PT Telkom IndonesiaPT Telkom IndonesiaEvaluating the Evolution of Access Networks to Support HDTV/VoDEvaluating the Evolution of Access Networks to Support HDTV/VoD

AA Case Study on IPTV DeploymentCase Study on IPTV Deploymentpresented bypresented by He Hennri Sri Setiawan Wyatnoetiawan Wyatno (R (Researcher of R&D Center PT Telkomesearcher of R&D Center PT Telkom))

Carrier Ethernet World APAC CongressCarrier Ethernet World APAC Congress

November 2-4, 2009Renaissance Hotel, Kuala Lumpur, Malaysia

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ContentContent

TELKOM in Brief

The Nature of IPTV Services

IPTV Business Model

Summary

IPTV Design and Deployment

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TELKOM TELKOM Ownership ...Ownership ...

TELKOM is the largest full service and network provider in Indonesia, owned by the Government of Indonesia and Public. (Total shares = 20,159,999,280, including 1 Dwiwarna share series A)

as of March 31, 2009

Government

Public

52.47% 10,320,470,711

shares

Treasury Stock

490,574,500 shares

47.53% 9,348,954,069

shares

The biggest publicly listed company in Indonesia ( Market cap : Rp.152 Tn, or +13.23 % of total market cap. at IDX)

TELKOM listed at the Indonesia Stock Exchange (IDX), the New York Stock Exchange (NYSE) as well as the London Stock Exchange (LSE) on November 14, 1995,and also Publicly Offering Without Listing (POWL) at Tokyo Stock Exchange (TSE)

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TELKOM TELKOM Core BusinessCore Business

Market leader with more than 90% market share

Operated by Division : Reg. Div 1-7; FWN Div; Infratel Div;

CISC Div; Enterprise Div; and Subsidiaries :

CO

NS

OL

IDA

TE

DU

NC

ON

SO

L

New Wave Business with significant growth

Operated by:

No.1 cellular operator with more than 49% market share

Operated by:

AWI Finance B.V Balebat

Property, telco infrastructure, trade and finance services, call center and directory, and printing

As of March 31, 2009

Others

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TELKOM’s TELKOM’s Map of OperationsMap of Operations

Regional ISumatera Island

Regional IIGreat Jakarta

Regional IIIWest Java

Regional IVCentral Java& DIY Regional V

East Java

Regional VIKalimantan

Regional VIIEastern IndonesiaBali, Nusa Tenggara,Sulawesi, Maluku & Papua

Covers all over Indonesia : 33 provinces and 440 districts

7 Regional Division 913 Customer Service Point /

PlasaTELKOM (11 shared with GraPARI) More than 317 K Warung Telkom

Subscribers in Java (70%) 4 Areas 11 Regional Sales 71 GraPARI (51 shared with PlasaTELKOM) 271 Gerai HALO

Subscribers in Java (70%)

Access revenues will contribute >80% of revenues, despite Access revenues will contribute >80% of revenues, despite increased contribution of VAS (i.e. IPTV) post 2010increased contribution of VAS (i.e. IPTV) post 2010

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29

49

83

143

244

419

1

6

17

45

112

226

374

660

950

1,209

1,547

971884

763

552

314197

30

27

24

17

10

2008 2009 2010 2011 2012 2013

Other VASVOIPIPTVSMEAccess

346,122334,664

323,585312,872

302,515292,500

201,414

184,630173,250 169,070 170,558

246,076

185,151191,508

236,138212,139

194,881185,390

2008 2009 2010 2011 2012 2013

Broadband Revenues – Indonesia Industry ARPU

• VAS ARPU may reduce decline in overall ARPU if IPTV experiences reasonable take-up in Indonesia • Globally, IPTV has not been a profitable stand-alone business in most cases•The challenges for IPTV in Indonesia are even greater due to low broadband penetration and limited population who can afford IPTV•Assuming moderate take up, IPTV market is expected to reach US$112 million (~1.5 million subscribers) in Indonesia by 2013•Telkom currently has an aggressive plan for IPTV, with a planned commercial launch in Q42009

• VAS ARPU may reduce decline in overall ARPU if IPTV experiences reasonable take-up in Indonesia • Globally, IPTV has not been a profitable stand-alone business in most cases•The challenges for IPTV in Indonesia are even greater due to low broadband penetration and limited population who can afford IPTV•Assuming moderate take up, IPTV market is expected to reach US$112 million (~1.5 million subscribers) in Indonesia by 2013•Telkom currently has an aggressive plan for IPTV, with a planned commercial launch in Q42009

