Post on 09-Mar-2018
CAPA
January 2007Rolling out IPTV,
in a tough m
arket
landscape
Pedro Ramalho Carlos
COO Sonaecom Fixo
1 2
ÍNDICE
Who we are
Sonaecom IPTV case study
3Key messages
1 2
ÍNDICE
Who we are
Sonaecom IPTV case study
Role of IPTV
Technological &
Netw
ork drivers
a b
Technical learnings
Project road
map
c d
3Key messages
eMarketing learnings
SEPARADOR
1Who we are
5
Sonaeco
m Presentation
Setting the Scenery –Portuguese Market
Q3 2006 (000)
Population:10.235
Households: 3.651
Residential T
elephone lines: 3.202
(88% household penetration; -1,3 % 2005-10 CAGR)
Residential Internet customers: 1.587
(43% household penetration)
Broadband Accesses:1.400
(38% household penetration)
PAY TV customers:1.801
(49% household penetration)
(3% 2005-2010 CAGR)
Sources: INE, ANACOM, PT and Sonaecom reports
ADSLgrowth : 19,8 %(2005-2010 CAGR)
CABLEgrowth : 10,4%(2005-2010 CAGR)
DTH: 403
CABLE TV: 1. 398
6
Sonaeco
m Presentation
Setting the Scenery –Portuguese Market Facts
75%
25%
IncumbentOther Players
Cable Broadband MS%
67%
33%
IncumbentOther Players
ADSL Broadband MS%
81%
19%
IncumbentOther Players
PayTVMS%
•Portuguese Market is Small (10 MM inhab
itants � ���
~3,7 MM Househ
olds)
•Telco industry is about scale
•PayTvhas a high penetration on Portugal, the highest of South European Countries
•Both distribution networks Copperand Cab
leare, so far, in the hands of the incumbent:
Portugal Telecom, which has a near monopoly in broadband and paytvdistribution:
•The dominant position of the Incumbent has been eased by a soft regulation policy.
Facts
7
Sonaecom Presentation
Group Structure
LEADINGIT
&SYSTEMS
INTEGRATORS
#3MOBILE
OPERATOR
#2 FIXED OPERATOR
INTERNET AND VOICE
LEADING REFERENCE
DAILY PAPER
(1) Software and Systems Integration
SONAE SGPS 50.1%
100%
FRANCE TELECOM 19.2%
EDP 15.9%
PARPÚBLICA 3.1%
FFLOAT 11.7%
SONAECOM
TELCO M
OBILE
TELCO FIXED
MEDIA
SSI (1)
100%
100%
100%
www.sonae.com
2Sonaecom IP
TV Case Study
Role of IPTV
Technical an
d Netw
ork Drivers
a b c d e
Technical learning
Project road
map
Marketing learning
9
�How to create a competitive network, capable of unbalancing an
entrenched incumbent and at the same time
biased
market
situation
�Be able to take advantage of a technology discontinuity/advance
in order
to effectively unbalance the situation towards a
challenger overcoming all the eco
nomic and competitive hurdles
�Grab the o
pportunity of the Broadband
explosion and the n
ew
ULL regulatedmarket
�To find out if it would be possible to deliver the so far unreachable
ideal of a true converged and multi-service netw
ork
Sonaeco
m IP
TV Case Study
NetworkStrategy-The Drivers
10
�Very scalable(from home to enterprise to service providers)
�Matches the MAN/WAN backbone speedof up to 10 Gbit/s
�Sim
ple technology (leading to cheap, reliable equipment)
�Good integration with the NGN Soft Switch
ingplatforms
�Excellent support for deploying massive ADSL2+services
Good fit for IP
( ...and MPLS, VLAN,
Multicast -IP/TV )
Skipping in
term
ediateSDH and ATM legacy network in
vestm
ents
... the m
ove to GEthernet as a core technology
Sonaecom was the first Telco in Portugal to deploy a full
GEthernet co
re netw
ork for supporting
ultra-broadband services, such as, IPTV
Sonaeco
m IP
TV Case Study
NetworkStrategy-Backbone
�From N x 155 Mbps to N x Gigab
it Ethernet
�From SDH to extensive DWDMdeployment (multiple optical signals on the same fiber)
�From silo Networks (Voice / Frame Replay / ATM / IP) to trueIP/Ethernet convergence
11
2001
