Overview of the potential of broadband access and IPTV services in Eastern European countries with a focus on Hungary, Poland and Romania

1. The broadband potential in Eastern Europe Michael Philpott [email_address] 4 th December 2008

3. Level 3 General market demographics © Copyright Ovum 2007 www.ovum.com

4. Financial In general the spread of wealth is relatively even. However, average salary is low compared to Western European countries

5. ICT General ICT levels are good. Fixed broadband is in danger of early saturation though.

6. Level 3 The Hungarian market © Copyright Ovum 2007 www.ovum.com

7. The Hungarian broadband market Hungary still has old incumbent boundaries. Magyar is the dominant incumbent, and has DSL and cable interests

8. Magyar Magyar’s fixed broadband is already starting to plateaux

12. Level 3 The Polish market © Copyright Ovum 2007 www.ovum.com

13. The Polish broadband market Cable Cable TPSA is the incumbent operator and dominates the Polish broadband market The cable market provides reasonable competition, but is fragmented. Netia is the only large ISP to be really growing market share

14. Overall market conditions Fixed market in sharp decline PLN (million) Source: UKE Source: TPSA financial reports TPSA’s fixed line revenues Change in fixed line revenues

17. Competitive offerings TP is highly focused on the provision of content But is being attacked on broadband access 70 zl ($21) (30 zl ($9) for the first 2 months) 135 zl ($41) 150 zl ($45) 30 zl ($9) 48 zl ($14) 80 zl ($24) 79 zl ($24) (54 zl ($16) under current promotion) 512k to 6M 59 zl ($18) 1M to 16M 69 zl ($20) 2M to 20M

19. Level 3 The Romanian market © Copyright Ovum 2007 www.ovum.com

21. Romtelecom 50% reduction in monthly subscription fees Increase lowest speed to 1M Introduces 20M More aggressive pricing is starting to pay off 78 ($100) 20 Mbps 49 ($63) 8 Mbps 25 ($32) 6 Mbps 15 ($19) 2 Mbps Tariff (EURO) Speed

25. Level 3 The potential for IPTV © Copyright Ovum 2007 www.ovum.com

26. Pay-TV is gaining strength Need to attack, not defend Difficult to find niche Good market for IPTV Must provide value Lack of good free TV Good free TV Weak pay-TV Competition Strong pay-TV Competition

27. There is an opportunity, but Broadcast TV VoD HDTV Multi screen Int. Apps UGC UGC sharing Int. Long tail Target Ads Int. home The beginning Differentiation Building value PVR / Catch -up But can it do it at the right price point? IPTV will really have to differentiate

28. There is a fibre push Hulu Apple TV But at what cost? Verizon Fios BT Vision

29. Given price points, utilising other platforms should be a good strategy Broad-band Broad-band Broad-band Simple service bundling to create value Add interactivity to provide new features Add DTT option to reduce costs further

30. Two issues with this strategy Broad-band Broad-band Partnerships can break down A VoD only service can come under new competition

32. Level 3 The potential for broadband © Copyright Ovum 2007 www.ovum.com

33. Broadband access is a sticky service Source Ovum sample size 8,000 consumers

37. Using OTT to your advantage Consumer Home One bill QoS Guaranteed Customer service Maintenance & support ISP acquired content Sport content Film content Music content Gaming Gambling • • • • • • • • • •

38. Level 3 Concluding thoughts © Copyright Ovum 2007 www.ovum.com

40. Level 3 Thank you © Copyright Ovum 2007 www.ovum.com