local phone service for one year, starting at 25.90 a month.
Subscriptions to the CANAL+ Numrique and CANALSATDSL offers are also available without the Internet and telephone services. CANALSATDSL will be launched for a starting price of 11.00 a month and CANAL+ Numrique, including CANAL+, CANAL+ Cinma, CANAL+ Sport, CANAL+ Confort and CANAL+ 16:9, will be offered via ADSL for 20.00 a month. Residents of Marseille will be able to subscribe through the CANAL+ Group network of authorized distributors, who will supply them with an ADSL modem and a set-top box developed by CANAL+ Group and Thomson. On May 17, CANAL+ Numrique and CANALSATDSL will be rolled out in Paris and the greater Paris area, partnering with two operators, France Telecom and neuf telecom. The triple play offer introduced in the Paris region with neuf telecom will be the same as in Marseille. Subscribers to France Telecoms Ma LigneTV ADSL television services will also benefit from CANAL+ Numrique and the CANALSATDSL package under similar terms. CANAL+ Group will continue deployment of its ADSL offers in other French cities this year, notably in Lyon, Toulouse, Nice and Strasbourg. In all, three million French households will have access to CANAL+ Numrique and CANALSATDSL via ADSL by the end of the year. In unveiling its ADSL television offer today, CANAL+ Group is reaffirming its commitment to being a driving force in this new distribution system. It also demonstrates the effectiveness and benefits of the multi-operator strategy chosen from the outset. France Telecom is a major telecom operator in France and, with Wanadoo, undisputedly the leading Internet access provider. Wanadoo subscribers represent an important potential market for developing television using this new technological solution. Neuf telecom and Cegetel, also partner to CANAL+ Group, are fast-growing newcomers to the ADSL market. In particular, the possibility of deploying a highly attractive triple play offer with neuf telecom represents an advantage for the development of television via ADSL.
Communications Department Laurence Gallot Jean-Louis Erneux Marine Lemonnier +33 (0)22 +33 (0)66 +33 (0)96

UltraBroadband Overview

UltraBroadband Seminar

Paris, 3 April 2008

Roland MONTAGNE Head of Broadband Practice r.montagne@idate.org + 04 80

Agenda

Consumers needs in the Future FTTH worldwide Status & Strategy
Leaders: US & Asia European detailed Situation

FTTN+VDSL

FTTH: Key parameters Countries

FTTH Business Model

General Structure of the Model FTTH CAPEX variables

FTTH French Case

Business model End 2007 Picture
Conclusion Dynamics for FTTH
Consumers needs in the Future
FTTH: What will be the drivers? Usages
Residential market usages A few specific applications needing more Bandwidth: HDTV, video services, blogs, personal content exchanges, A growth of the needs concerning Bandwidth but also Symmetry this will be driven by simultaneous usages in the home that have already started with Triple Play
Minimum bandwidth requirements
Upstream speed Downstream speed Video Phones Online games VoIP
TVSD in MPEG 4 Music, blogs, e-commerce, e-learning VOD TVHD in MPEG 4

10 Mbps

5 Mbps

Source: IDATE

France Telecom Service Strategy

Strategy

By Addressing the Increasing Demand for Convergent Services (neuf cegetel)

Neuf Music

Increasing Demand for Convergent Services (Fixed+ Web Services, Mobile, Media)
Providing services that are usually "local" from inside the network
E.g. iPBX, software suite in Neuf Pass, Neuf Giga storage, Neuf Scurit
Leading channels added to Neuf TV HD
Distributing rich media content (video, music, software, games) with interactivity & personalization
First free, legal and unlimited music download offer Neuf Music Premium channels in Neuf TV HD, Neuf TV Slection & Neuf TV Grand Spectacle On-line game Exalight
Giving access to "fixed" services on mobile handsets, for a low price
IP protocol well suited to providing cheap voice and mobile media services TWINTM phone with unlimited voice, emails, web browsing, access to Neuf TV, Neuf Music, Neuf Giga, etc.

