On the evidence of this year’s Cable Congress, which was held in London on March 5-7, the European cable industry is in much better shape now than at any time since the global financial crisis began in 2008.
However, the challenges it faces, especially in securing new revenue streams in what remains a difficult economic environment, cannot be underestimated.
Take the case of mobile services. In a wide-ranging interview, Mike Fries, Liberty Global’s president and CEO, said it would be important for the company to have a quad play option. After all, telcos do and it is not difficult to achieve, with little capital expenditure required.
However, he then went on to say that Liberty Global has already looked at acquiring mobile companies but found the process hard. Indeed, such companies may have a market share of up to 50-70%, but some mobile subscribers will never take cable services.
Perhaps more tellingly, when pressed Fries conceded that he considered mobile a threat as well as an opportunity.
That was certainly not the view of Ewan Mackay, MD, Cable Industry, EALA, Accenture, who contrasted the problems being faced by the mobile industry, certainly in such areas as the rollout of 4G services, with the manner in which cable has successfully responded to the challenges it faces.
Interestingly, he identified connected home, m Health and B2B sales as accelerated growth areas for cable in the future.
Wi-Fi, too, is also looming on the horizon, thanks in no small part to the activities of such operators as Virgin Media and Ono. The former, according to Kevin Baughan, director, Metro Wireless, Virgin Media Business, has embarked on its London Underground project – begun ahead of the Olympics last year and still being expanded – due to an interest in Next Generation Wireless. It has also undertaken small cell trials in the cities of Newcastle and Bristol and secured concessions in Leeds and Bradford.
Ono, on the other hand, began a public WiFi trial in Alicante last July. Manuel Sequeira, the company’s director of technology, said that it has been very successful and may now be extended, with “lots of lessons” having been learnt from building access points.
All this comes against the backdrop of an industry in a much better place than it was even a year ago. Major deals such as Liberty Global’s acquisition of Virgin Media show that it attracting finance from the markets and markets are generally much more open for floatations.
For its part, Liberty Global now finds itself in the driving seat and setting the agenda, with the Virgin Media deal having given it control of one of Europe’s larger cable markets. That, coupled with its earlier acquisitions in Germany, could yet prove to be a game changer for the company in the face of competition from incumbent telcos.
It was interesting to note that when asked if 80% of Liberty Global’s revenues would still continue to come from five European markets Mike Fries said that it was possible, though the company would continue to look at other markets.
He was arguably less positive than in previous years when asked about the company’s commitment to its operations in Central and Eastern Europe. They have been “a historic part of our business” and Liberty Global will “stick it out” in the region.
Clearly much of its focus in recent months has been the launch of Horizon, which is now up and running in the Netherlands and Switzerland. Fries said that the aim is to “develop a platform that gives the answers” and customers “no reason to go anywhere else.”
While he would not be drawn on the future of TiVo once Virgin Media becomes part of the Liberty family, Fries revealed that the next plans for Horizon include a better remote and taking the service into the cloud.
Interestingly, Fries denied Liberty Global has any plans to compete for sports or other rights with the likes of Sky. It is also not looking to buy any content provider, but “never say never.”
When asked about services such as Netflix and HBO Go, he was critical of the former’s business model, which sees 70% of its revenues go to content providers. Fries also held out the possibility of Liberty Global working with Apple in the future if any proposed economic relationship made sense.
In the content space, Bruce Tuchman, president, AMC/Sundance Global Channel, AC Networks said that the biggest threat to the cable industry is not Netflix or indeed cord cutting but young people who have never had cords to cut. His solution to this, despite the difficulties involved in downloading the app, was TV Everywhere.
There was also huge interest in the technology strand on the last day of Cable Congress. One of the main topics discussed was DOCSIS 3.1, which is still very much on the drawing board, with specs only likely to be issued later this year. The roadmap, as outlined by CableLabs, should see the first products introduced next year and initial deployments in 2015/6.
Once up and running DOCSIS 3.1 is projected to give download speeds of up to 10 Gbps, or double the current maximum of 5 Gbps possible with DOCSIS 3.0.
The host cities for the next two Cable Congresses are expected to be announced later this week.