2. Director of IPTV Solutions
Introduction to IPTV
Stoyan Kenderov
Director of IPTV Solutions

3. Agenda Overview Technology Market and Business Trends
Opportunities and Challenges
Key Success Factors
Integration of IPTV and VoIP
Summary & Q&A

4. The Relevance of IPTV
Michael Powell, FCC Chairman, September 2004
…”Almost every major phone company I'm aware of has an initiative under way to begin to try to plug the hole with partnerships with satellite-delivered video, but what they're really working on is broadband-delivered IP television. That's a major component that's moving fast…”

5. What is IPTV
A consumer technology for delivery of broadcast TV, on-demand video and interactive entertainment services to consumer TV sets over IP networks
Fundamental part of the telco triple-play strategy (voice, data, video)
User experience will be better than advanced digital cable
Cheaper to scale, unlimited number of channels
On-demand entertainment schedule
Highly personalizable

6. What made IPTV possible
Evolution of BB access (“ADSL2+”:25Mbps, “VDSL”:50Mbps)
Better video compression: H.264, MPEG-4, WMV9
Hollywood’s increased acceptance of advanced DRM technology
Cost of IPTV per subscriber going down
Telco voice revenues eroding fast
Greatly increased competition for telcos from VoIP and cable
Decrease in # of access lines
Cable eating away customer base
Consumers and businesses switching to VoIP
Video is seen as the new opportunity to
Retain customers
Grow ARPU

7. Agenda Overview Technology Market and Business Trends
Opportunities and Challenges
Key Success Factors
Integration of IPTV and VoIP
Summary & Q&A

8. Typical IPTV System Headend Transport Access Home Source: Kasenna Inc.
VoIP
Other
Content
Sources
IGMP
Router
Apps Servers
STB
Video
Servers
STB
Transport
Network
xDSL CPE/
FTTH
DSLAM
MPEG
Encoders
Computer
Digital and
Analog
Receivers
Source: Kasenna Inc.

9. Technical facts Standard Definition (SD) channel: 1-4Mbps per TV
High Definition (HD): 6-8 Mbps per TV
Only one channel at a time is transmitted to STB/TV
In comparison: cable requires 6MHz per channel. All channels transmitted even if only one watched
24Mbps link per household is enough for triple play (1x HD, 3x SD, VoIP & data)
IP multicast streaming for regular TV channels
IP unicast streaming for VOD and time-shifted TV
RTP streaming protocol, some add reliability on top
Deployments today usually over FTTH, ADSL2+ or E.PON/G.PON

10. Customer IPTV Experience

11. Content Partners’ IPTV Experience

12. Agenda Overview Technology Market and Business Trends
Key Success Factors
Integration of IPTV and VoIP
Opportunities and Risks
Summary & Q&A

13. IPTV Market - Global DSL Subscribers Forecast
DSL subscribers will be the first beneficiaries of IPTV services
DSL subscribers will grow from 91M (2004) to 202M (2008) (22% CAGR)
Source: MRG Inc. August 2004

14. IPTV Market - Global IPTV Subscribers Forecast
IPTV subscribers will grow from 2.1M in 2004 to 27M in 2008 (89% CAGR) – reaching 13% of DSL subscriber base
Source: MRG Inc. August 2004

15. IPTV Market - Global IPTV Revenue Forecast
IPTV revenues to grow from $685M (2004) to $15.4B (2008) (118% CAGR) - ~2% of total Wireline revenues
IPTV ARPU is expected to reach $47 (including interactive services such as VOD and interactive games)
Source: MRG Inc. August 2004

16. IPTV Market - Global Spending on IPTV System
IPTV system spending to grow from $472M (2004) to $2.0B (2008) (44% CAGR)
47% for STBs, 25% for better access systems
Middleware will account for 8% of total IPTV spending
Source: MRG Inc. August 2004

17. IPTV Launches Around the World
Europe
FastWeb (Italy)
TPSL (FT & TPS, France)
DreamTV (TF1 & LDcom, France)
Imagenio (Telefonica, Spain)
HomeChoice (UK)
Kingston Interactive (UK)
B2 (Sweden)
France Telecom (FR)
Asia
PCCW (Hong Kong)
Chunghwa Telecom (Taiwan)
BB TV (of Yahoo BB, Japan) NA
Sasktel (Canada)
> 100s of small operators in the US
SBC Communications
Recent Trials announcements
SwissCom (Bluewin)
Telecom Italia
Bell Canada
Reliance Infocom BT
Telus
Telstra

18. Example - PCCW (Hong Kong)
PCCW has > 500K IPTV subscribers as of 2005
Service launched August 2003
IPTV offering contains:
No charge for equipment & installation
6 free and 34 pay channels ($1-3 each)
15 audio channels
A-la-carte payment model for VOD
PCCW reports IPTV launch helped to:
Reduce churn by half (now less than 1%)
Increase ARPU (IPTV ARPU - $20)
Higher market share (25% of IPTV subscribers are new DSL subscribers)

