Triple Play Service Creation in Lifestyle Markets Thomas McCarthy-Howe, Netcentrex VP of Technology

1. Triple Play Service Creation in Lifestyle Markets Thomas McCarthy-Howe, NetcentrexVP of Technology

2. Market Leadership Kenan Acquisition- Convergent Billing Leadership Netcentrex Acquisition- VoIP Application Server Leadership #1 Voice Mail #1 Mobile Music #1 VoIP Application Servers #1 Total Communications #1 Real-Time Billing #1 Telecom Voice Applications #1 Mobile Instant Messaging #1 Unified Messaging #2 SMS #3 MMS Recent Acquisitions 2

3. Innovative, field-proven VoIP, FMC and IMS offering Technological excellence and highly skilled professionals Leading market position Netcentrex + Comverse Leading the Converged Communication World • VoIP infrastructure & expertise • Advanced consumer & business services • Leading VoIP market position • 300 employees, offices in 12 countries • $50 million 2005 revenues • 50+ service operators • 3 Million VoIP subscribers • Leading VAS & billing market position • Mobile expertise and know-how • Global market reach • 5,000 employees, offices in 41 countries • $1 billion revenues • 500+ service operators • 1 billion subscribers 3

4. IMS: The Enabler of Blended Services Services Today Services with IMS Separate, single-media sessions Simultaneous, multimedia sessions Voice Video Multimedia Services Presence Apps Messaging Gaming Application Sharing Voice Video SMS Instant Messaging 4

5. The Past and the Future The Past: The Network Was King The Future: The User Is King • Mass market, no segments • Telephone company branding • Same services for everyone • Same phones for everyone • Separate services on separate devices • Separate providers for • Communication • Entertainment • Information • Segmented markets • Personal lifestyle branding • Narrow psychographic segments • Specific services for each lifestyle • A user-centric view of the world.  "it’s all about me" — my applications, my identity, my availability • Customized GUIs & phones • All services available on all devices • Fixed phone, PC, TV and mobile phone • Single provider can offer • Communication • Entertainment • Information Evolution towards branding & lifestyle services 5

6. Worlds of Telecom and Broadcasting Collide Fixed phone PC Telecom Mobile phone Broadcasting TV Content Devices 6

7. Service Provider Challenges Challenge # 1: Keep Control Over Subscribers  Response: branding, segmentation, & service bundles Challenge # 2: New Sources of ARPU  Response: context-aware lifestyle services 7

8. How are Service Providers Goingto Create New Value? • Value comes from the combination of bundles + new services • Bundling communication + entertainment + content, etc. • New value thanks to cross-leveraging of services • Voice, video, SMS, presence, free content, wireless broadband access • There is increasing value in narrow end-user segments • Specific groups of end-users can be profitably addressed with customized services thanks to Quad Play/FMC technology (“long tail” principle) • New value can be created with context-aware services • An interaction is established according to a context, in real time or near-real-time mode from: • User to user (voice and video communication) • User to content such as quad play services • Users to machines, servers or third party applications • Strong input from local and culturally differentiated services The value is created with Lifestyle Services 8

9. Video Is a Key Service Enabler Across All Lifestyles • Interactive video services (Mobile - TV - PC) • Dating services • Videoblogging / moblogging • Televoting • Video window on TV show • Real estate virtual tours • Information portals • Home surveillance and monitoring services • Sports betting • Video telephony (Mobile - TV - PC) • “See what I see” from mobile to TV • Holiday photo/video message (combined with music or comments) on PC and TV • Video mail messages from mobile to TV • Video conferencing between mobile, PC and TV “Communication is 7% verbal, 38% vocal and 55% non-verbal” Albert Mehrabian, Professor Emeritus of Psychology, UCLA 9

10. Lifestyle Service Segmentation 2003 Number of subs per service 2006 Segmentation General lifestyle markets Branded lifestyle markets Specialized lifestyle markets Senior medical monitoring 10

11. Lifestyle Service Segmentation • General lifestyle markets: • Segmentation by age group • Same brand for all age groups • Services designed to keep up existing ARPU & customer loyalty • Low cost pricing thanks to economies of scale and historic public investments • High investment in infrastructure • Low investment in terminals & GUIs • Large, integrated service providers • Long established market 2003 Number of subs 2006 Segmentation General lifestyle markets Branded lifestyle markets Specialized lifestyle markets Senior medical monitoring 11

12. Lifestyle Service Segmentation 2003 Number of subs • Branded lifestyle markets: • Segmentation by community • Target segments unreachable by mass market operators • Unique brand for each community lifestyle • Services customized to each user community • Premium / value pricing thanks to strong branding • Limited investment in infrastructure • High investment in branding, terminals & GUIs • Link all elements of lifestyle, including content • MVNOs since 2003, integrated with TV & PC from 2006 2006 Segmentation General lifestyle markets Branded lifestyle markets Specialized lifestyle markets Senior medical monitoring 12

13. Lifestyle Service Segmentation 2003 Number of subs 2006 • Specialized lifestyle markets: • Multidimensional segmentation based on psychographics and context • Unique brand by niche segment • Services designed for and triggered by specific context of users • Premium / value pricing in line with context • High investment in terminals & GUIs • High investment in partnerships • Initial market from 2006 Segmentation General lifestyle markets Branded lifestyle markets Specialized lifestyle markets Senior medical monitoring 13

