Cable Congress CCC

8/3/2019 Cable Congress CCC

1/23

Switchers, Existing, Prospect

How Broadband Service

Providers Can Profit from

Carbon Reduction

Prepared by: Chad Raube


2/23

1/28/2012Prepared Chad Raube

Proprietary & Confidential

In 2007, the ICT sectors direct carbon footprint is a modest 2% of global emissions.

GtCO2e

Footprint from useEmbodied

carbon

* ICT includes PCs, telecoms networks and devices, printers and data centres

** Compounded annual growth rat

0.35

0.64

1.08

0.18

0.11 0.432002

2007

2020

0.53

0.83

1.43

CAGR**

+6%

2% of totalfootprint

2% global emissions 830 Mt CO2e (2007) Set to grow 6% each year until 2020

Context - The role of BSPs in climate change


3/23



Broadband service providers contribute less than 50% of the ICT sectors

carbon emissions

Emissions by geography

% ofGtCO2e

2002

2007

2020

% of 0.53

% of 0.83

% of 1.43

CAGR

%

PCs remain largest contributor to emissions

28 14 57

37 14 49

25 18 57

5 7 5

Telecom infrastructure anddevices

Data centres PCs, peripherals and printers*



4/23



The ICT sector can help reduce total carbon emissions by 15% in 2020 byenabling other industries to reduce their respective carbon emissions.

GtCO2e

Emissions ICT footprint Selected ICT-enabled abatements Other abatements

2002

* For example, avoided deforestation, wind power or biofuels

** 21.9 GtCO2e abatements were identified in the McKinsey abatement cost curve and from estimates in this study

Source: Entvist P.,T. Naucler and J. Rosander (2007), A Cost Curve forGreenhouse Gas Reduction, The McKinsey Quarterly, Number 1

2020 BAU

Abatements

2020 withabatements

40.0

51.9

0.5

1.4

-14.1* -7.8

30**



5/23



Context - BSP Ecosystem

Broadband Service Providers play a particularly important role inenabling the broaderICT ecosystem to enable carbon reduction services

4


6/23



Carbon Activism Survey

5

Thirty one cable broadband service providers were interviewed aspart of a survey to assess levels of carbon activism amongst BSPs.


7/23



Results ofCarbon Activism Survey

6

Frequencies Carbon Activism Categories

OperatorType No CRP

CRP in 12

months

CRP in 24

months

CRP and

no CRSs

CRP and

a CRS

CRP and

many

CRSs TOTAL

ISP 2 0 0 0 0 0 2

Telco 2 0 1 1 2 4 10

Cable TV 8 1 3 3 1 1 17

Mobile 0 0 0 0 0 1 1

Satellite 0 0 0 0 0 1 1

TOTAL 12 1 4 4 3 7 31

1. W ithinthe BSP segment,telcos and mobile operators lead while cable operators lag

2. Western European BSPs are more advanced than other geographies

3. Publicly owned BSPs are more advanced than privately owned BSPs

4. Large BSPs are more advanced than small BSPs

5. BSPs with a business focus are more advanced than BSPs with a consumer-only focus

Some important insights emerge from the carbon activism audit of 31 BSPs.

Key Take Away Points

Carbon Activism by Type of BSP


8/23



Diesel & Gas: 8%

Fleet Vehicles: 15%

AC: 2%

Facilities: 23%

Outside Plant: 39%

Allocation of emissions (% from each activity)

Scope 3: 13%

Commuting: 8%

Business Travel:

4%Waste: 1%

Scope 1: 25%

Scope 2: 62%

Carbon Footprint from a European cable TV company

The majority of the carbon footprint of a typical European cableoperator is driven by facilities, outside plant and fleet operations.

Sourced from:


9/23



Carbon Footprint Comparison

U.S.Cable System 1

U.S.Cable System 2

EuropeanCable System

Virgin MediaVerizon

Communications

Total Emissions(MTCO2e)

67,832.7 26,206.9 16,311.6 313,522 6,491,011

Revenue (Million $) 1,054 N/A N/A 5,880 46,100

MTCO2e per Million

$ Revenue64.4 N/A N/A 53.3


10/23



Carbon Footprint Analysis

Carbon footprint driven by several key factors

Fossil fuel use by utility

Ratio of homes passed to plant miles

Penetration rate

Geography

Inefficiencies in OSP and Critical Facilities

MPG of fleet vehicles (mechanical and behavioral)

Age/condition of office buildings and warehouses

High carbon footprintindicates considerable opportunities to save money and emissionsinthe form of carbon abatement strategies.

Cable companies can address the key drivers of carbon emissions andsave significant money through abatement strategies.

