1 © Cable Television Laboratories, Inc All Rights Reserved. U.S. Cable Market Broadband and OTT Competition TEPAL26 June 29, 2016

2 © Cable Television Laboratories, Inc All Rights Reserved. Broadband Profile in the U.S.

3 © Cable Television Laboratories, Inc All Rights Reserved. 3 Broadband Market Share – 2015  Cable added 3.3M broadband subscribers in 2015  Telcos lost 200K broadband subscribers in 2015

4 © Cable Television Laboratories, Inc All Rights Reserved. Broadband Surpasses Video Subscribers In Q2 2014, the inflection point occurred where broadband subscribers surpassed pay tv subscribers for cable E 59.5

5 © Cable Television Laboratories, Inc All Rights Reserved. 5 Broadband-Only Homes Increasing According to SNL Kagan's five-year projection, total households that subscribe to high-speed-data services but do not get traditional multichannel video are forecast to grow at a relatively sluggish 10.6% CAGR through 2020, reaching more than 21.9 million households, or 17.4% of projected U.S. occupied households

6 © Cable Television Laboratories, Inc All Rights Reserved. Competitors and Competition

7 © Cable Television Laboratories, Inc All Rights Reserved. America’s Gigabit Cities 7 “Today, there are more than 60 gigabit cities across the US,” wrote Google Fiber.

8 © Cable Television Laboratories, Inc All Rights Reserved US FTTH Profile  26 Million (~20%) of all U.S. HH are passed by fiber  12.3 Million (~10%) of all HH are connected by Fiber – a 50% uptake rate  Google Fiber had ~ 53,000 subscribers as of December 2015  That’s "5/100ths of 1 percent" of the U.S. pay-TV market (MoffettNathanson)

9 © Cable Television Laboratories, Inc All Rights Reserved. © Cable Television Laboratories, Inc All Rights Reserved. 9 Competition – Google and Telcos

10 © Cable Television Laboratories, Inc All Rights Reserved. Google Fiber – Rollouts San Francisco is the 22nd metro where we're going to serve customers

11 © Cable Television Laboratories, Inc All Rights Reserved. Google Fiber Gbps Broadband Service July 2015

12 © Cable Television Laboratories, Inc All Rights Reserved. AT&T GigaPower 12 “AT&T GigaPower is available in 20 of the nation’s largest metros areas, and we’ve announced plans to expand our ultra-fast Internet service in parts of 36 additional metro areas – which will total at least 56 metros served.” AT&T, 04/16

13 © Cable Television Laboratories, Inc All Rights Reserved. 13 AT&T GigaPower

14 © Cable Television Laboratories, Inc All Rights Reserved. 14 Verizon FiOS

15 © Cable Television Laboratories, Inc All Rights Reserved. Texas : Our Technology FTTP Architecture

16 © Cable Television Laboratories, Inc All Rights Reserved. © Cable Television Laboratories, Inc All Rights Reserved Competition – Municipalities

17 © Cable Television Laboratories, Inc All Rights Reserved. 17 Next – 10 Gbps Service?

18 © Cable Television Laboratories, Inc All Rights Reserved. Cable’s Competitive Positioning

19 © Cable Television Laboratories, Inc All Rights Reserved. 19 Comcast Gigabit Pro and DOCSIS 3.1  2 Gbps symmetrical service – Gigabit Pro – launched in July 2015  “Last month, Comcast announced it had successfully installed its first DOCSIS 3.1 modem in Philadelphia, and one was installed in Atlanta a few days later. ” Comcast, Feb 2016  “Comcast will have two pricing tiers for their gigabit service. A promotional 36-month contract price of $70/month will be offered, as well as a no-contract every day price of $140/month”, March 2016

20 © Cable Television Laboratories, Inc All Rights Reserved. 20  Cox Communications Inc. has a more mainstream launch of 1 Gbps, expanding its FTTH deployments to 12 markets as of December SNL Kagan.  “In order to deliver the 1 Gbps speeds, Cox will leverage a mix of GPON-based fiber to the premises (FTTP) technology and extend into the remaining area of the market using DOCSIS 3.1-enabled equipment when it becomes more widely available.” FierceTelecom Cox G1gablast Service

21 © Cable Television Laboratories, Inc All Rights Reserved. 21 Other MSO Gbps Deployments  Suddenlink – Operation GigaSpeed  Using DOCSIS 3.0  Broadband at speeds of up to 1 Gbps will be available in more than 250 Suddenlink networks by the end of That represents more than 60 percent of the company’s high-speed customers.  In contrast to AT&T and Google Fiber’s selective gigabit deployments, Suddenlink is bringing gigabit Internet service to all neighborhoods and households passed by Suddenlink’s network.  Mediacom – Columbia and Jefferson City, Missouri  Atlantic Broadband – Miami, Florida  Comporium – Rock Hill, South Carolina

