1. Business Model DVB-H - challenge for co-operation between content providers and telecom operators Klaus Pilz Brussels, 3rd of March 2005

2. 2 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 Content Swisscom Broadcast B2C Products Business Model DVB-H Conclusion

3. 3 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 Swisscom Broadcast Since January 1, 2002 independent corporation (wholly owned by Swisscom AG). 240 employees – of which 160 field force serving our business partners. More than 500 stations in all of Switzerland. Swisscom Broadcast - partner for mobile TV in Switzerland Digital terrestrial distribution (DVB-T) in the Tessin canton for the Swiss Broadcaster (SRG); and in the Graubünden canton for a private Broadcaster. Successful market start of Premium Digital TV – the digital TV offer for local cable network operators in Switzerland Swisscom Broadcast at a glance Swisscom Broadcast is the TV broadcaster in Switzerland Swisscom Broadcast has mastered the digital technology Leading infrastructure provider for wireless transmission and related additional services in Switzerland. Long standing experience with terrestrial and cable distribution of TV and radio

4. 4 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 Swisscom Broadcast evaluates the market opportunities of mobiles TV within the framework of a strategic initiative As a result, potential products, a suitable business model and a business case for mobile TV have been developed A qualitative and quantitative market research has been carried out in order to better assess customer needs and market opportunities before the deployment of the pilot Swisscom Broadcast aims to launch a regional confined pilot in 2005 Swisscom Broadcast is evaluating the risks and chances of DVB-H in detail before deciding about introducing mobile TV via DVB-H Swisscom Broadcast

5. 5 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 Content Swisscom Broadcast B2C Products Business Model DVB-H Conclusion

6. 6 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 B2C product groups can be divided into three categories B2C Products Standard TV Special Interest TV Pay-per-View TV Scheduled file download On demand file download On demand file streaming DVB-H UMTS B2C product groupCharacteristics DVB-H UMTS 1 2 3 4 Likely technology TV products are broadcasted. End customer cannot decide about the content of the program. Point to Multipoint (1:n) distribution. End customers decide about the content of the program that should be distributed. Point to Point (1:1) distribution. Content is compiled by the provider and automatically pushed into the end devices memory. Point to Multipoint (1:n) distribution. Content subscribed by the end customer is automatically pushed into the end devices memory. Point to Point (1:1) distribution. Category Pull products Classical TV products Push products 5 6

7. 7 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 B2C product groups can be optimally enhanced with additional services Additional servicesCore product B2C product groupCore product Standard TVTV channel Special Interest TV TV channel Pay-per-View TVTV channel Scheduled file download Automatic file download 1 2 3 4 Examples: Information services (news, weather, traffic information,...) Downloads (ring tones, games,...) Purchasing services (shopping, ticketing,...) Entertainment services (voting, betting,...) Socialising services (chat, dating,...)... B2C Products

8. 8 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 Standard TV (Example) B2C Products 1 A bouquet of attractive Standard TV channels is offered. The channels can be received and watched by end customers on mobile devices. Price Monthly subscription Interactive services Program MusicStar Voting: Which singer should continue? John (SMS to 9991), Lucy (SMS to 9992) Program Zürich Total Information: Event calendar Cinema at the lake (SMS to 8001) Top discotheques in Zurich (SMS to 8002) On demand services Program MusicStar (also independent of the program) Download of music videos (from archive) Stimulated by the program the end customer decides to download several clips Bouquet B A B A Additional services Interactive services and on demand services as optimal enhancement to the TV core product

9. 9 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 B2C Products Infotainment package B Scheduled file download (Example) 4 Interesting content that is compiled by the provider is automatically pushed into the end- device memory. End customer, who subscribed to the service, can view the content anytime. Interactive value added services Program Music video clip of the day Information: Event calendar Tour-Program (SMS to 5911) Program Daily news Voting/Opinion: Survey: What do you do this summer? Travel (SMS to 2031), Stay at home (SMS to 2032) On demand services Category Music (also independent of it) Download of ring tones (from archive) Rolling Stones index by title Category News(also independent of it) Download of financial news Financial Breaking News by CFN-CNBC Price Monthly subscription A B A News (latest four breaking news from SF1) Music (20 actual clips from Top Ten Switzerland) Comedy (four 10 minutes long funny clips) Sport (latest breaking sport news from Eurosport) Entertainment (e.g. Single of the day) Children (four 10 minutes long cartoons, e.g. Pluto) Weather (latest four weather forecasts from SF1) Additional services Interactive services and on demand services as optimal enhancement to the TV core product

10. 10 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 Possible interactive services for mobile TV can be grouped into five categories Downloads Purchasing services Entertainment services Socialising services News Weather Traffic information Information services Tourist information Restaurant-, hotel guide Horoscope, biorhythm Screensavers Ring tones... Banking... Casino... Friend finder... Route planer Event calendar... Video clips Audio clips Games Ticketing Shopping Auctioning Voting Lottery, quiz Betting Chat Flirt Dating B2C Products

11. 11 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 Content Swisscom Broadcast B2C Products Business Model DVB-H Conclusion

12. 12 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 A first scenario for the market introduction of DVB-H is the use of mobile phones for mobile TV With DVB-H, mobile phones will also become TV terminals, which could create new prime times for TV-channels (morning/lunch- time/late afternoon) TV broadcastMobile phone TV means entertainment and information (point-to- multipoint) 94% of Swiss households have TV access. The average TV consumption is approximately 3.5 hours per day Prime time is considered from 19:30 to 22:00 Communication for a mass audience (point of point) Market penetration is 85% in Switzerland Mobile phones improve security, accessibility and mobility – and give independence Additional services such as voice box, SMS, internet and MMS are today regarded by consumers as commodity Business Model DVB-H

13. 13 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 A close cooperation of the various market players is a prerequisite for the success of mobile TV Business Model DVB-H Regulatory board (OFCOM) Technology providers Content providers DVB-H operator Network operator Pave the way for the DVB-H business Strategies of technology providers may substantially influence the business model Treat the DVB-H services as the first real convergent media service DVB-H is a chance for all players, but can also threaten current business models A suitable business model for DVB-H must be found in order to succeed with DVB-H based convergent services

14. 14 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 The basic DVB-H business model is a challenge for all market players to agree on a fitting co-operation model B2C provider DVB-H Operator Content aggregator Buys content and aggregates it to marketable products DVB-H service provider Prepares content for distribution over DVB-H network DVB-H net- work operator Operates DVB-H network and distributes DVB-H content to end customers (1:n) Content provider B2C service provider Network operator Delivers content (e.g. TV channels, Hollywood films, ringtones,...) Has customer rela- tionships (incl. billing, administration of custo- mer- and usage- data) Operates point-to-point network and allows data exchange with end customers (1:1) End customer Buys and consumes DVB-H products B2C products B2B products Advertiser Advertises customer products in media Business Model DVB-H Content aggregator Buys content and aggregates it to marketable products

15. 15 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 Content Swisscom Broadcast B2C Products Business Model DVB-H Conclusion

16. 16 DVB-H Project Swisscom ETNO-Presentation 03/03/2005 A successful co-operation model for DVB-H based services requires trust among all involved partners as coverage costs may area specifically influence revenue share options Conclusion Coverage expectations of the customers Roll-out User figures Average ARPU Content Coverage assumptions might be a key issue for the success of DVB-H The roll-out scenario will also heavily influence customers service acceptance User figure development might be influenced by standardisation issues and co-operation models of the con- verging industries (win-win-model) The average ARPU which will be achieved can only be verified in market trial projects Content and decisions of DRM- standardisation should not be under- estimated in making DVB-H a success