Team 2 Cheryl Lee Marisol Cadiz Diana Lee-Akalin Sangtae Lee Good Afternoon, my name is Tim Page - part of ARC Group - consultancy specialising in Digital Broadcasting, Telecoms and Internet. I would like to thank IBC UK Conferences for inviting me to speak on the subject of Media Streaming and I will try to answer the question “How can increasing bandwidth enhance media streaming.”

Agenda Introduction Company & Product Overview Core Competencies Customers & Competition Critical Issues & Financials Critical Recommendations Question? Introduction Why Stream? - Basic streaming overview Network Considerations Software platforms Codecs Internet Access Streaming to Mobile Handsets Industry Convergence Summary

Introduction - Phil Condit, Boeing chairman and CEO Boeing intends to be a leader in the new mobile economy - -and that means helping our airline customers and their passengers stay globally connected at all times. The airplane will begin to look like your home or office and the experience of travel will change - Phil Condit, Boeing chairman and CEO

Air Travel Today Few choice Book Magazine Several movies New market emerging 3 million people board 42,300 flight a day 48% of air travelers in USA are business travelers 70% of business traveler carry a laptop on board Limitations of the Internet The internet is a great information resource and has many benefits over traditional information distribution. However for streaming media there are a variety of limitations. Dial up speeds For the consumer dial up connection to the internet is still fairly slow, currently being limited to 28.8k and 56k modems. It will not be possible to send CD quality in real-time because the modem speeds are slow and unreliable. Poor Audio Quality As we have seen earlier, the slow connection speeds to the internet limit the amount of data received at the end user. This limits the resulting audio visual quality. Currently 56k modem achieves sounds quality somewhere between AM and FM radio. ISDN is a favorable alternative but the high price is the major barrier. Low reliability and QoS Being packet based, data transfer across the internet is not very reliable, being bursty. Sometimes the connection can be a continuous stream but network congestion can be achieved especially when the internet has heavy use. One means to overcome the internet connection bottleneck is to increase the bandwidth and data reception capability over the “last mile” – the section of the network coming into the home, and we are now going to consider the various available technologies to that do just this. xDSL - challenge to improve the “last mile”

Market size: $70 billion over the next 10 years Connexion by Boeing New broadband telecommunication service in flight Real time, high speed, two-way connectivity Real time Internet and Live TV Service to begin in 2002 Market size: $70 billion over the next 10 years

The Capability of Connexion Internet Surf the Web E-mail (80%) Stock trades (49%) Book reservations AOL/Yahoo Live TV Entertainment (41%) News reports Weather Sports events CNN Destination Information Plan itinerary Check weather (75%) Reservations (45%) Expedia/ Airlines Company Intranet E-mail (80%) Reports Company news Indiv Co E-Commerce Shopping Duty-free Airline News & Information News(63%) Business Money CNN/CNBC Carrier Information Travel planning (46%) Travel support Frequent flier mileage Airline Flight Facts Airport maps Flight maps Gate information Airshow % :Air traveler’s preference

-Deploying large scale Core Competencies Technology - High Speed - Two way - Broadband In Depth Knowledge -Deploying large scale -Communication sys. Financial & Human capital - $45 Billion company - 200,000 Employee Strategic Alliance - Industry leader & Content Provider Global Relationship - Airline industry - Government

Alliances Contents Provider Hardware MASC -Live Sports Network -Satellite and Transponder -Asia coverage Contents Provider -Market News - Stock -Satellite and Transponder -Europe coverage -Airport Weather - City Guide Hardware -Satellite and Transponder -North America coverage MASC MATSUSHITA AVI. SYSTEMS CORP. -In Flight Entertainment Sys.

Customers Advertising Agencies

Competition Connexion In Flight Network Tenzing Comm Existing IFE Prov. Deployment 2002 Testing 2001 Testing “Emport” High Speed Real Time Y N Range of Services Extensive Basic Email Movies Basic Email & Web Internet Movies Infrastructure Reqmt Minimal Cost $$$$$ $$ $

Competition (cont.) Tenzing's technology is not real-time. Its system compresses batches of messages on the plane and sends them to the ground every several minutes via satellite link. Tenzing's on-board computers cache dozens of selected Websites and offer a menu of services to carriers that passengers will pay for. Tenzing also plans to repackage Web content and sell ads that target specific flight routes, or tout businesses in destination cities. Waiting for existing satellite provider, Inmarsat, to offer high band-width services soon.l

Competition (cont.) Tenzing's technology is not real-time. Its system compresses batches of messages on the plane and sends them to the ground every several minutes via satellite link. Tenzing's on-board computers cache dozens of selected Websites and offer a menu of services to carriers that passengers will pay for. Tenzing also plans to repackage Web content and sell ads that target specific flight routes, or tout businesses in destination cities. Waiting for existing satellite provider, Inmarsat, to offer high band-width services soon.l

Issues: Cost Up Front Investment: $100M - $200M Development Integration of communication, platform Hardware & Software Installation Content Development Est. $17/hour for email and net access Customers willing to pay Operating Cost Satellite communication: $20 per call

Issues: Technology Frequency sharing needs regulation authorities approval Development limits to existing technology & infrastructure Technology - what’s next?

Other Issues Consumer Acceptance Target Markets & Content Offerings What do they use & how much are they willing to pay? Target Markets & Content Offerings Who are they & what do they want? Airlines, Partnership & Alliance - They control what to provide & when to implement

Rough Financials Assumptions: Revenue sources Expenses: Analysis Boeing’s Estimation Revenue Sharing 20% 30% ROI 5-Years - Annual Rev.(m) $4,600 $8,200 $3,000 Market Share 29% 52% # of Paid Users (m) 108 192 Assumptions: Revenue sources Service fees: 50% Advertising: 30% Co-Branding: 20% Expenses: Service: $20/call Revenue sharing Standard stuff

Recommendation: $$$ models Service Fees Offer Basic Premium Service Corporate Accounts Prepaid Service Advertising Charge fees and use the proceeds to reel in Basic service users Co-Branding Charge Airlines and Content Providers

Recommendation: dis-integration SBU with tracking stock Heavy promises require speed, flexibility, and focus Boeing is a dinosaur …but Connexion still needs Boeing’s technological expertise government and regulatory contacts customer relationships

Recommendation: Focus on Value Stop comparing yourselves to cellular phones

Questions?