iesy Repository GmbH - Irish Stock Exchange

associations. Level 4 operators also seek opportunities to overbuild the Level 3 network, especially in the event of price
increases for access to the Level 3 network. BN, for example, started overbuilding the Level 3 network in the city of Kassel
in 2002 and, following its recent acquisition by EWT, it may reach the economies of scale needed to combine a larger
number of its Level 4 networks with fiber optic links and connect resulting clusters to satellite. Smaller Level 4 operators
could combine with this type of operator to try to provide a competitive alternative to iesy’s and ish’s Level 3 network. In
addition, Level 4 operators may have certain competitive advantages over our business, including a lower level of regulation
of their pricing. See “Industry—The German Television Market—Distribution Platforms—Level 4 operators.”
High speed Internet Access Market
iesy’s and ish’s high speed Internet business compete with companies that provide low-speed and low-cost (or even
free) Internet services over traditional telephone lines. iesy and ish also compete with Internet service providers that use
alternative broadband technologies such as digital subscriber lines. At the end of 2004, approximately 6.7 million
(approximately 97.2%) of the 6.9 million high speed Internet service subscribers, either directly or indirectly, were using
DSL Internet access services provided by DTAG. Only 145,000 Internet users were subscribing to broadband cable services
and approximately 50,000 Internet users were subscribers to high speed Internet services via satellite or Powerline. ish’s high
speed Internet business had approximately 16,000 subscribers as of December 31, 2004 and approximately 19,000 as of
March 31, 2005, and iesy served approximately 600 high speed Internet subscribers as of December 31, 2004, and
approximately 2,300 as of March 31, 2005.
The Internet access market offers significant growth potential in Germany, particularly in high speed Internet where
just 18% of households have a DSL connection. According to RegTP, the market for high speed Internet services grew
rapidly in the past with growth rates of approximately 40% in 2003 and approximately 53% in 2004. iesy and ish seek to
compete with DSL by means of the technical quality of its products as well as its competitive pricing. Furthermore, ish
provides the customer flexibility because there is no need to subscribe to telephony service in order to access its Internet
service, as is the case with the majority of ish’s competitors. Although the market is challenging due to the dominant market
position of DTAG, iesy and ish believe that they can benefit from further growth in the Internet access market.
Telephony
DTAG is the primary provider of fixed-line telecommunication in Germany. The operation of networks (including
cable networks) for all telecommunications services other than public fixed-line voice telephony was opened to competition
in Germany on August 1, 1996. The telecommunications sector in Germany was further liberalized on January 1, 1998. Since
then, DTAG has faced competition and has been required to offer competitors access to its fixed-line network at regulated
interconnection rates.
The most important providers in the fixed network area besides DTAG include: Arcor, BT Global Services (Viag
Interkom), Colt Telecom and Versatel. The most important providers of services or network operators in the mobile
telephony sector are: T-Mobile, Vodafone, E-Plus, O2, Mobilcom and Debitel.
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