Slide 1: From FTTH pilot to pre-rollout in France
From FTTH pilot to pre-rollout in France Paul-François Fournier senior VP, advanced products and services marketing NExT March 9th, 2007
Slide 2: Agenda
agenda 1 what we have learned from our customer pilot 2 orientations for 2007-2008 2
Slide 3: Agenda: what we have learned from our customer pilot
agenda 1 what we have learned from our customer pilot 2 orientations for 2007-2008 3
Slide 4: More bandwidth for more services
more bandwidth for more services HDTV with interactive programs, on multiple TV sets or PCs VOD movies and programs streaming or download video games on-line or download video blogs / online photos for digital cameras and camcorders online storage and back-up data security for consumers and SoHo's s
Slide 5: FTTH is enabling new usage patterns right now
FTTH is enabling new usage patterns right now fiber access ADSL access download and download at upload at upload at 8mbps 1mbps copper lines eligibility : 100mbps 8mbps / 1mbps Æ around 65% 15mbps / 1mbps Æ around 25% full HD quality movie 30 Gb 40min >8h >66h DVD quality movie 4.8 Gb 6min 30s 1h 20
Slide 6: Customers keep asking for more bandwidth
customer keep asking for more bandwidth Coverage DSL ADSL / ADSL2+ VDSL2 FTTH < 20 Mbps 50 Mbps 50+ Mbps 2005 2009 2015 we chose FTTH as it is the most upward scalable, therefore 6 future proof, solution
Slide 7: Which architecture should we use?
which architecture should we use ? 1st customer point to 1 fiber for multipoint 64 customers 64th customer 1 fiber for 1 customer point to point point to multipoint (on GPON) is the most CAPEX efficient (lower duct occupancy with less fiber) and saves OPEX at the central office, with no foreseeable
Slide 8: Customer pilot (June 2006 – February 2007)
customer pilot (june 2006 – february 2007) 5 cities in the Hauts-de-Seine all-included offer Asnières-sur-Seine Boulogne-Billancourt 100mbps symmetrical Internet access Issy-les-Moulineaux simultaneously 2 HDTV streams on TV Rueil-Malmaison and 1 stream on PC Villeneuve-La-Garenne unlimited
Slide 9: Lessons learned from our customer pilot
lessons learned from our customer pilot customers high level of interest for FTTH symmetrical bandwidth and 70% of customers own 2 reliability, with technical support required for mass market or more TV sets adoption 30% of customers own main applications are : HDTV, multi-access, photos, video, a H
Slide 10: Pilot helped us to accurately assess our cost structure
pilot helped us to accurately assess our cost structure cost structure derived from pilot phase 15% network and optical infrastructure 5% customer connection customer premise equipment 10% home installation 60% 10% customer acquisition, relationships with "syndics", service provisioning for a 10% pe
Slide 11: During roll out phase, cost structure will evolve according to identified drivers
during roll out phase, cost structure will evolve according to identified drivers to decrease as penetration rate increases, manufacturing costs network and optical for active equipment go down along with cumulated worldwide infrastructure GPON units shipped, and network studies costs go down throug
Slide 12: What we have learned from advanced countries
what we have learned from advanced countries fixed operators respond with fiber to cable predominance, and to customer demand for HDTV USA FTTH PON is the architecture chosen by Verizon (≈ 500 K customers by 3Q06) and by AT&T main lever is bandwidth : Internet remains the “killer application” JAPAN
Slide 13: Agenda: orientations for 2007-2008
agenda 1 what we have learned from our customer pilot 2 orientations for 2007-2008 13
Slide 14: Conditions are now met for phase 2
conditions are now met for phase 2 “ we are working to create a propitious environment for very high-speed network development by encouraging ducts infrastructure sharing and particularly the reuse, whenever possible, of existing ducts in the local loop.” (Paul Champsaur, November 16th, 2006) indoor
Slide 15: FTTH now entering phase 2: pre deployment in 2007 and 2008
FTTH now entering phase 2: pre deployment in 2007 and 2008 offer FTTH in 10 additional major and medium cities starting with Lille, Lyon, Marseille, Poitiers, Toulouse on top of the Ile de France area with 150 000 – 200 000 active customers by 2008 total Capex: around 270 million euros cumulated 200
Slide 16: How we defined the marketing mix for FTTH
How we defined the marketing mix for FTTH insight from main customer motivations are innovation launch of « la fibre » marketing through 100mbps Internet access, simplicity research of a triple play offer, a high level of customer on march 1st, 2007 support and quality of service there is segmented
Slide 17: New offer starting March 1st 2007
new offer starting march 1st 2007 fiber €44.90/month* * 12 month subscription Internet 100Mb Orange TV unlimited voice fiber optics up to 100mbps download livebox & up to 10mbps upload free access to 45 to fixed numbers in €3/month Web 2.0 portal, French and mainland France TV on PC international ch
Slide 18: New offer was warmly received by the press
new offer was warmly received by the press Le très haut débit résidentiel c'est vraiment parti ! Après Erenis à Paris et Mediafibre à Pau, les grands FAI se mettent à la fibre. Et finalement Orange devance Free. […] […] Published on february 16th, 2007 Published on march 1st, 2007 La fibre optique d
Slide 19: Pre-rollout in first semester 2007
pre-rollout in first semester 2007 Paris Plus Hauts-de- Seine progressive coverage in boroughs of Lille, Lyon, Marseille, Poitiers, Areas where fiber is passing residential buildings Toulouse 19
Slide 20: Entering in close cooperation with the real estate ecosystem
entering in close cooperation with the real estate ecosystem building a close relationship with - first “Rendez-vous du syndic” property organized february 15th, 2007, managers and with more than 50 organisations owners represented - a dedicated task force to deal with real estate players is in plac
Slide 21: 2007 evolutions
new services to enhance customer experience 2006 services up to 100 Mbps symmetric Internet Web 2.0 portal — including TV over PC multi-stream TV High Definition TV and PVR High Definition communication (voice and video) 2007 evolutions sharing of user generated content personal broadcast gaming sec
Slide 22: Phase to begin in 2009: mass market roll out
phase 3 to begin in 2009 : mass market roll out 6 000 3 000 subscribers cost per subscriber cost per subscriber ( ) subcribers (in 000') 5 000 4 000 2 000 3 000 2 000 1 000 1 000 0 0 2006 2007 2008 2012 Phase 1 Phase 2 Phase 3 Pilot Pre-rollout Mass market-rollout after 2006 pilot successful complet
Slide 23: FT group capex decrease in mature markets allows to fuel new growth areas
FT group capex decrease in mature fixed & mobile markets allows to fuel new growth areas Evolution of capex split ( base 100) capex intensity in emerging countries will reduce as 14% 14% markets mature 41% 42% lower requirements for 3G coverage plus network sharing will reduce capex in 46% 44% m
Slide 24: Summary
summary demand for very high speed access is emerging, and will achieve mass market status in 2009 we have started to industrialize our roll-out processes our selected technology is mature (GPON, FTTH livebox) our pricing approach in 2007 is designed to facilitate migration from ADSL while p