Published:
30-May-08
The ANGA cable show was held in Cologne this week with a newly unified trade association bringing together the Level Three operator's industry body Deutscher Kabelverband with ANGA's Level Four members. The show was the tenth held by ANGA and signals a new era in German cable as commercial operators increasingly dismantle the old division of cable infrastructure that has plagued the industry since launch.
Our take...
Germany's cable industry has come a long way in the past 18 months. The recent merger of the country's two trade associations and the aggregation of the association for the key Level Three trunk network operators with their smaller, but far more numerous, Level Four peers is symbolic of the changes that have occurred in the wider market. That combination was a key theme at this year's ANGA Cable trade show in Cologne, where it was stated boldly that German cable operators 'now speak with one voice'.
Certainly the combination is a sign that the silent war between the Level Four operators that control both the last mile network and the customer relationship and the Level Three operators that control the trunk network and the signal distribution is becoming increasingly irrelevant. The unhappy fragmentation of infrastructure has hobbled the industry for years as the power struggle between the two companies that served each individual customer led to delays in network upgrades and service innovation.
The difficulty of the situation became ever more apparent as private investors jumped into the market in the late 90s following Deutsche Telekom's sell off of the trunk network. In the years that followed, Germany's Cartel Office went into overdrive as the original nine regional Level Three networks created by Deutsche Telekom merged and combined to leave just three. The severe allergy that the office normally suffers when exposed to horizontal mergers was eased by the application of a competitive trade off: cable would act as the primary alternative to the all powerful Deutsche Telekom.
For cable, two problems remained: the Level Three/Level Four conundrum, and the notoriously lethargic German cable consumer. The solution the cable operators undertook was to launch a guerrilla war, fought house to house, door to door. Level Three companies bought up as many of the overlapping Level Four operators as they could and where they couldn't, they tried to by-pass them altogether by dealing direct with big housing associations or offering single line installations. Level Four operators, meanwhile, began to build their own Level Three networks, seizing control of the signal distribution and content.
The result was unification, as important for the cable industry as that between East and West. The full outcome was blindingly apparent at this year's ANGA show. Both Level Three companies KDG, Unity and Kabel BW and the newly engineered power-house Level Four operators like Telecolumbus/Primacom, Orion and Net Cologne increasingly enjoy direct connections to their customers and full autonomy in large parts of their networks. Executives at this year's show where touting figures as high as 80 per cent for direct customer relationships. It is not just the industry speaking with one voice, but the customer now hearing one voice.
The trade off, though, is that the Level Three and Four operators that previously maintained an uneasy symbiosis now increasingly compete for the same customer in the same street. That may turn out to be a small price to pay for the network unification that means, finally, digital, Internet and telephony roll-out can begin in earnest. And the pain will be further eased as ARPU for a direct customer is around 30 per cent higher than by the traditional Level Threee/Four partnership. The €9 monthly ARPU reported by German cable companies is after it has been skimmed to the tune of six or seven euros by a second supplier.
German cable has a lot of catching up to do, especially when it comes to the increasingly political issue of digital TV. But as the ANGA trade show demonstrated, the industry is ready to roll with one voice, one strategy and one aim: to seize the potential that infrastructure unification allows.
Germany,