New TWIN handset

HTC S710 Hybrid GPRS/WiFi Windows mobile 6 Fully multimedia Improved WiFi authentication
FTTH: Leaders Status & Strategies
FTTH: Worldwide Status & Strategies: leaders

Japan: the FTTH leader

More new FTTH/B subscribers than new DSL subscribers since April 2005
10.5 Million FTTH/B subscribers at 3Q07 and still around new FTTH subscribers each quarter (+ 818 K during 3Q 2008) At 3Q07 total Broadband subscribers reached 27.8 Million with DSL subscribers counting now less than 50% (48.5%) while FTTH is representing 38% Attractive prices, closing the gap with ADSL tariffs Governments proactive approach to FTTH deployment: 30 Million FTTH subscribers in 2010 as a ambitious objectivereality will be more 20 Million FTTH subscribers But.
- A few IPTV subscribers in Japan - Rumors from MIC to force NTT to open up its FTTH network at advantage prices for competitors
USA: FTTH is the unique solution for RBOCs
Power of Cable operators: Time Warner, Comcast, CableVision launching 30 or 50 Mbps offers
At end 2Q07 Verizon has signed up its 1 millionth FiOS FTTH subscriber and has almost 500,000 FiOS TV subscribers!
During 3Q07, Verizons FTTH net additions exceeded DSL by more than 4 times
At end 3Q07 Verizon has passed 8.5 M Homes, counts 1.3 Million FTTH subscribers and among them 717,000 FiOS TV subscribers AT&T (more FTTN oriented) and Verizon launched Fibre access for delivering HDTV & Triple Play Churn is very low for FiOS TV Subscribers

FTTH: European situation

Study Background for the FTTH Council Europe Objectives, available results

Background of the Study

IDATE has been commissioned by the FTTH Council Europe to provide a comprehensive overview of FTTH deployments in Europe (EU 27 + Norway, Iceland, Switzerland & Andorra) at end 2007 (4th edition) Methodology used - Desk research - Direct contacts with FTTH players (questionnaires, phone interviews) - Information exchange with FTTH Council Europe members - Direct contacts with IDATEs partners in several European countries Objectives: to provide a complete summary of the status of FTTx in Europe - Identify new projects - Characterize each project: organization initiating the project, Key parameters& Figures (Homes and Buildings passed), Technical parameters, Financing & Business model - We distinguished FTTH/FTTB and FTTN+VDSL or FTTLA

Available results

Telekom Slovenije

201 projects described

Qualitative
Identification Operator/Organisation
Telekom Slovenije is the incumbent operator in Slovenia. Slovenia, situated east of Italy and south of Austria, has a population of 2 million people.

Key parameters

European incumbent operator Telekom Slovenije plans to spend up to 450 million (US$620 million) until 2015 on a fiber-tothe-home (FTTH) rollout in an effort to deliver high-speed access capabilities to 70 percent of households in the small Eastern European country of Slovenia. Telekom Slovenije, which calls its FTTH project F2, plans to spend 50 million ($69 million) in 2007 taking fiber to 50,000 homes in Slovenia's main cities, running new cables through its extant ducts for the initial phase of the rollout. The carrier's total planned capital expenditure budget for the year is 220 million ($303 million), so it is dedicating more than 20 percent of its 2007 capital outlay to F2. By 2015, it plans to have fiber running to about 434,000 homes, or 70 percent of Slovenia's households. This, believes the carrier, will help boost the uptake of bandwidth-hungry services such as IPTV, video on demand (VOD), and interactive gaming. The carrier plans to invest 300 million ($414 million) in F2 by 2010, and 400 million to 450 million ($551 million to $620 million) by 2015.