14. Contents • General lifestyle services • Branded lifestyle services • Specialized lifestyle services • Conclusion 14

15. General Lifestyle Services • Segmentation by age groups • 8 – 15 years old pre-teens / teens • Key applications: IM, video greetings, gaming, multimedia ringback tones, SMS/MMS, friend locator • 15 – 25 years old students / young adults • Key applications: single directory, video greetings, video blogging, video “see what I see”, personalization, SMS/MMS, IM, televoting, friend locator, place-shifting • 25 – 55 years old working adults • Key applications: parental controls, teen locator, single directory, personalization, speech dialing, security, work productivity • Key value proposition • Offer service bundles which increase personal utility of communication, entertainment and information 15

16. Examples of General Lifestyle Services Media center content on mobile phone Telephony services on TV Televoting Personalization of TV viewing 16

17. Fastweb’s General Lifestyle IP PlatformEnables Wide-Scale Applications • Over 800K subscribers, IP-TV over DSL and FTTH • 10 M calls per day, 910 € ARPU / year; five 9s reliability • Residential VoIP plus IP-TV, IP-VOD, Data, Teleconferencing, PVR, Video Telephony, Gaming … and many other services 17

18. Consumer Education and MarketingIncrease General Lifestyle Adoption • The first incumbent telco to offer video telephony over their network – November 2004 • Video telephony platform • Offer: 99 Euros for 1 phone and the second for free • Benefits for the Incumbent: • A way to escape the pure price war • A way to increase DSL penetration by addressing “non PC-savvy” users with easy-to-use video terminals (“grandmother/grandchild effect”) • A way to differentiate against a pure VoIP telephony offering 18

19. Contents • General lifestyle services • Branded lifestyle services • Specialized lifestyle services • Conclusion 19

20. Branded Lifestyle Services • Segmentation criteria = communities of interest • Groups of users who have common requirements for communication, entertainment and information • Leverage existing content and/or brand promise • Disney: family • NRJ: young, cool • Yahoo!: different • Google: pioneering • Creating new brands and segmentation using the following criteria: • Age, gender, geography, interests, hobbies • Other examples • Amp’d • Virgin • Breizh • ESPN 20

21. Disney Mobile: The Lifestyle Brand forFamilies with Young Children • Mobile phone service (MVNO) designed for families, expected to launch mid-2006 • Family-package • Multiple handsets within the same subscription • Features to improve family communication • Family entertainment content • Parental controls • Limited Internet access and no chat room access • Almost 2/3 of parents with children aged 8-16 interviewed as part of a Disney study said they would welcome a package designed with families in mind • Other Disney lifestyle services: • Entertainment: resorts, cruises, games, books, cinema, TV channel, merchandising, etc. 21

22. Amp’d: The Lifestyle Brand for18-25 Year Old American Men • MVNO services designed for young men, launched in 2005 • Branding and positioning • Amp'd is focusing on serving their target segment well (2-3M) • Services include several elements of lifestyle service: voice + Web site + mobile entertainment + original content • Custom mobile phones • Cool, inexpensive handsets ready to receive streaming video, music downloads, and pictures of pin-up girls • Custom user interface: “Amp'd Live” • Combines music downloads, video clips, ringtones, games, and wallpaper into a single application • Custom TV / video content • 4 streamed TV stations from major broadcasters and a 5th channel that will carry self-produced shows ranging from action sports coverage to its own spoof reality TV shows • Fox Sports, Fox News, Spike TV and International Music • Clips from the Late Show With David Letterman and highlights from America's Next Top Model • Also produces its own (mobile) television network 22

23. Contents • General lifestyle services • Branded lifestyle services • Specialized lifestyle services • Conclusion 23

24. Specialized Lifestyle Services • Segmentation • Multidimensional segmentation based on psychographics and context • Niche-services designed for and triggered by special context • Unique brand by niche market • Example of target segment • Remote biometric monitoring and medical alarm notification for people with chronic conditions, at high risk, or the elderly • Solution based on custom wireless devices that seamlessly transmit situation-based and location-based data in real-time, for online monitoring, analysis and care 24

25. Examples of the Multitude of Specialized LifestyleServices for the Senior Market Healthcare: Medication reminder Pharmacy re-order Psychological Assistance Heart monitoring Diabetes training Respiratory monitoring Drink reminder Alzheimer monitoring (nPVR + Video, device tracking) Security: Emergency location services ID and social security check Alarm monitoring Commerce: Payment guardianship Proximity video Shopping Services Food supply re-ordering (I-fridge) Entertainment Infotainment Profiled nPVR Good old times films Family video storage TTS newspaper reading Senior Harmony Service Bundle Automotive, travel & transportation: Wheeling chair battery monitoring & replacement Location/map services Car sleeping control, Emergency services Edutainment Senior University (TV-Based) Retired education programs nPVR Gaming/gambling Video conferencing Lotto/bingo Network-based card playing Virtual slot machine 25

26. Project Description Initial pilot project “Campus Village” opened Fall 2005 Over 4,500 students and staff Campus Village provides: Triple Play via fiber to the pillow High-speed Internet access VoIP (residential and IPCentrex) Video on-demand Edutainment E-learning for recording classrooms Distance learning and multi-campus content Computer lab Interactive gaming center Onsite restaurants, including Starbucks! Specialized Triple Play forStudents at SJSU 26

27. Conclusion Challenge # 1: Keep Control Over Subscribers  Response: branding, segmentation, & service bundles Specialized lifestyle markets Branded lifestyle markets General lifestyle markets Challenge # 2: New Sources of ARPU  Response: lifestyle services 27