1. The European way to think the Digital World www.idate.org The Future of Telephony IDATE International Conference Montpellier (France), 25 November 2004 Didier POUILLOT Head of Industrial Analyses Department IDATE

2. IDATE © 2004 www.idate.org 2 Internet Act II and the Future of Telephony 25 November 2004 Traditional fixed telephony is declining… Decline in fixed access lines and related traffic Drop in fixed telephony revenues (in billion USD) Decrease in tariffs due to technology, competition, etc 2001- 2004: - 15 million access lines in the USA - 6 million in Western Europe Source: IDATE

3. IDATE © 2004 www.idate.org 3 Internet Act II and the Future of Telephony 25 November 2004... due to multiple factors  Mobile substitution Breakdown of world telecom service markets 1985 1995 2003  Development of emails  Emergence of VoIP  … Source: IDATE

4. IDATE © 2004 www.idate.org 4 Internet Act II and the Future of Telephony 25 November 2004 Key Questions Telephony: an application rather than a service? Assuming that telephony will no longer be a service in the near future but an application, what about the economy of the access market? Telcos: the search for more value added? Can the access providers, and notably the incumbent telcos, get enough money from their traditional activities or are they forced to move to more value added operations? What about the development of new services (videotelephony, …)? Can new players emerge? Who are they? What about their positioning? The impact of broadband technologies? What about the combinations of present broadband technologies (DSL, cable modem, mobile 3G…) with emerging ones (WiFi…)? Impact on operators’ positioning and business models? 1234