Sourced from:


11/23



Potential Options forCarbon Reduction

Maximum use ofrenewable energy

Investin greentechnologies (e.ginvestinnew, ecofriendly bay stations)

Low emissionsnetwork

Optimised datacentre cooling

Renewable energytrials

Site sharing

Recycling program

10

Supply chains Internal Operations&Governance

Green Offering Marketing &Communications

Along the value chain, BSPs have a variety of approaches to addressthe carbon reduction challenge.

Minimized materialsupport (e.g, plastic,paper)

Minimal travel (e.g,teleworking)

Low energycompany cars androute optimisation

Introduction ofebilling

Waste reductionprogrammes

Digital devicerecycling

Life-cycleassessments fortelecom services

Green settop boxes

CO2 audit andassessments/webtools

Personal carbonfootprint calculationon home page

Green partnerbrands

Green partnerbrands

Improved productlabelling, showingproducts energy

efficiency

E-billing

Environmentalreporting


12/23



Typology ofCarbon Reduction Opportunities

11

Telepresence

Teleworking

E-commerce)

Virtual Call Centre

E-billing

Virtual Data Centre

Energy network monitoring

Smart meter micro-generation

Smart meter grid optimisation

Centralised tracking

Decentralised tracking

On-board telemetrics

Remote supply control

Loading optimisation

Urban traffic management

Predictive machinery maintenance

Energy efficient devices

Eco-packaging

Eco-labelling

E-waste recycling

Sustainability consulting

CARBON REDUCTION SERVICE CAPABILITYGEOGRAPHIC

SCALENETWORK

TYPECUSTOMER

TYPE

BSP ATTRIBUTES IMPORTANT FOR CSR DEPLOYMENT

Partner

Corecompetency

Eiither

National

Multi-national

Eiither

Wireless

Wireline

Eiither

Business

Consumer

Both

CODE

1

2

17=85%

2=10%

1=5%3

3

2

6=60%

2=10%

12=40%1

3

2

6=45%

2=10%

12=45%1

3

2

7=35%

0=0%

13=65%1

Aggregate Results


13/23



Frequency ofCarbon Reduction Initiatives

12

0 2 4 6 8 10 12 14 16

Other

Office Heating & Cooling

Paperless Office

Network Efficienty

Desktop Power Conservation

Voltage Optimisation

Online Sales

Low CarbonVehicles

Energy EfficientLighting

Data Centre Savings

Energy Monitoring

Renewable Energy

Recycling

Other

Eco Packaging

Energy Efficient Set Top Box

Ebilling

Teleworking

Other

Smart Metering

Fleet Managment

Building Mgmt Services

Telepresence

Frequency ofInitiatives

Carbon Reduction ServiceCarbon Reduction ProductFeature

Intern Carbon Reduction Project

Consumer Perceptions of BSPs & Climate Change

Some carbon reduction initiatives have been more aggressively pursued byBSPs as they are easy to address and have a good ROI.


14/23



Key Barriers to Carbon Activism

13

2

1

1

4

9

2

1

5

6

3

1

4

7

3

2

Other

Company's leadership does not believe a CRP delivers commercial value to

the business

Company's ownership and board do not believe that a CRP delivers

commercial value to the business

Company lacks the expertise and understanding to ascertain if a CRP can

create commercial value

Company sees commercial value in a CRP but lacks the human and/or

capital resources to support their implementation

Company sees commercial value in a CRP but relative to other priorities it

does not rank high enough to be allocated resources

total number of votes

Barriers

1st place votes

2nd place votes

3rd place votes

Key Barriers ofCarbon ActivismAmongst BSPs

BSPs which are not actively reducing carbon emissions view carbonreduction as a public relations exercise lacking in real value creation.


15/23



Beliefs ofCarbon Activism Laggards

Creating positive bran perception but havelittle commercial value to companies

14

0

2

4

10

1

StronglyDisagree

Disagree NeitherAgree orDisagree

Agree StronglyAgree

Frequency

Response

6

8

12

0

StronglyDisagree


Agree StronglyAgree

Frequen

cy

Response

Company has a comprehensive and in-depth understanding of carbon reduction

opportunities and issues

55% of BSPs with no carbon reduction program expressed an interest in

learning more this area.

BSPs that are not embracing carbon reduction initiatives view them primarily as apublic relations tool, though admit their understanding of this arena is limited.


16/23



Drivers ofCarbon Activism

Key Drivers ofCarbon Activism Amongst BSPs

15

1

2

11

1

7

3

1

2

1

5

8

Other

Reducing regulatory risk and tort liability by being more

compliant with environmental regulations

Green initiatives represent an attractive business

opportunity to deliver new products and services

Positive public perception of company as "green and

environmentally" sound

Operational improvements via cost savings and

efficiency improvements represent strong business

cases

Total number of votes

Drivers

1st place votes

2nd place votes

3rd place votes

Operational and efficiency gains are the key drivers of carbon activism amongst BSPs.


