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ANGA 2012: German cable industry in turmoil
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ANGA 2012: German cable industry in turmoil - 13-June-2012, 19:20

ANGA 2012: German cable industry in turmoil

Jrn Krieger RapidTVNews | 13-06-2012

The upgrade of Germany's cable networks for high-speed internet access pays off: Two out of three new broadband customers opt for cable instead of ADSL. But the success leads to new concerns for the industry, it emerged at trade fair ANGA Cable which commenced in Cologne.
Germany's Federal Network Authority wants the cable operators to open their networks for third party players. Their main competitor Deutsche Telekom has already signalled its interest and would thereby use the networks again which it once sold to Kabel Deutschland, Unitymedia and Kabel BW.
Thomas Braun, president of German cable association ANGA, stressed in his keynote speech the importance of broadband internet for people: High-speed internet access would now be part of the basic features of a habitation just like electricity, water and gas. Braun criticised the plans by public broadcasters ARD and ZDF to terminate payments for carriage of their channels to cable operators from 2013: "Thats a distortion of competition which we will not accept," Brain said with reference to the fact that the broadcasters continue to pay for distribution of their channels on DTT and satellite.
In the subsequent panel discussion, Christian P. Illek, marketing head of Deutsche Telekom in Germany, affirmed that the telco would hold onto its IPTV platform Entertain despite the loss of the football Bundesliga rights to competitor Sky Deutschland. Illek expects to exceed the 2 million customer mark by the end of the year. At the same time, he played down the importance of the Bundesliga for Entertain: Out of the platform's 1.8 million customers, only one in ten has subscribed to Bundesliga package "LIGA total!". Despite this, Telekom does not want to remain without Bundesliga coverage. Illek confirmed that negotiations are underway with Sky to distribute the latter's Bundesliga package on Entertain. Sky CEO Brian Sullivan said that the broadcaster would be open towards such a collaboration.
As Sky has snapped away not only the IPTV rights, but also the mobile TV rights for Bundesliga coverage from Telekom, the subscription broadcaster considers offering its over-the-top-TV service Sky Go as a stand-alone product in future, hinted Holger Enlin, Chief Officer Legal, Regulatory & Distribution at Sky Deutschland. Football fans would then no longer need a conventional Sky subscription to watch Bundesliga live games or other linear Sky channels on their smartphone, tablet-PC or computer. Through games consoles, hybrid set-top-boxes or connected TV sets, Sky could thereby also reach households without cable or satellite reception for the first time. UK-based sister broadcaster BSkyB is currently preparing such an offering dubbed "Now TV".
Michael T. Fries, president and CEO of Liberty Global, revealed that the US media company will deploy its interactive multimedia set-top-box Horizon in Germany in Q1 2013 through its subsidiaries Unitymedia and Kabel BW. The box, which will act as a central hub connecting TV, internet and mobile devices in a household, will be introduced first in the Netherlands and Switzerland.
The high strategic importance of broadband internet for cable operators was highlighted by Manuel Cubero, COO of market leader Kabel Deutschland. The company has developed high-speed internet as its second foothold next to traditional cable TV in order to be prepared if TV consumption increasingly shifts to the internet, for example through over-the-top-TV services, he explained. "If this happens, then we will have the highest bandwidth." Kabel Deutschland would in fact financially benefit if a customer signs up for internet access instead of cable TV as an internet customers pays twice as much as a cable TV customer on average, Cubero said: "We are in a luxury position."
In the debate regarding carriage fees, Karola Wille, director general of ARD affiliate MDR, said that Germany would currently have a unique model in Europe as it would not usually be the case that broadcasters pay carriage fees to cable operators for distribution of their channels. It would actually be the other way in most cases. Also, for historic reasons, only the three operators of the former Telekom networks - Kabel Deutschland, Unitymedia and Kabel BW - would benefit from these payments while smaller operators would not receive carriage fees. The world has changed, Wille said, giving new distribution platforms such as IPTV or Zattoo as examples. It would now be a well suited time to put an end to this special treatment.
Cubero countered that cable networks would be the cheapest distribution platform for ARD and ZDF. For each cable household, they would pay only around 2 per year while the cost for DTH satellite would amount to 3.70 and even 37 for DTT. Wille explained that there would be an "important difference" between cable networks on one side and DTT and satellite on the other: The operators of DTT and satellite would not use the customers for their own business models.
Cubero accused ARD and ZDF to "discriminate" cable networks with their withdrawal of carriage fees, but said that he would be open for negotiations. This raised the attention of commercial broadcasters which fear that their public competitors could receive preferential treatment. Conrad Albert, chairman of Legal, Distribution & Regualtory Affairs at ProSiebenSat.1, said that he would follow the negotiations with ARD and ZDF "with great interest" and already made it clear that he would insist on benefitting from the same improved conditions if such an agreement is reached, adding that the "prohibition of discrimination" would require equal treatment of all market players.
Another heated discussion was focussing on the opening of cable networks for third party players, also known as bitstream access or open access. Iris Henseler-Unger, vice-president of Federal Network Authority, said that it would be her goal for cable operators to reach a voluntary agreement on this by the end of this year. However, these ambitions are not welcomed by the industry. Lutz Schler, CEO of Unitymedia, rejects the opening of his network and points to the fact that cable operators currently only have a 13% market share in the competition with ADSL providers for broadband customers. Telekom, however, could well imagine to use the cable networks for distribution of its triple play products, said Illek. Schler considers Telekom's interest in using other infrastructures to be a "historic moment" as the telco would always have insisted on having the best network itself until now.
Nonetheless, Henseler-Unger hopes that the regulator will be able to convince cable operators to open their networks as this would, for example, enable them to make better use of vacant capacities, thereby faster refinancing their investments into network upgrades. Theo Weirich, managing director of regional cable operator, does not understand the large market players' resistance. His company would already successfully practise bitstream access with Telefnica and QSC having subleased capacity to the third party players on its fibre-optic network to market their own products. Schuler explained that his opposition is based on strategic aspects: Unitymedia's strategy would be to attack Telekom and other ADSL players in the broadband market to take away market shares from them. It would therefore not fit into the concept to support the competitors by providing them with capacity.

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