All IP

Is Swisscom ready to take up the challenge?

Ueli Dietiker, CEO Swisscom Fixnet LtdFelix R. Graf, VP TV & portal Swisscom fixnet Ltd

19 Sept 2006

2

What does IP mean for Swisscom?

New business modelInvestments in infrastructureInvestments in services

3

Agenda

1. Infrastructurea) Transmission-Networks

– Current– Future

b) Access, in particular VDSL2Servicesa) VoIPb) IPTV

1. Conclusion / Outlook

4

1a) Current situation:"x" different physical networks

Customer& terminal

Long dist.level

Regionallevel

Telephony Data Broadband Mobile

ADM ADM

ADMADM

ADMADM

ADM

GWTZ GWTZ

GWTZ GWTZ

GWTZ

GWTZGWTZ

GWTZ

5

1a) Current practice:Overlapping, redundancy, complexity

IT systems (eTOM)Physical Networks

ADM ADM

ADMADM

ADMADM

ADM

GWTZ GWTZ

GWTZ GWTZ

GWTZ

GWTZ

GWTZ

GWTZ

6

1a) Future: "ALL IP" = Time to market & increased efficiency, cost savings

Long distnetwk level

Regionalnetwk level

Customer &terminal

Services

Networkcontrol

VoIP OnePhone

Mes-saging

IPTV

IMS

Technology

One technology, one network & operation

Unified IT for controlling the network

Product ConvergenceAccess via fixed & mobile

Time to marketRapid implementation of target group specific applications

End2EndIP universally used, in the “network” and in the “home“

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1a) Future:IMS (IP Multimedia Subsystem) = Control Layer for "ALL IP"

ALL

IP N

etw

ork IMS enables

multimedia services to be accessed by alldevices, regardlessof the access technology

ServicesOnePhone

Messaging IP TV

VoIP

IP CTX

IP Transport

IMS ControlIMS Core

8

924Accessnet

-> High SpeedTechnology

14 Metres

-> Redundancy& Quality

1 Core-> High Tech

& Capacity

1a) Leading edge 3Play network architecture already built

10-25 Mb > 50 Mb

Fibre Copper

ADSL VDSL FTTB

5 Mb

Legacy

NEW

NEW

NEWPilot

*

* Tel. remains Legacy

9

~2 km

924 Access networks

ADSL

3P : ~70%

HSI: 98%

Distribution boxes RTP

1b) ADSL from a central regional transmission point (RTP) has limited coverage

10

750m

Central Office

VDSL

1b) Provision to cabinets provides VDSL with additional bandwidth

VDSLCabinet

500 1000 1500

30

20

10

Mb/s

R (m)

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1b)Cabinet build-out

12

Agenda

1. Infrastructurea)Transmission-Networks

– Current– Future

b) Access, in particular VDSL22. Services

a) VoIPb) IPTV

1. Conclusion / Outlook

13

DECT telephone with FXO interface (PSTN) and LAN port for VoIP callsCustomer operates two phone numbers on one handset

2a) Bluewin PhoneFirst VoIP service on the Swiss market

Sample configuration of VoIP 2ndLine

ADSL/Cable

Router

AnalogLine

IP Base

LANDECT/GAP

FXO

Internet

PSTN

SIP Profiles

Config. Server

WEB-GUI

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Cost reduction through simplified infrastructure

Transparency and budget planning

Increased productivity

Ease of use & service availability

Reliability and quality

Investment protection

Residential SME Corporate

2a) Customer requirements

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2a) Extract from market research report on Internet telephony usage (VoIP) in Switzerland

7% 10%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

03_2006(n=94)

06_2006(n=103)

09_2006 12_2006

VoIP and trad. telephony

VoIP only as yet

Only 94 (Q1) / 103 (Q2) of the 1000 asked use VoIPOf these VoIP users less than 10% use Internet telephony exclusively

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2b) Definition of IPTV

• IPTV (Internet Protocol Television) refers to the digital transmission of TV programs and movies over a digital data network. The service uses the Internet Protocol (IP).

• The transmission of digital video signals requires high data rates (e.g. 6 – 13 Mbps for HDTV). IPTV can therefore only become a reality with the wide diffusion of broadband subscriber lines (VDSL) and the introduction of new compression techniques (VC1, H.264).

• IPTV is a broadband IP connection that feeds television signals directly to the TV set combined with interactive services via remote control. The drivers of IPTV include Video on Demand (VoD), exclusive content (in particular sports), digital Videorecorder (PVR) and high definition TV (HDTV); technology, i.e., TV over IP, is (still) irrelevant for the consumer

17

Key elements: Content rights for all offersPlatform control; joint and separate elementsMarketing & Sales

2b) Swisscom‘s triple screen vision

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2b) What is IP TV from Bluewin?

Powerful content

Easy to use usefulfunctions

Continuousdevelopment

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2b) IP TV: BluewinTV vs. Internet TV Streaming

Screen

Video-rate

Control

Zapping&VOD

Content

Availability

DRM

TV

Ca. 2.5 Mbps

Remote Control

Instant

Major studios, 3 languages

Switzerland

Closed, PKI

PC

Below 1 mbps

Keyboard

Delayed (>3 secs)

Varying

Varying

“open”

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MagazineInternet-Guide

2b) ServicesTV

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2b) Implementation

Build on existing solutions wherever possibleInvolve partners in development of new solutions

– Microsoft– Cisco– Alcatel– Cinétrade– Tandberg

22

Agenda

1. Infrastructurea) Networks

– Current– Future

b) VDSLServicesa) VoIPb) IPTV

1. Conclusion / Outlook

23

3) Conclusion

"Is Swisscom ready to meet the IP challenge?"

Yes, …Major changes need to be addressedLarge scale investmentsBasis for many possible servicesCustomer decides, not the technologyDifferent business model – same approach