Investor & Analyst Conference

Technical Presentation
Jan Vorstermans
Mechelen - May 13, 2008

Agenda

The current network

The challenge
The actions
Cable versus DSL
Research & Standardization
Capex
Conclusion

The current network

Telenet network footprint
Homes passed per km2

Telenet network infrastructure

The 3 main levels of the Telenet network

5 Switch Stations

47 Head Ends

2255 Optical Nodes

1400 Homes per Node
4

Telenet HFC network

10,000 km optical fibre - 52,000 km coaxial network

Telenet HFC network

10,000 km optical fibre - 52,000 km coaxial network

Average distance customer to optical node: 1.5 km

Towards an all IP network

Focus is on the HFC Aggregation

The challenge
Bandwidth needs are on the rise
Strong natural traffic growth due to richness of content (video)
Strong RGU growth
n Strong VOD growth

Average bandwidth per user

Assume a
constant
increase of
1.5 x every year

Maximum bandwidth trend

for data modems
Past 25 years also show a consistent 1.5 x increase
every year
Can we
extrapolate this
trend into 2016?

Bandwidth needs and solutions

10

Needs

Solutions

Higher upstream speed

Upgrade upstream
spectrum

Higher Internet speed,

more iDTV channels

Increase digital capacity

with factor 3

Long-tail and communitybased content

Switch from broadcast to

on-demand (streaming)

The actions
How to create more bandwidth
Increasing the bandwidth, optimizing use of the spectrum

Former upstream (Return) spectrum: 5-25 MHz

For Internet and VoIP Telephony

Former downstream (Forward) spectrum: 87-450 MHz

11

For ATV, iDTV, Internet and VoIP Telephony

Action 1:
upgrading the existing technology
Increasing the modulation scheme from 64 to 256 QAM
The more powerful the modulation algorithm, the more bits per Hertz you can add

12

Result

A better use of the existing spectrum: + 200 Mbps

Status

Already finished

Cost/HP

0.2

Action 2:
expanding the existing spectrum
ExpressNet/Mach 3 phase 1:
expanding the upstream spectrum

Before

13

After

Result

Increase of the upstream spectrum to 65 MHz

Status

Started in 2005, completed

Cost/HP

40

Action 2:
expanding the existing spectrum
Mach 3 phase 2: expanding the downstream spectrum
Before

After

14

Result

Increase of the downstream spectrum to 600 MHz

Status

Started in 2007, completed by mid 2009

Cost/HP

16

Action 3:
increasing interactive bandwidth
Pulsar: node-splitting
From 1400 homes per node to 500 homes per node

15

Result

Tripling the existing bandwidth, ready for Hybrid PON

Status

Started Q1 2008, 5 year program

Cost/HP

35

Action 4:
more efficient use of bandwidth
By introducing Euro Docsis 3.0 Channel Bonding

16

Result

Downstream up to 200 Mbps, upstream up to 120 Mbps

Status

Field trial second half 2008

Action 4:
more efficient use of bandwidth
By introducing Switched Digital Broadcast

17

Result

Expected gain: 200 Mbps, unlimited number of channels

Status

Field trial second half 2008

Cost/HP

The bandwidth race

Cable versus DSL
Cable widely outperforms all DSL technologies

Speed in Mbps

Cable =
shared medium,
separate spectrum

18

Watching TV does
not slow down your
internet!

Distance between DSLAM an CPE in km

Research & standardization

Cable Europe
Cooperation & standardization
Linked to CableLabs

19

Determine the optimal roadmap for

extending cable network capabilities
to meet future service demand

Capital expenditures
Capex-to-revenue ratio
Capex-to-revenue ratio down to 22.7% in 2007
and expected to decrease further
As % of revenue
24.5%

200

150

22.7%

25.2%

Increasing impact of STB Rental

strategy

20.6%

100

Network infrastructure capex to

sustain RGU growth & product
leadership

50

Continued network programs

0
2004

20

Continued downwards trend in

cost per install

2005

2006

Support capital

Line extensions

Commercial

Upgrade/rebuild

Scalable infra

iDTV rental

2007
CPE

Network upgrade programs

Network upgrade programs remain stable and fit

with long-term Capex guidance
100
90
80
70
60
50
40
30
20
10
0
2004

21

2005

2006

2008

2007

Support capital

Line extensions

Commercial

Upgrade/rebuild

Scalable infra

iDTV rental

CPE

Conclusion
Telenet is ahead of bandwidth evolution

Bandwidth per homes passed

The HFC network architecture

22

Time

superior to DSL
speed independent of distance
enables rapid expansion
Allows gradual evolution to Hybrid PON