Source: Ovum, A.T. Kearney Analysis 2008

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ContentContent

TELKOM in Brief

The Nature of IPTV Services

IPTV Business Model

Summary

IPTV Design and Deployment

The Nature of IPTV/VOD ServicesThe Nature of IPTV/VOD Services

• IPTV/VOD services are inherently resource-intensive, with unpredictable demand fluctuations.• The issues that define the nature of IPTV/VOD services and lead to unpredictability and resource-

intensiveness include:– VOD/Unicast Concurrency: VOD session concurrency has a direct effect on the amount of unicast network

traffic, and is therefore a major variable in network design and reliable service delivery. Initial peak concurrency rates will likely be about 10 percent, although as VOD content and features such as nPVR are added, unicast video is expected to grow to more than 20 percent in the short term. This excludes unicast traffic as part of the channel- change mechanism, which can be on the same order of magnitude as VOD/nPVR during commercial blocks.

– Broadcast Channel Concurrency: The number of broadcast channels watched concurrently affects multicast replication throughout the network. Internet Group Management Protocol (IGMP) snooping can be deployed to block unwatched channels by pruning the related multicast tree branches, thereby optimizing bandwidth usage in the first, second, and third mile, based on actual viewing patterns.

– HD Content Growth: HD content grows in direct proportion to increased network bandwidth, whether broadcast or unicast. Even with advances in compression technologies, an MPEG-4 HD stream will consume a maximum of 8 Mbit/s. Many service providers believe the amount of HD will be a significant differentiator, making the addition of as much HD content, as quickly as possible, a top priority.

– STB Proliferation: The number of STBs per household – and features such as multichannel viewing for picture-in-picture and multi-angle viewing – further compounds bandwidth requirements as more channels are accessed concurrently per household. North American service providers are projecting somewhere between two and three STBs per home on average.

Key Challenges & RequirementsKey Challenges & Requirements

End-to-End IPTV Network ArchitectureEnd-to-End IPTV Network Architecture

Source : LightReading

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ContentContent

TELKOM in Brief

The Nature of IPTV Services

IPTV Business Model

Summary

IPTV Design and Deployment

Service Impact on Capacity Needs at Each Network LinkService Impact on Capacity Needs at Each Network Link

Source : LightReading

IPTV Design – A Case from TelkomIPTV Design – A Case from Telkom

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Open EcoSystem – IPTV Trial ArchitectureOpen EcoSystem – IPTV Trial Architecture

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ContentContent

TELKOM in Brief

The Nature of IPTV Services

IPTV Business Model

Summary

IPTV Design and Deployment

Methodology Methodology

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Business and Operational Transformation Project Objectives:To create a methodology for defining operator’s business requirements. Define case examples to facilitate internal and external discussions.

Pricing and Packaging Pricing and Packaging

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Shop Window Network Provider

Content Provider/

Editor

Service Provider

Access Network

Aggregation Provider (L2 o L3)

Service Provider

SP SP

Content

Reseller

Editor Editor Editor

STB STB STBSTBSTB

Telco

Other actors

Contents

Interface/

Content Provider /

Editore

Content Provider /

Editor

SP

Content Provider/

Editor

Service Provider

Editor/

Content Provider

STB

Telco’s Business Model

Build A Business Partner EcoSystemBuild A Business Partner EcoSystem

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Driven is Content CommunityDriven is Content Community

Business User

Individual

Family User

CP

– C

on

ten

t P

rovid

ers

New Value Chain – Operator should find its advantageous position to go after the new revenue/profit opportunities.

Financial

Education

Health

Media

NetworkOperator

En

d U

ser

Integrated Service Provider

SP-Service Provider

User Interface

Integrate many contents to provide good user

experience

• Digital lifestyle and workstyle• New user experience for

consumer• E2E solution for business user

Cultivate new markets in cooperation with other industries

New Business Model

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ContentContent

TELKOM in Brief

The Nature of IPTV Services

IPTV Business Model

Summary

IPTV Design and Deployment

SummarySummary

• Although, there are technical challenges to be carefully managed during an IPTV deployment, service providers establishing an IPTV business risk commercial failure – because of their inability to fully understand market dynamics, not addresing unique buying characteristics of target customers, and not orchestratin gappropriate value constellations.

• For service providers that carefully consider the business models, risk sensitivities and overall strategy to maximize competitive strengths, there is an opportunity to compete effectively and grow shareholder value.

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Thank you Thank you for your attention...for your attention...

Contact Address :R&D Center of PT Telkom IndonesiaGedung Menara R&D Lt.4Jl. Gegerkalong Hilir 47Bandung, 40152IndonesiaTel : +62-22-4572426Fax : +62-22-2012262Email : henry@telkom.co.id

http://telkom-indonesia.com

Any further questions?