17/23



Perception of Financial Value ofCarbon Reduction

BSPs that actively address carbon reduction see strong commercial value in bothnternal carbon reduction initiatives and in offering services to assist other companiesto help them to reduce their respective carbon emissions.

16

0 0

1

8

5

StronglyDisagree


Agree StronglyAgree

New services that our company offers customersto help them reduce their carbon emissionsrepresent attractive business opportunities

1

4

5

3

1

StronglyDi

sagree

Disagree NeitherAgree

orDi

sagree

Agree StronglyA

gree

The commercial benefits of reducing internal companyemissions are greaterthanthe commercial benefits

associated with delivering new carbon reduction

services


18/23



Q: Climate change is a serious issue thatneeds addressing

Q: 'It is important for my phone, internet andTV service provider to be environmentally

responsible and to reduce its carbonfootprint'

84

48

34StronglyAgree

Agree

Disagree

Strongly Disagree

Don't know 5

Base: (999)

94

57

25StronglyAgree

Agree

Disagree

Strongly Disagree

Don't know 7

Base: (999)

Source: BT Broadband Study: 23/06 20/07/2010

82% 82%


In the UK, consumers believe climate change is a serious issue that needsaddressing and that their BSP has a role to play.


19/23



Yes41%

No35%

Don'tKnow24%

Q: Would a companys environmentalresponsibility be an important factor in

selecting a service provider?

Yes42%

No24%

Don'tKnow

34%

Q: Would you consider switching to aprovider who is more environmentally

responsible?

Yes60%

No14%

Don'tKnow26%

Q: Would you consider purchasingenvironmentally friendly services thathelp you reduce your carbon footprint

from your supplier?

Source: BT Broadband Study: 23/06 20/07/2010

Base: (804)

Base: (804) Base: (804)


Consumer interest in environmentally sustainable services from their BSPsis significant enough to grab the attention of BSPs.


20/23



7

20

13

7

20

13

7

40

53

33

40

47

47

7

13

20

7

20

27

40

27

20

20

40

40

20

27

40

7

20

27

20

13

33

53

27

53

0

0

27

20 60

0

0

0

0

0

0

0

0

0

0

0

0

0

Hardware Suppliers Top the Sustainability Priority List

How important are the following suppliers for your firms sustainability programme?%

Extremely

important

Important Neutral Unimportant Totally

unimportant

IT hardware firms

Telecoms hardware firms

Energy consultants

Telecoms firms

IT consultants

Not for profits

Environmentalconsultants

Verification firms

Software firms

Management consultants

Financial auditors

Source: Verdantix

Business Perceptions of BSPs & Climate Change


21/23



Internal BSP Success Factors

Understanding of Carbon Emissions

Measurements Compensation

Organisational Structure

Culture

1. Appoint of Chief Sustainability Officer whoreports to the CEO

2. Provide the CSO with the budget for aprogramme managementteam.

3. Ask functional leaders with sustainabilityimpacts to dotted line reportto the CSO

4. Authorise the CSO to set sustainabilitypolicy and targets for business units

5. Require the CSO to define a portfolio ofsustainability offerings

6. Create P&L for sustainability marketofferings

7. Elevate sustainability capital allocations tothe investment committee

SuccessDrivers Organisational Drivers

Within companies, certain factors emerged that assist BSPs in effectivelyreducing their carbon emissions.


22/23



Associations and Consortiums

The telecom and mobile industries have aggressively supported individualcompanies in carbon reduction whereas the cable industry has lagged.

21

Sustainability charter

?

European Green Telco Consortiums European Green Cable Consortiums


23/23



Conclusions

The cable industry can create financial value if it acts upon some of the keyinsights that are emerging as to how BSPs can profit from carbon reduction.

22

1. Carbon Reduction presents a real opportunity: Carbon reduction has clear financial benefits forBSPs, both interms of cost savings and new products that offer environmental benefits.

2. BSPs are polarised: intheir embracement and approach to reducing carbon, with some evangelistBSPs and others laggards who see no value creationin carbon reduction.

3. All BSPs are not created equal: some BSPs are better positioned than others to deliver carbonreduction services.

4. Delivering carbon reduction requires ecosystem cooperation: coordination across the BSPindustry can be enabled through associations, regulators, and other avenues.

5. The Cart cannot go before the horse: BSPs cannot deliver carbon reduction services with credibilityifthey do not address their own carbon emissions first.

6. Show me the money: BSPs motivation reducing carbon emissions is motivated by financialconsiderations, with carbon leaders already realising the benefits of acting on carbon reduction.

7. ItsAll About the People: BSPs that are successful at carbon reduction have a visionthatis set bythe seniorteam and imbued across the culture.

8. Intent is not enough: Many BSPs wantto be more active on carbon reduction but lack the financialresources orinternal expertise to move inthis area.

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