Figures

Number of Households/Business Units passed 2,500 householes passed (June 2007) 41,000 households passed (end 2007) objective : 100,000 households passed (end 2008) and 300,000 households passed (end 2010) 200 FTTH susbcribers (June 2007) 3,300 FTTH susbcribers (end 2007)

FTTx subscriber base

Quantitative

Technical parameters

December 2007 (1) FTTx subscribers ELLA Kvinnherad Breiband Los Lyse Tromskraft Alta Kraftslag Telenor Halfslund Others (2) Norway (*) Norway (**) na Homes/Buidings passed na 199 500
P2P Ethernet The main vendor beneficiary from the FTTH rollout is Iskratel, which is supplying the Fiber Access version of its SI3000 multiservice access family of products. This is Iskratel's first major FTTH deal. The network model used in the project continues the concept of the IP triple-play-enabled access-network architecture of Telekom Slovenije, based on Iskratels SI3000 MSAP family of access products. Iskratel SI3000 Fiber Access, the chosen CO product for the project, is a member of Iskratels SI3000 MSAP network-access product family and is designed on the same platform (same shelves, central Ethernet switch and management) as the SI3000 DSL Access, which is already widely deployed in the access network of Telekom Slovenije.

FTTH in Europe Overview

FTTH in Europe - Overview: Projects
IDATE has identified 201 FTTx projects in Europe of which 88 are new initiatives since mid 2005
Some significant FTTH/B & VDSL European deployments at end 2007
Countries Denmark France Players EnergiMidt DONG Energy Iliad/free France Telecom/Orange Neuf Cegetel Numericable Reykjavik Energy Fastweb Deutsche Telekom Swisscom Belgacom B2 Lyse KPN Regge Fiber Power utility Power utility Alternative operator Incumbent Alternative operator Cable operator FTTLA & FTTB Power utility Alternative operator Incumbent/VDSL Incumbent/VDSL Incumbent/VDSL Alternative operator Power utility Incumbent/VDSL Civil Engineering

Source: IDATE 15

Home/Building passed (end 2007) 000
Iceland Italy Germany Switzerland Belgium Sweden Norway Netherlands
FTTH in Europe - Overview: Global Figures
End 2007, 1 Million FTTH/B subscribers in the EU 31 and around 4.9 Million Homes Passed A growth of 23% in terms of subscribers and 79% in terms of Homes Passed compared to June 2006
End of 2007, Deutsche Telekom covers 8 millions homes in Germany with FTTN + VDSL compared to 2.9 millions at mid 2006 End 2007 around of 19.2 Million Homes Passed with FTTx including VDSL & FTTLA in Europe and 1.2 million FTTx subscribers
Europe Subscribers mid-2006 end-798
Europe Homes/Buildings passed growth mid-2006 end-2007 2007/207 79% 208%
Total without VDSL, FTTN/C/LA Total FTTx + VDSL + FTTLA
Growth 23% Total without VDSL, FTTN/C/LA 47% Total FTTx +VDSL + FTTLA
FTTH in Europe - Overview: Players
Municipalities and Power utilities continued to initiate FTTx projects in 2007 but significant deployments come now by alternative operators Adding Fastweb (Italy), B2 (Sweden), Illiad/Free & Neuf Cegetel (France) and T2 (Slovenia) FTTH subscribers at end 2007, we reach nearly 50% of the European FTTH subscribers base
Players involved in FTTH/B (Number of players) Incumbents Municipalities / Power Utilities Alternative operators / ISPs Housing companies & Other June 7,1% 78 69,0% 12 10,6% 15 13,3%
December 8,5% 123 61,2% 43 21,4% 18 9,0%
Open Network Models are often chosen by Municipalities
FTTH in Europe: Open Access Model - Sweden
Familje Bostader: Housing Company in Stockholm
Exemple of Open Network Business Model: Familje Bostader
6 $ /month OPTICAL FIBER NETWORK
PRICES INCL. VAT ~36 $ /month (SP) For Internet access

