Discussion Papers

Peter Stamm

Current developments and strategies of German cable industry

No. 347 / September 2010

Summary

The German cable industry is undergoing a quite dynamic change. During the last seven years, about 3.7 billion euros were invested in order to redesign the TV-cable networks fundamentally. Coming from single broadcast distribution networks, today’s cable networks are a very powerful infrastructure for interactive broadband services of all kind. The service offers of cable companies comprise beside analogue and digital radio and television programmes also interactive video services, telephony and – most important – very high bit rate broadband connections. Cable is setting in motion a more and more intensive infrastructure based competition on the telecommunications market. Thanks to bit rates above 100 mps of today’s cable broadband connections, the cable companies’ activities are having a catalytic effect on investments in optical fibre sub-loop networks.

Within this study an up-date is given on current developments on the cable market. Activities to upgrade the cable networks and the structure of hybrid fibre coax (HFC) networks are analysed. The latest availability of triple play services is described, both on average and for the three largest cable operators. In doing so, different strategies of the operators and technical distinctions regarding the capacity of their networks are emphasised.

When up-grades for all cable networks are finalized, the cable technology will still offer some potential for further optimizations with more capacity. The major technical options are shown for medium- to long-term bit rate increases. In the long run cable operators can even follow a migration path to fully optical fibre sub-loop networks.

In the next section of the study the position of cable on the markets for TV reception, broadband connections and telephony is analysed. Main emphasis is put on today’s penetration of digital cable television and the future expectations into this, as well as on the position and role of cable operators on the market for broadband connections. It can be observed that cable operator’s current marketing activities are focused on price and performance of cable broadband connections. An outlook is given on the coming cable service offers, which will shift the emphasis towards IP-based interactive video services.

In the study’s last section the dynamics of change of the cable market structure are portrayed. During the last decade numerous changes in ownership as well as mergers of operators and consolidations of networks could be observed. The German competition authority has set a more liberal course, at least regarding mergers on network level 4. Depending on permission by the competition authority, the cable industry can be expected to follow the trend towards structural integration of network levels as well as larger sized network and company units.

Full version only available in German language.

Discussion Paper is available for download.

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