Broadband via Satellite: Eutelsat Perspective

DLR, 11 February 2004

Eutelsat: Europe’s Leading Satellite Operator, Worldwide Number Four

25 Years in the Satellite Business

4 Capacity commercialised on 22 satellites, 20 of which are of European origin

4 Serving 5 continents: Europe, Africa, Asia, North and South America

4 Revenues of 715 M€ (2002/2003)

4 Active over a diverse range of industries and markets4 1300 TV channels4 750 data networks4Mobile services4 Broadband services

4 Distribution to 107 million homes via DTH or cable

4 27.7% equity interest in HISPASAT

Eutelsat’s Portfolio of Activities

Direct broadcasting of television channels and radio programmes

Television channel distribution to cable networks

Contribution links

Professional video networks for programme exchange and newsgathering via satellite

Leading operator in Europe75% of 2002/2003

consolidated revenues

VIDEO APPLICATIONS

Private networks for interconnecting LAN/WAN and extending voice networks

Data broadcasting services to wide audiences

Corporate television and videoconferencing services

Professional mobile services for messaging and positioning

Leading operator in Europe15% of 2002/2003

consolidated revenues

PROFESSIONAL DATA NETWORKS

Internet backbone connections for Internet Service Providers

Broadband Internet access for corporate and private users

Virtual Private Networks via satellite

Multicasting and distribution of IP content

Emerging market3% of 2002/2003 consolidated

revenues

BROADBAND SERVICES

The Digital Divide: A Reality

Projected DSL Coverage in Europe

50%

60%

70%

80%

90%

100%

2001 2002 2003 2004 2005 2006 2007 2008 2009

Cov

erag

e of

all

site

s

Who is left out?10% of the population= 15 million householdsMainly in rural areas

Access to DSL

No Access to DSL

Part of Europe’s Population is Left BehindDigital Divide: an essential part of e-Europe objectives

Source: CMA

Germany in Comparison

Germany: Population Out of Reach of DSL

Germany: Population Out of Reach of DSL

Households Out of Reach:European Comparison

Households Out of Reach:European Comparison

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

2003 2005 2007

HouseholdsBusinesses

4.4M

0.4M

‘000

2003 2005 2007

Germany 17% 14% 11%

France / UK 30% 22% 14%Italy 33% 24% 15%

Source: Omsyc

Why Satellite?

4 No geographic constraints within coverage area of satellite

4 Economics are independent of local demographics (see next slide)

Available EverywhereAvailable

EverywhereQuick DeploymentQuick Deployment

Possibility of Bundled Offering

Possibility of Bundled Offering

4 Service available today

4 Installation normally takes < 2 hours

4 TV

4 Multicasting

Cost Comparison DSL - Satellite

Terrestrial technologies:

exponential increase in installation costs

when density decreases

0

50

100

150

200

250

300

1 10 100 1000 10000 100000

Sites per square km

Eur

o pe

r sub

scrib

er p

er m

onth

DSL

Satellite Today

Objective

Cost of Broadband Access by Technology

Broadband Services on Eutelsat Fleet

More than 100 distributors

Partner platforms (examples)Partner platforms (examples)Eutelsat platforms and VASEutelsat platforms and VAS

4 Market presence through distributor networks in Europe, Middle Eastand Africa, providing turn-key solutions to SMEs, local authorities and the general public

More than 10,000 terminals deployed in Europe at end-June 2003

Eutelsat Value-Added Services

4 Broadband Internet & multimedia services

4 Broadband IP services

4 Enterprise network solutions with bandwidth on-demand

4 Meshed data networks

ResidentialOne-way services

BusinessesTwo-way services

Internet Satellite Subscribers in Europe

99.497.176.5

76.0

63.553.550.5

0

20

40

60

80

100

Q1 Q2 Q3 Q4 Q1 Q2 Q3

2002 2003

‘000

(North America:

227.5)

Satellite is far from reaching its potential in

Europe!

DSLCable

4.65M2.35M

14.1M5.1M

Source: Digit

Key Challenges to Develop Satellite Broadband

4 Reduce price gap with DSL

4 High cost has limited uptake of satellite broadband4 Terminal: 900€4 Subscription:

120 - 500€

4 Incumbents (Telcos) have little interest in promoting satellite

4 Small service providers and distributors often cannot provide adequate marketing and customer support

4 Satellite associated with TV

Reduce PriceReduce Price Improve DistributionImprove Distribution Raise AwarenessRaise Awareness

How Can the Public Sector Help?

4 The public sector can play an important role in the development of broadband via satellite

4 The short-term objective is to jump-start the industry 4 The objective is to enter into a virtuous circle of subscriber growth

and decrease in cost of service4 A program of 300K terminals over 5 years would bring the

terminal down to 550€, 1M terminals to 270€

4 Several measures can make a significant difference4 Fiscal incentives in order to reduce the cost of the terminal (see

next slide)4 The public sector as a customer4 The public sector as an aggregator for third party customers

Example of Fiscal Incentive: France

4 The French Government has recognised satellite as the best solution to reduce the digital divide

4 Priority has been given to the business sector in order to retain employers in underserved regions

4 From 1 January 2004 to 31 December 2006, the cost of a satellite terminal can be deducted from corporate profits

Medium-Term Objectives

4 The cost of broadband access via satellite can be dramatically decreased with a new generation of satellites4Dedicated to Internet access

4 Such a programme has to be initiated by the public institutions, with the involvement of private companies from the beginning4Government support especially in R&D for space segment and

terminals

4 While this could be done on a national level, a European solution would be preferable

Thank You!

Holger IschebeckBusiness Development Manager

Eutelsat S.A.Tel. +33 1 5398 4774hischebeck@eutelsat.fr