New Digital Business Models Driving the Softwarization of the Network

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1 New Digital Business Models Driving the Softwarization of the Network Marc Halbfinger January 2018

2 Here To Serve Headquartered in Hong Kong PCCW consolidated 2016 Revenue: US$4.9 billion HKT 2016 Revenue: US$4.339 billion Employees: 25,000 HKT is listed Trust on the Hong Kong Stock Exchange as code 6823 PCCW is listed corporation on the Hong Kong Stock Exchange as code 0008 China Unicom is a significant shareholder of PCCW

3 630,000 Kilometres of diverse cable capacity globally Tier 1 Transit free network Largest IP Gateway to China 5+ billion minutes of voice traffic annually 55 locations worldwide Network presence in over 16 Tb/s of global fibre capacity 200+ Gbps private connectivity to major China carriers 3,000 cities and 150 countries TOP 5 Ranking for Global Peering

4 Cloud based Applications Enabling Digital Business Our solutions provide customers with new capabilities & improved levels of efficiency and flexibility Flexible cloud-based IT and communications applications Connectivity and solutions for MNOs across technologies and global markets A single integrated platform delivered from the cloud for global UCaaS Superfast delivery of content around the world Solutions to monitor, optimise networks and free up IT resources Expertise, intelligence and infrastructure to secure assets from cyber attacks Leverage the extensive knowledge and experience of HKT and the PCCW Group to support global customers Value Added Services Cloud Infrastructure & Applications Global Mobility Solutions Global UCaaS Solutions Media Solutions Managed Network Network Security Core Services Voice Service Global Development Services Data Service Global Fibre and Satellite Network

5 Today Every Business is a Digital Business In the digital world success requires a combination of three factors: Evolving customer requirements: Speed and agility Integration Consuming everything as a service Workloads moving to multiple clouds Distributed applications Improved network performance, security & reliability Greater visibility & self-service Automation

6 Carrier softwarisation has three elements Model of Softwarisation Primary Objective Primary Application Primary Relevance Example Impact Big Data Implications 1 Automation Cost-Savings Infrastructure Operations Repetitive tasks Standardised processes Non-core functions Repetitive tasks Repetitive tasks Savings in labour costs of 16% by 2025 amongst top 25 exporting nations Operational automation potential to deliver 25% cost-savings Increased operations and organisational data gathering and monitoring 2 Digitisation Productivity Operations Product and Services Non-standardised Process components with automatable features Capability gaps Healthcare Manufacturing Integration of patient data via Streams app saves UK health workers up to 2 hrs a day Integration Digitisation of metal processing supply chain increased productivity 50% Extended data gathering and oversight of complex functions Product management and execution insights 3 Innovation Revenue Growth Product and Services Emerging market demands New traffic types Emergence of non-carrier Retail Pharmaceuticals Stich Fix using AI platforms to provide automated style & fashion recommendations service BERG using machine learning and AI to support drug development and clinical trials Superior product / service management and control Increased innovation potential

7 Softwarisation requires big data capabilities Automation and Digitisation Automatic generation and collection of data over extended period Value for Carriers 1 Novel Insights Provide insight into previously inaccessible parts of carrier operations 4 Economic valuation More efficiently measure costs and economic value to leverage in commercial agreements and propositions 2 Enhanced industry understanding Build a continuous understanding of carrier operations, partners and markets 5 Customer and industry analysis Build a granular understanding of customer needs and industry trends 3 Performance and decision-making Leverage data and insights from a fully informed overview of the business to support performance measurement and strategic decision-making 6 Network and product strategy Leverage data and insights to inform network evolution strategies and network-driven product and service development

8 Four priorities for enabling carrier industry softwarisation Priority Long-term risks Priority Long-term risks Alignment of industry-wide technology roadmaps Facilitate commercial opportunities Increase evolution certainly Improve investment ROI Industry coordination towards common standards Increase technological feasibility Increase network interoperability Increase technology applicability with third party partners or customers Increased standardization of protocols Reduce risk of failure Priority Long-term risks Priority Long-term risks Industry collaboration to support a dynamic testing, feedback and learning process Confidence in standard development Confidence in software-based product development Insight into industry-wide priorities Value-adding growth opportunities A roadmap for retiring legacy networks Aligned progression across the industry Support interoperability and coordinated transition Benefit knowledge sharing and learning processes Support a reduction in network failure

9 Rapid Transformation of Network, Products and Services Virtualisation & Automation of Networks SDN, SD-WAN, NFV Cloud-based Applications Virtual Network Functions, Security as a Service, UCaaS, XaaS Integrated & Bundled Products API Integration Unified Management Console Network and Applications. Configure, price, quote, order, provision, manage Software is now at the core of Product Strategy

10 The Move to Automation and Customer Self Service

11 The Softwarization of the Network Driving the demand for a different approach and skillset for the carrier industry Increasing focus on software infrastructure development is itself driving an increased demand for more bandwidth to facilitate realtime collaboration, ubiquity, compute, etc. Increasing focus on complex apps to manage capacity, collaboration, orchestration, ubiquity, computing power, etc. etc. Software-based Infrastructure Physical Network Infrastructure

12 Embracing the Platform-Based Business Model Transforming network services to digital platform services Value creation Economies of scale Improved customer experience An enabling partner in the digital ecosystem: Extensive partnerships for product & distribution Open API integration Highly automated, on-demand Customer self-service Secure transaction environment Dynamic global digital distribution

13

14 As business-critical applications and content move to the Cloud, Enterprises need increased performance, predictability and security.

15 Software + Network + Community [fuelled by new organizational behavior]

16 Software-Defined Interconnection With Console Connect you can easily and quickly spin up virtual private Layer 2 and Layer 3 connections, regardless of location or technical knowledge. Bypass the public internet and directly connect to the cloud applications, partners and locations that are important to your business. Improved performance Access and global reach Enhanced visibility and monitoring Reduced complexity Reduced costs Time-savings Reduced security threats

17 Interconnection Made Easy 150 countries, 3,000 enabled locations Access a global ecosystem of SaaS and cloud providers Get started with just one port and one cross connect Interconnect in just seconds Simple user interface on desktop and Android and ios apps

18 Performance and Availability Bypass the public internet for resilient and consistent performance Easily monitor connection performance View bandwidth allocation and utilization Dial bandwidth up and down as needed

19 Global Community Platform Connectivity begins with people Access a community for network engineers by network engineers for knowledge-sharing, troubleshooting and growing your business

20 Your Clouds, Your Way Quickly and easily connect to major cloud service providers In a world-first, directly connect between your clouds with CloudNexus Achieve true multi/hybrid-cloud environments across multiple locations and providers

21 PCCW Global Platform Approach Strengthening our Digital Partner Ecosystem and Marketplace Application Providers Telco & Cloud Players Security SD-WAN Networks ERP Big Data Apps IoT

22 Regional Contacts THANK YOU Africa Johannesburg, South Africa Tel: Americas Virginia, United States Tel: Asia & CIS Hong Kong Tel: Europe London, UK Tel: +44 (0) Paris, France Tel: +33 (0) MENA Dubai, United Arab Emirates Tel: +971 (0) mena@pccwglobal.com SSAO Singapore Tel: ssao@pccwglobal.com Contact marketing@pccwglobal.com

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