TENANT STOKAB

~21 $ /month (ISP) SERVICE PROV. HOUSE OWNER

Com.operator

~ 3 $ /tenant/month
~7 $ /paying customer/month

Source: IDATE - FB

Europes FTTH leaders
FTTH/B subscribers in Europe by country
Evolution of FTTH/B subscribers in Europe (1)

350 000

300 000

250 000

200 000
June 2005 June 2006 December 2007

150 000

100 000

50 000

or w ay

en m ar

Fi nl an

(1) * **

Here FTTx means Fiber-to-the-Home or Fiber-to-the-Building or Fiber-to-the-Office or Fiber-to-the-Dormitory Excluding VDSL / VDSL2, FTTC, FTTN deployments by incumbents Source: IDATE Excluding FTTLA deployments
FTTH/B Home Passed in Europe by country
Evolution FTTH/B Homes Passed in Europe (1)

500 000

Po rt ug

Li th ua

Here FTTx means Fiber-to-the-Home or Fiber-to-the-Building or Fiber-to-the-Office or Fiber-to-the-Dormitory Excluding VDSL / VDSL2, FTTC, FTTN deployments by incumbents Excluding FTTLA deployments
FTTH leadership in Europe: Technologies
Technical solutions: PON vs E-P2P vs AON

Source: Alcatel Lucent

Technical architecture of European FTTx deployments: at end 2007 Ethernet still dominates PON
Majority of the FTTH rollouts in the Nordics & the Netherlands Significant projects based on Ethernet like Iliad/Free in France In Eastern Europe, Telekom Slovenia also selected Ethernet
But PON selected for several major projects is now deployed in Europe
in Spain, the government of Asturias has chosen an Open Access Network GPON for its infrastructure (Homes Passed) EnergiMidt, a Danish power utility has also selected a BPON/GPON technology (Homes Passed). Also in Denmark SEF is deploying EPON (Homes Passed) France Telecom after testing FTTH / GPON since June 2006, is now deploying (Homes Passed) neuf cegetel in France is deploying both technologies: Ethernet for Paris & GPON elsewhere (Homes Passed) Telenor, Telefonica have selected GPON recently (in a mixed VDSL2 architecture)

Key points and FTTH Dynamics for Europe
Key points: FTTx in Europe
The panorama of FTTx deployments in Europe at end 2007 shows that the FTTH market in Europe continues to grow
Especially in terms of Homes Passed (+79%) reaching around 5 million Subscribers shows a +23% growth but are concentrated in 5 countries
Dynamism of countries like Norway (FTTH subscribers x 2.5 in 18 months) Involvement of 4 leading Broadband players in France in deploying FTTH/B and key role played by the Government and ARCEP Dynamic Eastern Europe countries like Slovenia (2 players involved), Slovakia, Czech Republic and Poland

Nevertheless

With a little more than 1 million FTTH/B subscribers at end 2007, Europe is still largely lagging behind the US (2 million FTTH subscribers) and Japan (11 million FTTH/B subscribers) Strong Barriers remains in Europe - Facilitate access to MDU for operators, - Mutualise Civil Engineering costs - The Business Case of FTTH outside Urban and Suburban areas? - Regulation: what ex ante remedies EU will propose? Role of the European Telecom Market Authority?

FTTH Dynamics for Europe

We have seen encouraging signs in 2007 for the Future of FTTH in Europe
In major European countries like Germany where three major City Networks announced ambitious FTTH rollouts (Munich, Hamburg, Cologne) In the UK where Government may intervene to promote the deployment of FTTH in front of the reluctance of the main British players
Large Incumbents announcing that they will rollout FTTH in the near Future (Telefonica, Telenor) and others that first choose to deploy VDSL, are now launching FTTH deployments (KPN) or considering launches
Infrastructure companies confirmed that they will also play a leading role in the future of FTTH deployments: ReggeFiber in the Netherlands or H20 networks in the UK Finally, 2007 confirmed the leading role played by Municipalities and Utilities especially in the Nordics and Benelux through Open Access Model. Local Bodies will be also be key players in order to mutualise civil engineering related costs
FTTH vs VDSL : Key parameters - Countries
FTTx Technology choice in France? Copper Loop
Copper Local Loop structure in France

