IPTV & France Telecom:

A three years

Experience

-06/02/2007

2

The story

1.Why France Telecom went to show-business ?

2.A new positioning & business case

3.New partnerships with content providers

4.A three years return of experience

-06/02/2007

3

The story

1.Why France Telecom went to show-business ?

2.A new positioning & business case

3.New partnerships with content providers

4.A three years return of experience

-06/02/2007

4

Triple play, a market imperative

�Driven by the customer

�Strong demand for broadband and service

bundling

�Thirst for digital content and internet

services, e-government and e-commerce are

taking off

�Driven by the technology

�Generalization of Digital content, IP

universality, broadband (ADSL, ADSL2+,

VDSL, WiFi, Wimax), New Generation

Networks

�Driven by the competition/deregulation

�Competition from alternate operators and

Cable TV providers, using Triple Play offers

to win market share from the incumbent

�Telcos are faced with a loss in traditional

voice revenues and increased churn.

Telcos must develop a new positioning

to boost broadband ARPU and customer

loyalty

Home services

Home services

Broadband

ADSL access

PC

Wi-fi

Modem

ADSL “multi-

VC”

TV Set

Top Box

QInternet

QTelevision

QTelephony

QVideotelephony

QInteractive

gaming

QMusic

QSecurity

©France

Telecom

-06/02/2007

5

Broadband service

Providers

Broadband TV

Bundle Players

•As a BSP, your TV offer

does not necessarily

have to have the best

in service and content

•The key selling message

is for 30 €you get 3 BB

Services

•This type of positioning

offers a rapid customers

acquisition opportunity for

merging FAI/ Telco in

unbundling regulatory

context

•A True new generation

TV Centric player

•QoS in TV service &

content is non negotiable

•Can compromise future

ARPU, Margins & share of

wallet of actual Customers

•An opportunity for new

broadband telecom

operator (FTTH and ULL)

Incumbent Telco

•Public utility responsibility

•A mission to impulse

new technology for every

one in the society

•Has to prepare new

generation multidevice

services => integrated

operator

•QoS in TV service &

content is non negotiable

•An opportunity for

incumbent telcoto maintain

and develop ARPU.

Market Positioning for different Triple play strategies

-06/02/2007

6

USA

220,000 IPTV subscribers

•75 regional operators

=>SureWest(California)

=>All West (Utah, Wyoming)

=>Consolidate (Illinois)

•Verizon(FiOSTV –

Texas)

(Sept 05)

•AT&T (U-Verse -mid 2006)

CANADA

30,000 IPTV subscribers

•Sasktel

•Manitoba Telecom

•Bell Canada (Sympatico)

MAURITIUS ISLAND

•Mauritius Telecom

HONG KONG

654,000 IPTV subscribers

•PCCW

•City Telecom

RUSSIA

•AFK-M

ultimedia System

Moscow arera

JAPAN

16 000 IPTV subscribers

•Softbank

•NTT

•KDDI

CHINA

120,000 IPTV subscribers

•China Netcom (Beijing, Harbin

Henan)

•China Telecom (Shangai)

TAIW

AN

50,000 IPTV subscribers

•Chunghwa(Big TV)

INDIA

•MNTL

•BSNL

AUSTRALIA

•TransACT

Operational

Operational from 2006

Launch phases or trials

IPTV goes worldwide –Q4 2006

MOROCCO

MarocTelecom

SENEGAL

•Sonatel (O

range)

BRASIL

•BrasilTelecom

•Telemar

•Telefonica

KOREA

•SKT Corp -1000

SINGAPORE

•Singapore Telecom

(SingTel)

URUGUAY

•Antel(AdinetTV)

EGYPT

•Telecom Egypt

SOUTH AFRICA

•Telkom

SA

Source: Sofrecom

CHILI

•Telefonica (Im

agenio)

-06/02/2007

7

France

•Orange –450,000

•Free –500 000

•NeufTV –140,000

•Alice TV –66,000

•Tele2 –19,000

•Club Internet –23,000

•AOL (Sept 06) –7,000

Finland / Alands

•AlcomTV –1000

•Elisa/Canal Digital (Nov 06)

Sweden

•B2 –

7000 (Q3/05)

