The Role of Broadband Cable in Infrastructure Competition

Transcription

1 The Role of Broadband Cable in Infrastructure Competition ITS 16 th European Regional Conference Porto September 2005 Georg Merdian Director Infrastructure Regulation Kabel Deutschland GmbH

2 Kabel Deutschland: Europe s largest cable operator Rheinland-Pfalz/ Saarland Ish Iesy Kabel BW Hamburg/Schleswig- Holstein/Mecklenburg- Vorpommern Niedersachsen/ Bremen Berlin/ Brandenburg Brandenburg Sachsen/Sachsen- Anhalt/Thüringen Bayern Kabel Deutschland GmbH Largest cable operator in Germany and Europe Operations in 13 German Federal States ( Bundesländer ) ca. 9,7 mill. supplied TV households ca. 3,1 mill. direct customers 1,1 bill. revenue (2004) ca staff Headquarter: Unterföhring / Munich KDG covered regions S. 2

3 Kabel Deutschland in International Comparison Cable Operators Connected Households in mill. 21,5 10,9 9,7 7,2 3,2 2,6 1,7 1,6 1,5 Comcast/ AT&T Time Warner KDG UGC ntl:* Tele Columbus Telewest Telenet Cablecom Passed Homes (Mio.) 39,7 18,8 15,3 12,7 8,9 2,6 4,9 1,7 1,7 Source: Annual Reports * ntl UK: 2,9 plus ntl Irland: 0,3 S. 3

4 Kabel Deutschland from Deutsche Bundespost to Triple Play Since 1982 Roll-Out of the German CATV network by Deutsche Bundespost Start of CATV in Germany with first regional pilots Deregulation of telecoms sector with telecoms act (TKG) Separation of Deutsche Telekom (DTAG) cable operations into Kabel Deutschland GmbH (KDG). Since 2000 March 2003 Reorganisation of cable operations into 9 regional operations and a service company and sale of cable networks in the regions of Northrhine-Westfalia (Ish), Hesse (Iesy) and Baden-Württemberg (KabelBW) A consortium comprising of Apax Partners, Goldman Sachs Capital Partners and Providence Equity Partners acquires the remaining cable networks in six regions from DTAG KDG moves to Munich and launches new digital services. October 2005 Launch of Triple Play service in entire regions of Rhineland-Palatine & Saarland and more than 15 additional cities (some 3.5 mill. homes passed upgraded). S. 4

5 Layers of Cable Network in Germany Core Business KDG Program Down-Link Coax Cables Program Up-Link Mikrowave or Fibre Links Core Network: Coaxial, Microwave or Fibre Regional Headends with Primary Amplifiers Secondary Amplifiers Amplifiers Street Cabinets NE 1 Program Provider or KDG NE 2 Feed-In Network KDG NE 3 Distribution Networks NE 4 Inhouse Networks (majority not KDG) S. 5

6 KDG s Structure of Customer Relation Customer / Tenant Housing Societies NE4 operators (2,8 mill. HH) 3,8 mill. HH 3,1 mill. HH KDG (ca. 9,7 mill. connected HH NE3) S. 6

7 International Success Story: Broadband via Cable Market Shares Broadband Internet via Cable 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Austria USA Netherlands Canada Switzerland Germany DSL Cable Other Source: Monitoring Informationswirtschaft, 7. Fact Report 2004 of TNS Infratest GmbH & Co.KG for German Ministry of Economics S. 7

8 Kabel Deutschland Broadband and Triple Play Missed Opportunity? Why is KDG such a late runner with regard to broadband internet and triple play? (1) Historic reasons - until 2003 part of German telecoms incumbent. (2) Artificial market structure in Germany. - Separation between so-called NE3 and NE4 networks. - Implemented for political reasons to promote SMEs in the 1980s. Thus KDG has only direct relations to a rough third of its customers. Often limited and only indirect control of investment and upgrade decisions. Without knowing the customer you cannot sell new products or bundles. Differentiation not only between homes passed and homes connected, but also with regard to homes marketable for new products and bundles (Digital & Pay TV, Internet, Telephony) S. 8

9 Obstacles from Regulatory and Competition Policy German Media Regulation is in the domain of the Federal States and despite a Media State Treaty fragmented and not very much harmonized. KDG has to deal with 12 out of 15 federal media regulators plus German telecoms regulator BNetzA (infrastructure regulation). No clear delineation between media and telecoms regulation with regard to infrastructure. The Must Carry legacy: must carry rules sometimes make up 100% of total analogue programming and may be carried over to digital programming in future as well. Copyright Law: right for digital distribution of all analogue programming is ambiguous and may be enforced via courts only. Currently no clear regulatory framework for cable telephony and VoIP services, i.e. emergency calls and nomadic usage. The Federal Cartel Office gave up only in recent time and only partially it s blocking approach of further industry consolidation both within NE3 and for NE3/NE4 operators. S. 9

10 Level Playing Field for Cable Operators vs. competing Infrastructures? Media regulation has to be streamlined and harmonized on European and national scale. Delineation between content and infrastructure must be clear in order to avoid double regulation. Must-Carry legacy has to be cut back instead of application to digital distribution on infrastructures. Asymmetric regulation in favor of satellite, DTT or DSL has to be removed and prevented. Telecoms or media regulation preferring traditional PSTN networks in contrast to cable violates infrastructure neutrality. Increasing competitive pressure for cable operators in traditional broadcasting markets (end customers, feed-in, wholesale/signal-delivery) thus industry consolidation should not be blocked based on historic market analysis. Further integration between NE3 and NE4 is essential in order to provide scale and scope for successful roll-out of internet, triple play and other bundles. S. 10

11 What Role for Cable as Broadband Infrastructure? Cable networks are the natural players for triple play and even X-play. Bandwidth and QoS can easily be scaled and upgraded. Cable operators can capitalize on their content experience and leverage their existing relationships to new digital, interactive as well as internet offers. Choice and quality of TV programming are at least in the foreseeable future still superior to TVoDSL or IPTV. Cable operators already have the technological capabilities and the supply chain links for new services like VoD, interactive TV or HDTV. Even mobile or wireless (portable) services can be integrated into CATV bundles using cooperations with mobile providers or WiFi/WiMAX access. Window of Opportunity with regard to broadband growth is open at least for the next months. Within a favourable framework in Germany a significant fraction of the growing broadband market could be achieved by cable operators like in other countries. S. 11

12 Thank you for attention Georg Merdian Director Infrastructure Regulation Kabel Deutschland GmbH