PSTN subscribers

Street cabinet

CP (7 to 14 pairs)

12,500 in France

120,000 in France

Source: IDATE Source: IDATE
Subscribers (d) average distance from SC: 700 to 800 m; 300 m in
Germany; 420 m in the UK Subscribers (d+d) average distance from the local exchange:
29% of lines at less than 1 Km 39% of lines at less than 1.5 Km 52% of lines at less than 2 Km
Performances of the French copper network
If all the Central Office (CO) are equipped with ADSL2+: 50% of the population eligible at 10 Mbps If all the CO are equipped with VDSL2: less than 10% of the population eligible at 50 Mbps If all the Street Cabinet (SC) are equipped with VDSL2: less than 20% of the population eligible at 50 Mbps
The SC is not the right place of arrival for Fibre in a VDSL approach in France; the Curb or the Building is better
FTTH vs VDSL Italian VDSL particularity

Source: Telecom Italia

Average copper loop length boost VDSL potential in Italy
International benchmark Dwelling Type in Europe
In Europe, countries like Spain, Italy, Germany are well positioned for FTTH It will be more expansive to deploy FTTH in the UK for example

FTTx Business Model

General structure of the model
Interconnection, Backhaul, Unbundling

Content purchases

CAPEX Civil engineering, cable installation Final connections Electronic equipment
Revenue Retail (number of subscriber x

Wholesale

OPEX Marketing costs Network operations External purchases

Amortisation

Operating profit

FTTH CAPEX variables

Technologies
Costs of different FTTH solutions are close FTTN + VDSL can present substantial savings (up to 70%) due to already existing copper sub-loop
Cost per connected outlet
by architectural type in the urban context Greenfield deployment (in ) Source: IDATE
200 GPON civil engineering and cables E-P2P hosting and netw ork equipment VDSL subscriber connection

Dwelling-unit type

Density
Civil engineering and cable costs
based on population density for GPON technology ( per outlet) Source : IDATE

12 000

16 000

18 000

20 000

22 000

10 000

Vertical structures

1400 1200
based on average number of apartments per building for GPON technology ( per outlet) Source: IDATE

14 000

24 000
FTTH cost model: French case
FTTH cost model: French case Base option
Base option : Greenfield deployments main cities then residential areas
Amortization of network component Number of Homes + SME/SoHo (million units)
Paris Lyon Others main cities (downtown) (1) Suburban buildings Residential areas Total (2) 1.100 0.210 1.200 9.900 9.400 21.810
(1) Cities of more than 200 K inhabitants (2) Total for France: 30 million units
: GPON and Ethernet P2P Deployment : 2006 to 2015 for a coverage of 40% of the population In 2015 : 11.9 million homes passed and 5.3 subscribers representing a penetration of 17.8%
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2014 2015

Coverage evolution

Paris Centre autres grandes villes Zones pavillonnaire
Lyon Immeubles suburbains Moyenne nationale
Results Base Option : For an ARPU of 50 EUR / month incl. VAT Total investments between 10.4 billions EUR (GPON) and 11.3 billions EUR (Ethernet P2P) over 10 years
On the 10 year period cost :
per Home Passed: 879 EUR for GPON and 950 EUR for E-P2P per subscriber: EUR for GPON and for E-P2P
Civil Engineering represents 70% of the costs
Investments per year (in million EUR)