•Canal Digital IPTV

•Telia

Digital TV –50,000

Italy

•Fast Web –170 000

•Telecom Italia –

30,000

Norvège

•LyseTele –50 000

Belgium

•BelgacomTV –100 000

Spain

•Imagenio (Telefonica) –267 000

•JazzTel

•Orange Spain (launched in June 06)

•Superbanda

UK

•Homechoice/Tiscali–

50,000

•BT (Dec 06)

•Orange UK

•Siminn TV (Iceland Telecom)

20 000

Poland

•Multimedia Polska –10,000

•TPSA (launched in Sept 06)

Switzerland

•BluewinTV

(Swisscom)

Netherlands

•Mine TV (KPN)

•Tele 2

•Orange NL

Iceland

•TDC TV –4000 (Q3/05)

•NVE/Fast TV –3000

•Danskbredband–30,000

Denmark

Austria

•AonDigital TV -5000

(TelekomAustria)

Irlande

�Magnet network

�Smart Telecom –15,000

Germany

•Alice Hansenet

•T-Online (Oct 06)

Czech Republic

•Telefonica O2 (launched Sept0 06)

IPTV European context –Q3 2006

Slovaquia

•Slovak Telecom (T-Com)

•Orange Slovaquie

Operational

Operational from 2006

Launch phases or trials

Source: Sofrecom

Hungary

•Magyar Telekom(T-Com)

Croatie

•MAXtv(T-Com)

-06/02/2007

8

The story

1.Why France Telecom went to IPTV ?

2.A new positioning & business case

3.New partnerships with content providers

4.A three years return of experience

-06/02/2007

9

SCREEN

France Telecom in the Audiovisual value chain

TV

CHANNEL

PRODUCTION

DISTRIBUTORS

AGREGATION

DIFFUSION

EDITION

VENDORS

TECHNICAL

SERVICE

PROVIDER

STB

AERIAL

TERMINAL

STB

SATELLITE

MOVIE

DISTRIBUTOR

MOVIE THEATER

PROGRAMMATION

MOVIE

THEATER

VIDEO

DISTRIBUTOR

VIDEO

CLUB

MOVIES

DOCS

NEWS

ANIMATION

SHOWS

TECHNICAL

SERVICE

PROVIDER

STB

CABLE

SATELLITE

BOUQUET

CABLE

BOUQUET

VOD & TV

DISTRIBUTOR

SERVICE

PLATFORM

STB

ADSL

PC

MOBILE

TERMINAL

DVD

PLAYER

TV SERVICE

VOD SERVICE

HEAD END

PRODUCTION

-06/02/2007

10

�Launched in 2003, 1st in Europe to

propose IPTV services on a large

scale

�France:

�+200 TV channels, 1000 hours of VoD

programs, agreements with major TV

broadcasters and picture studios

�By the end of 2006, Orange TV covers

most of the French population –more

than 10 m

illion homes

�Europe:

�Spain & Poland launched Q2 2006

�UK launch Q2 2007

�Netherlands launch end of 2007

Orange TV service

-06/02/2007

11

Orange TV service

�Orange TV is a service combining VoD and IP television on the customer’s TV

set, through the telephone plug :

�“W

all garden”: OrangeTVis not accessible from the Internet

�OrangeTVis not accessible on the PC

�Double security for programs : phone number and encryption (Viaccess)

�Streams : start with 3,5 Mb/s MPEG2, 2 Mb/s in MPEG4 from 2006,

�2007: enable two simultaneous streams

�Surround Dolby Sound

�3 main virtual channels (Orange TV, Internet, Visiophony)

�French OrangeTVpartners :

�TPS, CanalSat

�FT VoD distributor :

�agreements with Lagardere, Warner Bros,

Fox, Disney, Fox, Studio Canal, Pathé…

-06/02/2007

12

Orange TV service :France pricing model

TRIPLE PLAY OFFER

PAY TV OFFER

-06/02/2007

13

The story

1.Why France Telecom went to IPTV ?

