European Cable: strategies for success

Table of Contents

0. Summary

1. Telcos and broadcasters pose threats from different sides

• 1.1 Telecoms operators are focusing on services enabled by broadband, including TV
• 1.2 Established broadcasters hold a latent advantage
• 1.3 Some cable operators' networks still lag behind significantly
• 1.4 Regulation may work against the cable operators' interests
• 1.5 Cable operators must focus on content, including its presentation and delivery

2. Content must remain cablecos' top priority

• 2.1 Cablecos must continue to improve the quality and range of their content
• 2.2 Cable operators must prioritise building a national brand
• 2.3 Telecoms infrastructure increasingly facilitates content delivery

3. Upgrading to M-CMTS should be prioritised

• 3.1 Footprint limitations can be overcome by alternative technologies
• 3.2 Provision of higher bandwidths does not necessarily require more spectrum
• 3.3 (Euro)DOCSIS3.0 will enable increased bandwidth, scalability and new services
• 3.4 The M-CMTS standard enhances scalability and flexibility while reducing costs
• 3.5 Increasing downstream bandwidth may be achieved through pre-specification DOCSIS3.0
• 3.6 Ethernet-over-cable may also be deployed to achieve higher downstream speeds
• 3.7 Demand for upstream bandwidth is less well addressed than that for downstream
• 3.8 Cable operators should only employ pre-specification DOCSIS3.0 in small-scale trials

4. Price competition can only take an operator so far

• 4.1 Broadband prices are approaching rock bottom
• 4.2 Cable operators must consolidate a value-driven strategy
• 4.3 The cable broadband pricing portfolio can be streamlined and enhanced
• 4.4 Bundling services to increase perceived value is key

5. Only large scale will enable adequate content and technology Actions

Figures and Tables

• Figure 0.1: Forecast ROI from four different infrastructure upgrades
• Table 0.1: Phases of build-out options A- D, 2008- 11
• Figure 1.1: RGUs within the Western European cable industry, 2001- 6
• Figure 1.2: RGUs within the Western European telecoms industry, 2001- 6
• Figure 1.3: Satellite TV subscribers in Western Europe, 2001- 6
• Figure 1.4: Coverage and adoption of cable services in Western Europe, December 2005
• Table 1.1: Estimated proportion of CATV network upgraded for two-way communication in selected European countries at December 2006
• Figure 2.1: Per-annum cost of first-division football league rights in selected Western European markets, 1999- 2006
• Figure 2.2: Typical household downstream broadband demand, 2006- 14
• Table 3.1: Typical frequency allocations for services in an 860MHz-bandwidth HFC cable network
• Figure 3.1: The impact of codec compression on the bandwidth demands of IP-based video services
• Figure 3.2: Comparison of EuroDOCSIS versions
• Figure 3.3: I-CMTS head-end architecture
• Figure 3.4: M-CMTS head-end architecture
• Figure 3.5: Cost of CMTS downstream ports and video EQAM ports, 2002- 7
• Table 3.2: Details of pre-specification DOCSIS3.0 channel-bonding CPE
• Table 3.3: Four upgrade options
• Table 3.4: Phases of build-out options A- D, 2008- 11
• Figure 3.6: Forecast ROI from four different infrastructure upgrades
• Figure 4.1: Average price of flat-rate residential 2Mbit/s retail broadband connections in Western Europe, 3Q 2003- 1Q 2007
• Figure 4.2: Net profitability of selected European unbundlers, 1Q 2004- 3Q 2006
• Figure 4.3: Net profitability of selected European cable operators, 1Q 2004- 3Q 2006
• Figure 4.4: Customer penetration of multi-play packages for selected triple-play providers in Western Europe, December 2006
• Figure 4.5: Telewest' s monthly ARPS for telephony, broadband and TV and total customer ARPU, 2001- 5
• Table 5.1: Aspects of cablecos' strategy in historical media and future converged markets