2007 2008

Equipment of residential areas Equipment of suburban areas

2010 passif

2011 actif
Entering in residential areas in 2010 with individual homes has a strong impact in deployment costs:
Investment during 4 first years is 1 billion EUR to cover 1.7 million HP and 500 K subs. Next year you need to invest 1.6 billion EUR to double HP and subs. Base ! Per Home Passed the cost in residential areas is between 1.5 and 2.5 times more expensive than in Urban areas or Suburban Building areas The renewal of ONT every 5 years (starting in 2011) does not impact cost
FTTH cost model: French case Options
Option 1 : Paris with usage of passive existing infrastructure (Paris sewer) At 1/m/year it allows an economy of 30% compared to the Greenfield case In 2015 : 1.1 million homes passed and 0.5 million subscribers Investment needed is 500 million EUR instead of 700 million EUR Option 2 : France (40% of the population) with usage of already existing ducts At 2/m/year it allows an economy of 50% compared to the Greenfield case In 2015 : 9.1 million homes passed and 2.6 million subscribers

Sharing of passive infrastructures (ducts, trenching,) will be key !!
FTTH French case: picture
FTTH: French picture end 2007
December 2007 (1) FTTx subscribers Castres-Mazamet France Telecom (3) Gonfreville Iliad-Free (4) Maurienne Neuf Cegetel Sipperec Sicoval Cite Vision Other* Numericable - Noos(2) France (**) Numericable - Noos(2) France (***) na na na na na Homes/Buidings passed na na na na na 510 000
Numericable: the leader in terms of Homes Passed
2 Millions Homes Passed in FTTH at end 2007, 4 M end 2008, 8 M end Q08: launching of ADSL offer (using Completel backbone)
Free: 20% Market share end 2007 in ADSL (2.9 M subscribers)
Investment: 33.3 Millions EUR in FTTH in 2007 Planned investments: between 300 et 400 Millions EUR in 2008 + 2009 Planned investments: 300 Millions EUR in 2007 + 2008 + 2009 Probably more when fusion completed with SFR For more than 5 M Homes Passed wholesale needed by FT, For more than 10 M Homes Passed role of Local Bodies will be key
Neuf Cegetel: 22% Market share end 2007 in ADSL (3.2 M subscribers)
France Telecom announcements: 2006 to now
France Telecom finally announced on Dec.15, 2006 a first FTTH deployment
Target at end 2008: 150 to 200 K subscribers and 1 M Home Passed Started in March 2007 in Paris then by June 2007 Lille, Lyon, Marseille, Poitiers and Toulouse. Around 10 cities covered at end 2008 Investment 2007 + 2008: 270 Million Euros To prepare a massive roll out in 2009/2010 In 2009: 20 to 30% of French Homes equipped with HD TV Will allow France Telecom to secure regulatory fair conditions
The pilot in Paris + 6 suburbs Cities (92)
End 2006: 500 subscribers and Home Passed at 70 Euros monthly for 100 Mbps Penetration of 4.3%
1Q07: France Telecom launched a pre commercial Service
Launching of FTTH service in March 2007 47.90 Euros for 100 Mbps downlink and 10 Mbps uplink
Recently, France Telecom gave FTTH investments estimates
To reach 4 Million FTTH subscribers in 2012 (Government objective) A total investment between 3 and 4.5 billion EUR up to 2012 A direct market share of 50% on FTTH subscribers and 75% counting network renting

France Telecom Orange FTTH offer

Conclusion

Conclusion Dynamics for FTTH

Competition

Platforms competition Cable vs DSL is a dynamic factor TV players & content providers will play a leading role
Governments & Regulators roles will be essential

Maturity of technologies

VDSL2 is now being deployed PON technologies are deployed: Asia, US, Europe Dynamics/Complexity of the Digital Home
FTTx: ARPU potential & New players
New players will come: Housing companies, developers, Civil Engineering companies, VOD, SVOD, HDTV. First services to leverage the ARPU others to be invented for Residential as well as for SMEs

Thank You!

Roland MONTAGNE Head of Broadband Practice r.montagne@idate.org