2002
2003
2006
2006
The short but successful story of hard work and perseverance
Fiber
optical network with a significan
t geo
graphical coverage
�> 5.000 Km of core fiberacross almost the entire country
High quality and high cap
acity tran
smission network
�Highly redundant rigs using, DWDM, NGN-SDH and GEthernet
�Installed capacity in each section ranging from 2.5 up to 10Gbps
�High network usage efficiency
Sonaeco
m IP
TV Case Study
NetworkStrategy–Optical Network Evolution
12
Sonaecom’s
national network
reaches 134+ cen
tral offices in
Q306
�Delivering Leased Linesto Mobile
network access nodes and to business
customers
�Reaching 1.6 m
illio
n homesin Portugal
~50
%of the Portuguese population
�Delivering 2Play services
�2 Play footprint already mainstream of
connected m
ost im
portan
t PT Cen
tral
Offices
�Delivering 3Play serviceson
approximately 60% of the connected
CO’s
Oporto
Lisbon
COs with Sonaecom presence
PT COs
September 2006
Sonaeco
m IP
TV Case Study
NetworkStrategy–ActualAccess Network
13
CO DSLAM
Increased Ban
dwidth Increased Reach
ADSL2+
Rem
otes
VDSL2
“Fiberization”(gradual or green
field)
Studies of FttXwith:
VDSL2/GbEth/Eth/PON
Eth/GbE
Increased Functionality in Acces
sMulti Service Node
Need for:
Ultra BB, service differentiation, multicast…
Layer 3 Functionality
“The First Mile…”
Multi-
service
access
node
ADSL2+
ADSL2+/
VDSL2
SHDSL
GSHDSL
VDSL2
GbE
GbE L2/3
Site C
Site E Site D
Site B
Site A
Metro DWDM Ring
10KM~300Km
Site C
Site E Site D
Site B
Site A
Metro DWDM Ring
10KM~300Km
Sonaeco
m IP
TV Case Study
NetworkStrategy-Access Network, the 2nd step…
14
Sonaeco
m IP
TV Case Study
TheIP Benefits
•DedicatedNetworksfor
dedicatedServices
•SeparateAccess for each
service
•Costlyand Time Consumingto
offernewservices
Industry Telco Drivers
•ServiceDeliveryOverCommonIP
Infrastructure
•SeamlessUserExperienceOverany
Access
•ReducedCapexand Opex
•FastServiceRollout
Benefits
=
15
Sonaeco
m IP
TV Case Study
TheIP Benefits
17
2Sonaecom IP
TV Case Study
Role of IPTV
Technical an
d Netw
ork Dreivers
a b
Technical learning
Project road
map
c d eMarketing learning
18
Broad
cast TV
VoD
Premium TV
VAS
SHORT RUN
Broad
cast TV
Premium TV
MyT
VOn-Dem
and
World
+
VAS
MEDIUM RUN
Broad
cast TV
Premium TV
My Favourite:
•Film
s
•Shows
•Series
•Photos
•Music
•…
LONG RUN
More control
Interaction
Even m
ore
choice
Wan
ts to be en
tertained
Wan
ts choice
Wan
ts a good value proposition
Eco
nomic
models
Advertising
Subscription
Advertising
Subscription
Some su
bsc. per service
One to One Advertising
Subscription per service
…
Couch
Potato
On Deman
dIt will
take so
me
years
to ch
ange
consu
mer
hab
its
making
MyT
Va
successful co
ncept.
Sonaeco
m IP
TV Case Study
Role ofIPTV
19
Sonaeco
m IP
TV Case Study
Role ofIPTV
�Current strength & positioning of existing players
�Is cable strong? Is satellite a factor?
�Current penetration of Pay-TV; How good is Free to Air? DTT coming?
�Propensity to spend on premium content, ARPU level
�Common ownership of cable & telecom infrastructure ?
�DSL penetration; Powerful ISP’s
�Regulatory environment
�Favors Facilities or Services based competition?
�Access to content? Content competition?
�...
Unique m
arket factors will determ
ine value of the IPTV opportunity
Adoption of a Positioning for IPTV dep
ends on your specific m
arket
factors:
20
Sonaeco
m IP
TV Case Study
Role ofIPTV
�Add an additional revenue stream;
�Increase attractiveness of 2P offer;
�Reduce 2P churn;
�Enhance the innovative positioning of the brand.
