Shareholders' Letter

Innovation and development
Swisscom’s innovation and development efforts are aimed at creating added value for customers
and shareholders, and at the same time are the key to sustainability. In line with this, new growth
areas are pursued, unnecessary costs reduced and sustainable, eco-friendly products created.
The portfolio consists of 10 to 15 projects with a foreseeable market launch horizon of 12 to 18
months, as well as longer-term programmes to explore new business ideas. Successful handover
of innovations to the divisions is of paramount importance. To ensure this, experts lead the projects
from kick-off to market rollout or until the innovation has been introduced in the relevant sphere
of activity.
In 2010 the following innovations were successfully rolled out:
> FTTH robot: This innovative tool reduces the effort involved in laying fibre-optic cables. The FTTH
robot was jointly developed by Swisscom and a local partner, Plumettaz AG, which sells it to
Swisscom subcontractors.
> Community support: An online forum allows customers to answer other customers’ questions.
The answers are rated, and the best community users are assigned a special status on the forum.
The forum was developed in partnership with an innovative US company.
> Wireless home network: A new wireless connection kit has been available since October.
Designed for Swisscom TV customers who want to connect several televisions and set-top
boxes with a home router, the new product is based on an innovative wireless semiconductor
chip. Swisscom developed the chip in conjunction with Quantenna, a young US company in
which Swisscom holds a stake.
Potential new projects are selected according to the following criteria: unfulfilled customer need;
risk factors; impact; market potential; economic benefit; and sustainability. Longer-term
exploratory efforts are targeting the following areas:
> TV and entertainment: Evaluation of the risks and opportunities relating to Internet-connected
television sets that allow users to watch Internet video content directly on their TV screen without
the need for a set-top box; studies into ways of recommending and personalising the user
experience.
> Communication: Development of a prototype for telepresence in the home (high-definition
video communication on the television screen, seamlessly integrated with the Swisscom TV
experience); analysis of ways in which advanced communications can help to bring healthcare
from the hospital into everyday living.
> Customer co-determination: Examining inspiring new experiences to improve and personalise
the customer experience in Swisscom Shops.
> Advanced services for third parties: Use of mobile phones for for a wide range of services for
third parties (e.g. VPN access for companies, online banking); investigation into the possibilities
of data mining the information gathered from telecommunications service usage.
> Future broadband networks: Reduction in the cost of FTTH equipment through innovative network
architecture and new vertical cabling concepts; studies into low-cost, remote-controlled
broadband home networks.
> Green network and IT infrastructure: Deployment of fresh air cooling systems not only for public
switching exchanges as well as for data centres; intelligent measurement of proprietary
switching exchanges and IT centres to optimise electricity consumption.
Management Commentary 96 | 97
Corporate Responsibility