Media & Telco Conference: 2011 and beyond 31 January 2011
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1 Media & Telco Conference: 2011 and beyond 31 January 2011 Convergence The Holy Grail Gavin Patterson, CEO BT Retail
2 Convergence is nothing new Multicast - c.1900 Online multiplayer gaming - c.1935
3 Convergence transforms the whole value chain Marketing Standalone services, sales Bundled communications channels and bills and TV/media services Different companies for each service Companies compete by breadth of offer Content, Services & Applications Linear analogue TV with limited range of channels PC only, applications physically installed Integrated linear/on demand TV on multiple devices App stores, hosted in cloud Devices Single purpose Mostly fixed Multi-purpose and feature rich, enabling new services Mobile/wireless and personal Networks Separate wireline, wireless and broadcast networks Narrowband only Converged IP networks, wirelessly enabled High speed, low latency
4 Convergence is a reality of our markets today Broadband and pay TV continue to grow Increasingly bought as bundles Hous seholds (m) Broadband and pay TV households in UK BB Pay TV % of households Bundle penetration 60% Dual Play 40% 20% 0% Triple Play Source: Analysys Mason, Fixed Broadband Forecasts, 8th July 2010 and Pay TV in Europe: Market Sizings and Forecasts, 16th July 2010 Source: Ofcom, The Communications Market 2010, August 2010 Functional separation between devices is blurring Web traffic is now dominated by online video Watching live AV content BBC iplayer Web browsing Online gaming Watching DVDs / Blu-ray % of households using their games console for additional services 0% 5% 10% 15% 20% 25% Global traffic volume Top 50 sites Online video Software download 36% Images Browsing Private proxy File sharing Online music Source: Ofcom research, Q Source: Cisco Visual Networking Index, Oct 2010
5 YouView is archetype of convergence in services New mass-market standards for converged TV platforms Linear TV and on-demand TV Broadcast TV (DTT) integrated with multicast TV (IPTV) Free TV integrated with pay TV, without a subscription required Open standards for an open market in set-top boxes Open to all ISPs and broadcasters Content & Services A collaboratively developed platform supporting common standards will accelerate convergence in TV, to the benefit of consumers
6 Integrating on-demand with linear is key in TV Aggregators Channels Content Owners Market shift increasing importance of on-demand content However, buying decisions remain anchored around linear channels Aggregation and recommendation across both on-demand and linear is critical to success Integration of social elements a real opportunity Content & Services The most effective on-screen retailers will make relevant content choices, across linear and on-demand platforms - easy
7 Convergence is needed across all devices Proliferation of high specification devices Demand for consistency of services across devices Expectations of content availability on any device Opportunity to drive usage and value by enabling this Cannot be delivered by a single company Devices Currently fragmented approaches to DRM and proprietary systems need to converge
8 Convergence needs network investment Global consumer internet traffic Traffic volumes driven by video will continue to grow rapidly (k) Exabyte es per month Other Web / data Internet video to TV Internet video File sharing Network investment crucial to expand capacity and speed BT investing across the network in capacity and speed Network and content providers to work within these dynamics 1 Exabyte = bytes Source: Cisco Visual Networking Index, June 2010 Networks While there are many solutions, the delivery model for different types of traffic will need to develop
9 BT investing in a high speed future Headline speeds (Mbps) Continued investment to increase connection speeds 71 min 24 min 15 min 6 min Covers backhaul, plus copper and fibre access networks ADSL ADSL 2+ FTTC FTTP Indicative download time for DVD quality film (4GB) 2.5bn expenditure on fibre by BT dependent on appropriate investment environment BT Retail Wi-Fi estate increasingly important Networks Customers want speed and consistency of experience across access networks fixed or wireless
10 Investment has to be commercially viable Types of traffic Sources of internet content Range of providers Other data access Downloaded video Other live video streams Quality assured video streams Voice traffic No network can be built with limitless capacity So traffic management of peak demand is necessary Some traffic needs to have priority over others So prioritising some types of traffic over others is beneficial But it should not be used to discriminate internet access Policy & Regulation Honour net neutrality open access to sources of internet content Manage traffic optimise customer experience and network costs
11 Converged markets need converged regulation Live issues Limited regulation of broadcast channels, subject to testing in the CAT No regime regulating sales of content rights Inconsistent application of regulation for access to infrastructure t Focus regulation on enduring economic bottlenecks Implement consistent regulatory framework across all markets Extend ex-ante regulation in communications to media markets A healthy media market needs Ofcom to win in the CAT in pay TV regulation Policy & Regulation Achieving a level regulatory playing field in the up and downstream communications markets must be a priority
12 Media & Telco Conference: 2011 and beyond 31 January 2011 Convergence The Holy Grail Gavin Patterson, CEO BT Retail
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