22 © Cable Television Laboratories, Inc All Rights Reserved.  DOCSIS 3.0 can provide speeds approaching 1 Gbps (32 bonded channels)  DOCSIS 3.1  Where FTTH-based competition exists, DOCSIS 3.1 capabilities can support offers comparable to 2.5/1.2 Gbps GPON  1 st generation DOCSIS 3.1 can provide up to ~ 4 Gbps of downstream capacity  Second generation DOCSIS 3.1 will be able to take advantage of the full HFC spectrum, supporting up to 10 Gbps of capacity – this creates general parity with 10G PON downstream speeds  Upstream bandwidth – mid-split or high-split  Full Duplex DOCSIS  10 Gbps symmetrical service  Node+0 network 22 Cable’s Multi-Gbps Technologies

23 © Cable Television Laboratories, Inc All Rights Reserved. OTT Trends in the U.S. Video Market

24 © Cable Television Laboratories, Inc All Rights Reserved. 24 Is this OTT?

25 © Cable Television Laboratories, Inc All Rights Reserved. Convenience –What, when and where the consumer chooses to view video content –Viewing “TV” on smart phones, tablets, gaming platforms & other connected devices – including smart TVs Cost –A la carte preference Changing viewer behaviors –More than Millennials –Ability to watch certain TV shows and whole seasons (binge viewing) –User generated content Why the Demand? 25

26 © Cable Television Laboratories, Inc All Rights Reserved. Rise of OTT Services 26

27 © Cable Television Laboratories, Inc All Rights Reserved. Proliferation of OTT Platforms 27 “.. the present process is similar to what the industry went through during the 1980s and 1990s, which saw the creation of hundreds of cable networks. The participants looking to enter this space consist of distributors, hardware makers, and existing content providers in addition to the existing pure OTT service providers like Netflix, Amazon and Hulu. “ U.S. Cable and Media Evolution of OTT, Equity Research, 21 April 2016

28 © Cable Television Laboratories, Inc All Rights Reserved. 28 Netflix, Amazon, and Hulu Dominate According to Parks Associates, there were 101 OTT video services available in the U.S. as of March Netflix, Amazon, and Hulu dominate & command 95% market share. Only 5% of U.S. broadband households subscribe to one or more of the other 98 options.

29 © Cable Television Laboratories, Inc All Rights Reserved. 29 Netflix, Amazon, and Hulu Dominate

30 © Cable Television Laboratories, Inc All Rights Reserved. 30 Netflix ~ 81.5 M Subscribers “Net additions in Q1 ‘16 amounted to a record 6.74 million, surpassing our prior high water mark of 5.59 million in Q4 ‘15 and against 4.88 million in the year ­ago period. Of our 81.5 million members, 42% are now outside of the US. Operating income was $49 million vs. $97 million in the year ago quarter, as we continue to invest in international markets. “

31 © Cable Television Laboratories, Inc All Rights Reserved. 31 Netflix

32 © Cable Television Laboratories, Inc All Rights Reserved. 32 Amazon has begun to reimagine the multichannel TV bundle “Consumer Intelligence Research Partners estimates that Amazon ended 2015 with 54 million U.S. members for its Prime service, up 35% from the prior year. Of those about 40% of U.S. Amazon Prime members (are estimated) to use the free streaming service at least once a week. That works out to 21.6 million Amazon Prime Video users.” “In December 2015, Amazon announced it was offering add-ons to Prime such as Showtime, Starz, TriBecA Shortlist, Lifetime Movie Club, among many others.” Amazon Video ~ 21.6 M Subscribers

33 © Cable Television Laboratories, Inc All Rights Reserved. Cable Operator Strategies

34 © Cable Television Laboratories, Inc All Rights Reserved. 34 “Skinny Bundles” March 21, 2016, DECIDER Website

35 © Cable Television Laboratories, Inc All Rights Reserved. The Bundling Advantage for MSOs is Big 35 A potential ‘cable killer’ cannot easily compete with cable’s bundling advantage, as users would still have to pay for broadband

36 © Cable Television Laboratories, Inc All Rights Reserved. Increased consumer awareness and uptake Increased consumer interest in new content distribution models –Importance of differentiating “cord” audiences; pay television is primarily a household product Skinny bundles and a la carte impact on content –Survival of the fittest? –Compounded by decreasing advertising spend for traditional pay television programming due to decline in viewership Investment in original content and impact on subscriber base What is “good enough”? What makes a “competitive” virtual MVPD? Seamless consumption So What are the Implications? 36

37 © Cable Television Laboratories, Inc All Rights Reserved.