Discussion Papers

Franz Büllingen, Annette Hillebrand, Peter Stamm, Anne Stetter

Cable industry strategies for the NGA world

No. 365 / February 2012

(Full version only available in German)

Summary

Full Service Cable Networks are gaining increasing importance in the broadband access market in Germany. After the late market entry, cable internet experienced an accelerated customer growth during the last years. At the end of 2011 cable reached a market share of more than 13 per cent on the German broadband market.

The special attention cable gets is less due to this absolute market share. It is more due to the 61 per cent share cable could gain at the latest annual net increase of broadband access. The growing importance of cable infrastructure is also driven by the fact that nearly half of all homes in Germany are within the coverage of ultra-fast internet access with 100 mbps and more by cable networks. Classical telecommunication operators (telcos) are not able to offer high speeds similar to cable, unless they invest in new NGA fibre networks. However there are still few of those new FTTB and FTTH networks installed yet, passing only 2.5 per cent of German homes.

In this study we analyse the development paths for cable network operators to improve the network capacity in order to meet increasing demand for ultra-fast internet access. We explain different options cable operators have to migrate their network in a demand-driven modality. The relevant upgrade concepts are full service Hybrid Fibre Coax (HFC) networks, Deep Fibre networks and Radio Frequency over Glas (RFoG) networks. The RFoG networks concept includes fibre lines up to the building.

With two brief case studies we show the convergence of cable and NGA fibre networks on different levels. The case of city-carrier NetCologne demonstrates how services of both types of networks – cable and NGA fibre – converge. Upgrade projects of cable operator Kabel Deutschland convey that cable networks in their final upgrade state are similar to FTTB networks on the infrastructure level.

In an excursus we analyse in which way cable broadband access differs from other means of broadband access regarding IT security. It turns out that the emphasis of security risks is not on the infrastructure level, but on the IP service level. Therefore the IT security level of cable broadband access is comparable to other NGA networks.

In the final two sections of the study we provide a closer look to comparative markets in the Netherlands and in Switzerland. These are two markets with well-established infrastructure competition and highly developed cable networks. In both countries, cable offers ultra-fast internet access to a majority of homes. On basis of this competitive pressure, telcos are much more advanced in rolling out their NGA fibre networks. These insights to neighbouring markets support our thesis of cable being a catalyst for NGA fibre networks deployment.

Discussion Paper is available for download.

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