Experience Sharing .Beyond IPTV at PCCW Frederick Chui SVP, International Products & Solutions 28 March, 2007 Agenda About PCCW PCCW Business Transformation Evolution to Quadruple Play Technological Foresight Moving Forward About PCCW Merged with Cable & Wireless HKT in August 2000 to form PCCW More than 14,000 employees worldwide Fixed, Broadband, Mobile & IPTV business Largest customer base in IPTV service with more than 750,000 subscribers Group revenue increased 21 percent from the first half of 2006 to US$1,810 million and Group EBITDA increased 13 percent to US$468 million Publicly listed on the HKSE and the New York Stock exchange with an ADR Listing China Netcom 2nd largest shareholder Business Transformation PCCW Business Transformation Extending Value Chain Content Application Access Conduit (POTS, Basic Broadband) Own content (e.g phone calls) Separate networks and billing Transactions Unlocking Capabilities Secure third party content Managed high bandwidth Network and Billing Trusted partner Increased stickiness Evolution to Quadruple Play PCCW Has A Leading Market Position in HK 2.6M Fixed Lines 1M Broadband Lines 750k PayTV Subscribers 920k Mobile Subscribers .One part of wider Telco strategy INTERACTIVECONTENT&TRANSACTIONS HOMENETWORKING Quadruple-PlayIntegratedServices Evolution to Quadruple Play 2004-05 2006 2007 Going Forward Fixed-line Circuit Switched PSTN NGFL Advanced NGFL Packet Switched IP Voice Broadband 8 18 25 1.5-6Mbps 6Mbps Mbps Television IP TV Basic Interactivity Advanced Interactivity HDTV Mobile Mobile 2G Services 3G 3G TV Evolution to Quadruple Play Fixed-line 2004-05 2006 2007 Going Forward Packet Circuit Switched PSTN Switched IP Voice Broadband 1.5-6Mbps 6Mbps 8 18 - 25Mbps Television IP TV Basic Interactivity Advanced Interactivity HDTV Mobile 2G 3G Evolution from Basic Voice to Advanced Converged Phone Services Now & Tomorrow, Content Applications & Transactions Future Converged In the Past, Access Only Advanced NGFL BB NGFL Video Phone snaap! Services VoWi-Fi Home networking Fixed Mobile Convergence NGFL/CVG Colour Display Enhance SMS PSTN Basic data SMS Today Partial IP Interactive Information Full IP Time Evolution to Quadruple Play Fixed-line 2004-05 2006 2007 Going Forward Packet Circuit Switched PSTN Switched IP Voice Broadband 1.5-6Mbps 6Mbps 8 18 - 25Mbps Television IP TV Basic Interactivity Advanced Interactivity HDTV Mobile 2G 3G PercentageofTerritorialReach(%) 6Mbps introduced ADSL2+ and VDSL 8Mbps Early ramp up of fiber to the building/ kerb ADSL to 8Mbps To 50% from exchange Dedicated Managed Bandwidth with Q.o.S. NOT SHARED Broadband Access Development 6Mbps introduced 85% 93% Via FTTB + ADSL2+ and VDSL 18 -25Mbps 8Mbps Early ramp up of fiber to the building/ kerb 50% ADSL to 8Mbps To 50% from exchange Today Dedicated Managed Bandwidth with Q.o.S. NOT SHARED ! Time Evolution to Quadruple Play Fixed-line 2004-05 2006 2007 Going Forward Packet Circuit Switched PSTN Switched IP Voice Broadband 1.5-6Mbps 6Mbps 8 - 25Mbps Television IP TV Basic Interactivity Advanced Interactivity HDTV Mobile 2G 3G Evolution from Basic Broadband to HDTV and Mobile TV now HD 2007 STB with H.264 for HD 7.5Mbit/s plus MPEG2 for SD HDTV Advanced Interactivity MPEG4 Home Networking Multiple TVs MOBILE TV Basic Interactivity Replay/ timeshift On-demand Interactive advertising Casual games Transactional services (e.g. Movie Trailers/Cinema Ticketing) Electronic program guide Pay TV Online subscription & billing Traffic & weather channels 95 channels (ESPN, ATV, drama) 23 channels Broadband Internet a la carte model MPEG2 Today Time Evolution to Quadruple Play Fixed-line 2004-05 2006 2007 Going Forward Packet Circuit Switched PSTN Switched IP Voice Broadband 1.5-6Mbps 6Mbps 8 - 25Mbps Television IP TV Basic Interactivity Advanced Interactivity HDTV Mobile 2G 3G Mobile TV on Exclusive to content made available customers Utilizing CMB technology, content can be broadcast more efficiently and to a large group of users Initial programming will include local & international news, finance & sports: Other entertainment including Technological Foresight TV Innovative Technology Digital Decoder One Link to the Home World first technology Modem First Patents Granted Subscription online View billing on TV Protection against piracy Use Internet and now TV simultaneously HDTV & Surround Sound Phone Home PC PC ATM Fibre Ring DSLAM Key Components Web EPG, Interactivity, Low Cost STB DVD chipset based TV 6Mbit/s or better Local Broadband Network Based Conditional Access Unit in DSLAM and Viewership Information DSLAM CAU SMS & Online Billing Studio Feed Archive Satellite Fibre Links STB ADSL Modem 6Mbps IP Multcast DSLAM CAU Billing Headend Subscriber Mgt System Rating The Internet Digital Copyright Protection End-to-end Encryption/Decryption CAU Info Sophisticated and Flexible Subscriber Provisioning and Management System 2 PC 3 DSLAM Rights Management Three Layers of Security Protect Content Network-based Conditional Access TV - Revenue Protection - No Internet Access for STB 1 DSLAM Studio Feed Archive Satellite Fibre STB Digital Copyright Protection End-to-end Encryption/Decryption ADSL 6Mbps Modem IP Multcast DSLAM CAU CAU Billing Headend Subscriber Mgt System Links Rating Analog Copyright Protection Macro Vision The Internet CAU Info ATM Fibre Ring IPTV Technology Platform Moving Forward Enrich content Unique flexible pricing Drive ARPU Mass market packages More exclusive deals Inter- activity Quad Play Market Growth Strategies Enrich content From 23 to 120+ channels in just over 36 months Unique flexible pricing Drive ARPU Mass market packages More exclusive deals Inter- activity Quad Play A la carte proposition low entry point Mini-packs drive up ARPU Chinese Content Platform Ticketing, now Select, now Shop Internet: N.hk / PCCW Mobile $388 Super Value Pack Sept-03 Mar-04 Nov-04 Nov-05 Nov-06 Marketing . Maintaining Momentum ! On-Line Cinema Ticket Booking Customers can pick the seats and purchase tickets from UA Cinemas by clicking on the buttons on their remote control More customers using Movie Ticketing than Cityline Internet Equivalent. Growing New Interactive and Transactional Services Snaap! Quad Play UGC snaap! - Real time uploading, processing, share & view both photo & video First quadruple play service in the market； launch in Mar 2, 2007 View & share both videos & photos on PC, NOW TV, mobile & Broadband p