�IPTV is an interesting way to m
aximize revenues and R
oICfrom network
investments at a low-medium cost over 2P investments;
�IPTV w
ill be key to competeas all major players are positioning themselves
as triple or quadruple players.
The Role of IPTV for
21
2Sonaecom IP
TV Case Study
Role of IPTV
Technical an
d Netw
ork Drivers
a b
Technical learning
Project road
map
c d eMarketing learning
22
Q3
Q4
Commercial Test
(1.000 clien
ts)
Commercial Lau
nch
UPGRADE
2P
Commercial test with:
�Value proposition closed, but
with a work-in-progress list of
channels
�Core contents closed to test
commercialacceptance
�Test all processes and
support tools
Commercial Lau
nch
�Final offer ready for
2P clients upgrade
�Upgrade 2P
customer
�Sell trough
telemarketing, pull
and D2D
2005
Technical test:
�Get it up and running:
Headend, encoders etc
�Outsourcers: Learning curve
�Home networking
2006
Q2
Q1
Q3
Q2
Q1
Q4
Technical Test
(200 clients)
Sonaeco
m IP
TV Case Study
Project Roadmap
23
2Sonaecom IP
TV Case Study
Role of IPTV
Technical an
d Netw
ork Drivers
a b
Technical learning
Project road
map
c d eMarketing learning
24
Sonaeco
m IP
TV Case Study
MainLearnings–Technical
Eligibility Control
�Eligibility difficultieseven for 2play clients: cause-effect mechanisms and degree
of causality difficult to identify.
�Multi STBis a major challen
ge
�A reliable GEO reference toolis crucial for new customer eligibility
ADSL 2+ stability
�No consistent stabilityin Local Loops as market grows: the increase of ADSL
penetration can affect noise levels in cables: affects loop stability and causes errors;
�Speed is necessary but not enoughto ensure quality: small interferences which
do not affect 2Play service, cause pixelizationand QoSerosion in IPTV;
Provisioning and Breakdowns
�Difficult and long learning curve;
�The provisioning cycle is complex: it’s an operational challen
geto manage
installation outsourcers and the incumbent to provide good end2end customer
exp
erience
Eligibility Control
�Eligibility difficultieseven for 2play clients: cause-effect mechanisms and degree
of causality difficult to identify.
�Multi STBis a major challen
ge
�A reliable GEO reference toolis crucial for new customer eligibility
ADSL 2+ stability
�No consistent stabilityin Local Loops as market grows: the increase of ADSL
penetration can affect noise levels in cables: affects loop stability and causes errors;
�Speed is necessary but not enoughto ensure quality: small interferences which
do not affect 2Play service, cause pixelizationand QoSerosion in IPTV;
Provisioning and Breakdowns
�Difficult and long learning curve;
�The provisioning cycle is complex: it’s an operational challen
geto manage
installation outsourcers and the incumbent to provide good end2end customer
exp
erience
25
2Sonaecom IP
TV Case Study
Role of IPTV
Technical an
d Netw
ork Drivers
a b
Technical learning
Project road
map
c d eMarketing learning
f
26
Sonaeco
m IP
TV Case Study
MainLearnings–ConsumerInsights
Focus Groups and Research m
ain results
�Customers are
unsatisfied with
existing Pay-TV
offers
�Portuguese pay TV
market is considered
monopolistic
�Customers are
unsatisfied with
existing Pay-TV
offers
�Portuguese pay TV
market is considered
monopolistic
Alternative co
mpetition
�Customers say they
want an active role
in their choice of
channels
�VOD was greatly
appreciated once
tried
�Customers say they
want an active role
in their choice of
channels
�VOD was greatly
appreciated once
tried
IPTV ben
efits
�3Play is perceived
as a bundle : better
value for money
3X1
�Single invoice is
seen as an
advantage
�3Play is perceived
as a bundle : better
value for money
3X1
�Single invoice is
seen as an
advantage
3Play
Consu
mers value having m
ore contents at home and freed
om to choose.
