Chris Dziadul speaks to Stefan Amon, Director Wholesale, A1 Telekom Austria, about the company’s strategy and plans for the future.
How would you assess Telekom Austria’s progress with its white label strategy to date?
We are definitely on a roll. During IBC a couple of years ago Telekom Austria Group announced its grand return to the broadcasting industry with a refreshed portfolio of services clustered around the newly established “direct2home” platform. Our ambition was to act as a single-stop-shop technology and capacity delivery hub for satellite-TV start-ups in CEE. It received a widely positive reaction by the industry and the media. More precisely, in 2014 both Eutelsat and Global Telecoms Business awarded us with their Innovation awards for our direct2home platform.
Within 24 months of the IBC announcement Telekom Austria Group successfully launched DTH pay-TV in two of our markets – Croatia and Bulgaria. Telekom Austria Group’s Wholesale Media and Broadcast department acts as a DTH white-label service provider to the affiliates. Our “one-platform, one-satellite, one-encryption” philosophy proved to be highly lucrative from operational and cost-efficiency point of view, due to the content synergies on the capacity, realised through simulcrypting, as well as the shared costs for infrastructure and operations.
I wish to emphasise how quickly we made the launches in Croatia and Bulgaria happen – in both markets it took us just four months from the local Management Board’s decision to the commercial launch. This is how rapid and affordable we make the launch of DTH pay-TV for the operators who wish to extend their portfolio with such services.
Why has Telekom Austria placed such a strong emphasis on HD in that strategy?
Our read of the markets is that HD TV has been gradually becoming a commodity. The TV screens in people’s living rooms are getting larger and larger, especially when there is a World Cup or another major soccer event throughout the year. Sports content is a major driver for HD demand. The pay-TV industry, however, especially in CEE, is generally incapable to catch up with the increased demand for HD delivery. There are still too many legacy set-top-boxes lying around and DVB-S transponders on the satellites. As an example one of our neighbouring DTH platforms on Eutelsat 16A has just recently announced their planned migration to DVB-S2 and MPEG-4 in order to meet the increased consumers’ demand for HD.
Being a new entrant in DTH, we practically had no legacy to hold us back from delivering what the markets yet demanded. We offered by default sleek hybrid HD/MPEG-4 set-top-boxes to all of our customers. When given the choice between broadcasting the SD or HD version of a channel, we always opted in for the HD version. As a result the HD channels are fully integrated into our pay-TV package tiers and we do not charge additionally for the better quality. Currently we offer over 25 HD channels in our DTH package in Bulgaria.
Here I should make a side note that regardless of our strategy to bring the best quality possible to the TV viewers, the majority of the channels still charge quite unfavourably for the HD content rights in comparison to the SD version of the same channel.
Telekom Austria has recently emerged as a teleport and broadcasting provider and last year was a particular active one for the company in terms of deals. Can you provide some details about these deals and any strategic partnerships it has entered into?
In fact Telekom Austria Group has been offering teleport and broadcasting services for over 30 years. We have been operating one of the largest and most advanced teleports in Europe – Aflenz, located in the Styrian Alps, also an integral part of our pan-European fiber optic backbone. Still, back in 2011-2012 we realized that we were in a need of a re-do of our service portfolio in order to regain market share in the sector. When constructing our new direct2home platform we partnered with Harmonic for the encoding, Conax for the encryption and Agama for the video quality control. The toughest bet was the choice of a strategic supplier for the satellite capacity. The tender was won by Eutelsat with their 16A satellite.
In the past few years the 16 degrees East orbital position has been growing as an attractive hub for DTH operation and technical broadcast distribution. At present Eutelsat 16A hosts the DTH platforms for more than 10 countries, namely the whole of Ex-Yugoslavia, Albania, Romania and as of recently Bulgaria. In the past couple of years Telekom Austria Group has also played its partial role in developing the Eutelsat’s 16 degrees East orbital position and evolving it into one of the hot-spots for broadcasting in Europe.
Within the past 6-7 months we launched our Bulgarian DTH operation and signed more than 11 technical broadcast deals for over 28 channels (13 in HD) that we currently commercially uplink to Eutelsat 16A. We introduced new, original and fresh channels into the region, thus bringing diversity and valuable content not only to our own DTH subscribers but also to make those channels available to the customers of other DTH platforms on the satellite via simulcrypting.
For example we signed a strategic technical distribution deal with SPI/Filmbox International, bringing their premium thematic content into the Balkan territories via Eutelsat 16A. Besides their presence on our pay-TV platforms in Macedonia and Bulgaria, now the Filmbox channels are being widely adopted in the region and simulcrypted via Telekom Austria Group to other platforms on the Eutelsat 16A. Another example is the Box Plus Network from the UK with their top music brands Kiss, Kerrang, SmashHits, Box Africa and Magic. Our strategic partnership made the best rated UK music channels available to the whole CEE region and beyond. The list of HD channels where our Group acts as technical distribution platform goes on with FightChannel World, FashionTV, the premium music channels Classica, Brava, DJazz.tv, PlanetaHD and the action sports channel FuelTV.
How do you see Telekom Austria’s white label business developing? Do you have plans to establish a presence in more CEE markets?
SThat has always been the plan. We have had numerous talks with partners all across CEE who sought after Telekom Austria Group’s direct2home services to launch satellite TV. Right now we keep ourselves focused on the Czech and Slovak markets, where we have identified together with our partners high growth potential for DTH pay-TV. In the next couple of months we will witness the first launches of Telekom Austria Group-enabled DTH operators in those markets, on Eutelsat 16A. We see this step as a game-changer for the pay-TV evolution in those two markets. The Group plans to play an active role, albeit indirect, in those highly defragmented pay-TV markets, aiding the TV digitalisation in general and the growth of HD penetration.
In addition, there is work in progress with a couple of strategic partners in other CEE markets, but it is premature to disclose details about these projects yet. One fact remains clear – the more operators from the region join Telekom Austria Group’s white-label direct2home platform, the more lucrative the DTH business model becomes for them.
Looking ahead 2-3 years, how do you envisage Telekom Austria’s position in the CEE market? Where will its main focus lie?
On one side we need to focus in growing the Group´s own pay-TV base, in the highly competitive environments where we operate. On another side we are not shy of our ambition to become a leading broadcasting services provider in CEE via our direct2home platform. América Móvil, our new investor, has announced on several occasions that Telekom Austria Group will be their platform for further growth in the region. Therefore we are also focusing into enhancing our capabilities and expertise in order to support our investor’s strategy for the region.
However, I wish to answer the same question from another angle – by disclosing some details about our Wholesale Media and Broadcast unit. We have established a unique cross-borders organization, where we have managed to attract experienced industry experts and multi-cultural talent from Croatia, Bulgaria, the Republic of Macedonia, Turkey and Austria. With this powerful mix of youth, energy and expertise in both content and broadcasting, we definitely look into a bright future.