2.A new positioning & business case

3.New partnerships with content providers

4.A three years return of experience

-06/02/2007

14

Continuity

Continuity

““Catch

Catch-- up TV

up TV””

I create my play list at home

and play it mobile. I listen to my

personalised radio station on

mobility as at home. I receive an

alert for a new friend

connection

Complementarily

Complementarily

Music & games

Music & games

My terminal, my

screen, I watch the

channel I want when

I want

Individualisation

Individualisation

TV on mobile et

TV on mobile et

PCPC

TV series “Plus belle la vie”

accessible on Orange Web

portal, Orange et IPTV

platform, I am sure not to miss

an episode

Mobiles enhance the offer:

bringing continuity, complementarities et personalisation

-06/02/2007

15

Plus Belle La Vie : TV series everywhere

PCTV

Mobile

�never miss an episode of your favourite serial (audience 5 M / jour)

�episodes and summaries accessible few m

inutes after TV live

�monthly or weekly subscriptions for previous episodes (PC)

2’and 4’summaries

previews

complete episode in three parts

summaries, trailers & extracts

complete episode

summaries, trailers & extracts

complete episode

Access to previous episode

HSDPA Network

-06/02/2007

16

The story

1.Why France Telecom went to IPTV ?

2.A new positioning & business case

3.New partnerships with content providers

4.A three years return of experience

-06/02/2007

17

�Get a clear picture of Triple play and IPTV business cases

�Market studies, marketing mix and business plan

�Content is king: build credibility and trust with content providers

�Understand content providers requirements and culture to get thebest content offer

�Billing and revenue sharing processes, content security

�Strong impact on Telco’s organization and infrastructure

�content rights acquisition organization, to deliver content anywhere, any time, any device

�Service platform

specifications, IS & Network integration

�Sales and after sales processes

�It’s a brand new industry

�New customers, with different expectations

�New partners to deal with, with different business m

odels (rightholders)

�New skills to learn for all Telco’s employees (marketing, sales, technical, IT)

�New positioning in the value chain: the Telco’s positioning is moving towards content’s

creation and distribution

Key points when going for triple play and IPTV

-06/02/2007

18

Sofrecom: Building IPTV solutions

�A wide-ranged expertise for a complete understanding of the IPTV and its issues

for the operator

�A dedicated “multimedia & new services”team, which mobilizes France Telecom relevant

expertise

�On going watch of triple play and IPTV markets, a genuine understanding of its stakes for telcos

�Merging network, multimedia and audiovisual expertise

�Melting content and technical support

�A framework with guiding tools and methodology

�Experience in international projects

�Based France Telecom success in multimedia

�Early VoD experiments (business model, content partnership, technical solution)

�Ma Orange TV deployment in France: Service platform

technical specifications, Network & IS

integration, IPTV architecture reference

�FT’s international IPTV deployment (business plan, content, technical solution)

-06/02/2007

19

MAURITIUS ISLAND

MauritiusTelecom

POLAND

TPSA

Latest Sofrecom IPTV references

UK

Orange

NETHERLANDS

Orange

FRANCE

France Telecom

Orange

SPAIN

Orange

SENEGAL

Sonatel

ICELAND

Siminn

-06/02/2007

20

Skillsall alongthe creationof new services

Strategic

studies

Marketing

studies

Launch

Deployment

•Telcostrategy

•New services

•Ecosystem

•Triple play

•Mobile TV

•Music

•Project office

•Technicalstudies

•Content partnerships

•Network & IS

•Content provisionning

•Digital home

•MauritiusTelecom

•Orange Switzerland

•Jordan Telecom

•FT’sContent strategy

•MauritiusTelecom

•Orange France

•Jordan Telecom

•FT’sContent marketing

•MauritiusTelecom

•SONATEL

•FT’sOrange TV

•FT’sVOD on PC

•MauritiusTelecom

•SONATEL

•FT’sOrange TV

•FT’sVOD on PC

•Disneyland Paris

-06/02/2007

21

STRATEGI

C STUDIES

Context

analysis

Business

plan

Marketing

plan &

positioning

Sofrecom: a global approachfor IPTV operator

OPERATION

PROCESS

MARKETING &

SALES

ORGANIZATION

PROJECT OFFICE

�

PARTNERSHIPS

�

BILLING & REVENUE SHARING PROCESS

�

Interfaces& Portal

New services

�

Services

specifications

CONTENT

&

SERVICES

STRATEGY

�

Technical

process

SERVICE PLATFORMS & NETWORK

ENGINEERING

TV head ends

Devices & STB

VoIP

CAS

�

Service

platform

Thank you for your attention