3.Play bundles are seen as a potential so
urce of savings
Source: Sonaecom’s focus group
�“I don’t want to pay
too much”
�“I just want to pay for
the channels I
watch”
�“I appreciate a vast
number of channels”
�“I don’t want to pay
too much”
�“I just want to pay for
the channels I
watch”
�“I appreciate a vast
number of channels”
PayT
VBundles
27
One operator, one connection, a single bill
Sonaeco
m IP
TV Case Study
MainLearnings-Offer
10 Fixed
Chan
nels
30 Fixed
Chan
nels
+ 10 àla carte
48 Fixed
Chan
nels
+ 20 àla carte
100 Chan
nels
Over 100 live channels
available
On-demand Contents (>2.500)
Movies
Anim
ation
Docu
men
taries
Adult ContentMusic Concerts
X
28
Sonaeco
m IP
TV Case Study
MainLearnings-Offer
User Interface
ORCA
Middleware
29
Sonaeco
m IP
TV Case Study
Main Learnings–Video on Demand
1.
Don´texp
ect high usage from day 1:
2.
VoDreach
ed ju
st over 20% of clien
t base.
Dom, 19 Março
18:31
VOD
“UmaCasa no Fimdo
Mundo“
com Collin Farrell, de Michael Myer
Género: Drama, Novidade, Romance
Filmeda Semana
Novidades
MENU
OKSeleccionar
Voltar
Brevemente
MaisVistos
SugestõesClix
Catálogo
Novidades
Ver
trailer
pesquisar
Adicionar
a Favoritos
What's New
Catalogue
Top
Suggestions
Coming soon
Create the Habit for
ON DEMAND
BEHAVIOUR
30
Sonaeco
m IP
TV Case Study
MainLearnings–Video on Demand
Promote Promote
Promote:
�Coach potatoes do not have on demand behavior
�Create the habit !
�Provoke trial
Top rated
Most
Seen
31
Sonaeco
m IP
TV Case Study
MainLearnings–Video on Demand
Intuitive navigation : easy to use:
�Good “Search Engine”: Artist / Title etc
�Navigation on menus intuitive : 1 stop shop
“Action”
pag
e
Search
engine
32
Sonaeco
m IP
TV Case Study
MainLearnings–Video on Demand
60%
25%
10%
3%2%
Movies
Adult content
Anim
ation
Concerts
Docu
mmen
taries
VOD split per categories :
�Movies /Adult content = Revenues
�Concerts, Animation & Documentaries = Differentiation &
Segmentation
33
�Mature Content Industry : PAYTV = CABLE
�Tough negotiations -contracts take a long time
�Industry has barriers to retain vertical power…
Sonaeco
m IP
TV Case Study
MainLearnings–Content Insights
Watch Out for Telcos:
Do Not Rush
Neg
otiations
Main contractual negotiation
variables:
�Monthly fee per subscriber
�Revenues Share
�Minimum guarantee &/or Minimum %
over client base
�A la carte subscription
�Flat rates
�Buy rates per title
�Window Availability
35
Sonaeco
m IP
TV Case Study
MainLearnings–VOD Offer
MainChallenges
�Make “search”more in
tuitive
�With abundance comes more choice and more complexity : MAKE IT S
IMPLE
AND INTUITIVE FOR CONSUMERS
�Quantity Vs Quality
�5% of blockb
usterswill be responsible for the majority of revenues
�Perm
anently promote and highlight what's new
on the service
�Keep Consumers coming back
�Create user habits
�PROMOTE and PROVOKE TRIAL
36
Sonaeco
m IP
TV Case Study
MainLearnings-Offer
TRIAL IS KEY
37
Sonaeco
m IP
TV Case Study
Wrapup–Marketing/Offer
�The choice of TV packages shows a sim
ilar pattern of
cable offers
�Main reasons for sign-up are dissatisfaction with
previous operator and/or price savings
�Trial is keyto sell: image quality must be seen and
VOD must be experienced
�Consumers
value personalization: VOD & a flavour
of “a la carte”
�The availability of all p
remium channelsin every
STB is greatly appreciated
�New
features(VoD, EPG)need to be properly
communicated & experien
ced
�Over 80% of current users are advo
catesof the
service and recommend it
SEPARADOR
3Key Messages
39
�The TV business is a different industry to Telcos
�Don't rush on content acquisition � ���
it can
be a
very expen
sive m
istake
�VoD
and other V
AS are key differentiators vs.
traditional Cab
le
�PAYTV C
onsumers are passive � ���
Don't exp
ect
immed
iate uptake an
d usage of powerful VAS
services
�Service need
s to be user-friendly
�PROVOKE TRIAL & CREATE THE HABIT
Key Messag
es ab
out IPTV
40
ped
ro.carlos@
sonae.com
Thank You
☺ ☺☺☺
COO Sonaecom Fixo