19. Agenda Overview Technology Market and Business Trends
Opportunities and Challenges
Key Success Factors
Integration of IPTV and VoIP
Summary & Q&A

20. IPTV Challenges Business challenges Technological challenges
Create a better user experience than cable or satellite
Becoming entertainment provider - major shift for a telco
The television market is an uphill battle - well established entities
Uncertain regulation for new fiber builds and TV franchises
Get premium content at lower prices than cable or satellite
Build trust with studios and publishers
Differentiate business model from cable (On demand? Anywhere access?)
Set Top Box price <$100
Accelerate FTTx/ADSL2+/VDSL roll-outs
Technological challenges
Build better/cheaper silicon for STB
Lower cost of DSLAM/FTTx deployments (WiMAX?)
Further improve video compression rates
Content recording and distribution control (secure DRM)
End-to-end QoS monitoring and service assurance
Integrated customer care, billing, provisioning, activation, self-service
Multi-services blending (VoIP, IPTV, apps)
Higher density of VOD play-out farms

21. Opportunities Multi-service blending Community applications
Click-to-speak from within TV experience
TV parental control from cell-phone
Interactive voting or messaging applications
Access to personal picture albums, videos, music library
Community applications
Greeting cards
Video-conferencing
Alerts and public announcements
Personalization
Personalized advertising
Personalization of on-demand TV experience
Video content discovery
Take content with you (drag and drop)

22. Agenda Overview Technology Market and Business Trends
Opportunities and Challenges
Key Success Factors
Integration of IPTV and VoIP
Summary & Q&A

23. What Differentiates IPTV
Exceptional on-demand experience
Integrated Customer Management by operator across all touch points
Powerful self-service capabilities
Multi-services blending
Community applications + local directories
Unlimited content choice
Simplicity of service set-up and navigation

24. Agenda Overview Technology Market and Business Trends
Opportunities and Challenges
Key Success Factors
Integration of IPTV and VoIP
Summary & Q&A

25. Multi-Services blending
Jane is calling…
Reject
Take call

26. IPTV-VoIP Integration Points
Headend
Transport
Access
Home
VoIP
IGMP
Router
DSLAM
IPTV Apps Servers
VoIP
Soft switch/ Gatekeeper
DSL CPE/
FTTH
STB

27. IPTV and VoIP Possible integration points IPTV middleware platform
+ full access to media, customer context, devices info, remote control
+ full synchronization with user activities
+ rich and deep application integration possible
- tedious integration process (IPTV middleware owned by telco)
+ erects a higher barrier to entry for competition
The residential gateway (xDSL CPE)
- no significant integration possible
IPTV Set-Top-Box
presently leased to customer by telco
telco decides what goes on STB
STBs are authenticated and validated at boot-time, no DIY
- integration only possible with consent of operator
- high cost of R&D due to diversity of deployed STBs

28. IPTV in the Living Room
Distribution in the home via Coax/Cat5/PWL or WiFi
Multi screen distribution with multiple STBs
Number of screens only limited by broadband link
Control service from
Remote control
Web browser
Cell phone
Portable media player
Media centers will integrate with STB
For current market, IPTV is still more TV than PC
Indications are that our kids will want the above reversed

29. What Are the Needs That IPTV Fulfills
For Service Providers
Much stickier service combinations – lower churn
Video conferencing, community messages, alerts
Additional revenue from payTV, gaming, interactive advertising, tv-commerce
Detailed service analytics
Powerful customer self-service
For Carriers
Finally demand for the bandwidth glut in the network
For Manufacturers
New home devices market
Innovation potential around user interface, silicon, services
Customer managed PayTV service is a fantastic opportunity for telcos to run the money making machine on autopilot

30. Future of Video Entertainment
Community creative process
Reality Shows
Citizens journalism
Participative entertainment – voting, video-telephony (B2C, P2P)
Broadband link is a commodity
Access to content over any available access tech.
Anytime, any device and any location entertainment
Seamless blending of entertainment and commerce
End of the 30sec ad spot TV economics
Search and discovery of content
Drag and drop services from one device to another

31. Summary IPTV and triple play is happening
IPTV is not me-too-TV – it’s a differentiated user experience
Integrated customer management is key
Cable operators will probably adopt IPTV as a technology too
Key success factor is a quality customer experience
Differences between cable and telco companies are disappearing – it’s only a last-mile technology
User experience will decide success or failure
Content is king
Devices are converging in their capabilities – mobile, TV, PC
Advertising industry will have to adapt to new reality

32. Thank you!
Q & A
IPTV