01-Nov-02
Broadband internet has become 'killer application' for european cable industry

Total european cable revenues generated €11.5bn at year end 2000

Telephony, internet and set-top box rentals now account for nearly 22% of total european cable revenue
Cable internet, digital television and cable telephony services are the main drivers for the technical upgrade of networks

According to the European Cable Yearbook 2002 published by media analysts Screen Digest on behalf of the European Cable Communications Association (ECCA), the year 2002 has been an important one for the cable industry. The pace of change has been relentless and the shift in market values across the telecoms sector has forced many cable companies to change their priorities. As result, consolidation has been placed on hold, but the upgrading of networks is continuing. Guy Bisson, the report author claims,
"The markets have forced a more measured approach to the execution of business plans, which has seen the cable industry step back from expensive technology upgrades. Many of those business plans were based on forecasts that were simply naïve in their bullishness. When the cable industry emerges from the dark days of the previous two years, it will have learnt many valuable lessons. Whatever the attitude of shareholders and financiers, the fact is that cable revenue is growing".
The cable industry has been actively restructuring its business in order to cut its debt burden. At the same time, the industry continued to increase its turnover by adding more subscribers and delivering a more diverse range of services with a particular focus on digital television.
Although conditions vary across the different European territories, the march to broadband, particularly the provision of high-speed Internet has continued apace. If there is one service that has emerged as the 'killer application' for cable, then broadband Internet is it. And on the horizon, the developing technology of IP telephony is set to unleash as second.
Henk de Goede, President of the European Cable Communications and CEO of Casema NV states, "Most analysts remain positive about the industry, considering its assets such as customer base and the broadband infrastructure. It is this important asset, broadband infrastructure that needs to be promoted actively and undone from unnecessary and burdensome obligations. As result, the year has been an active one. The industry is changing in every imaginable way; from the way businesses are run to the range of services that are offered. In looking forward this will be an exciting time to work in the cable industry".
The year 2001, witnessed a 14% increase in total gross revenues generated from European cable providers as compared to the previous year. By far the largest market generating in excess of €3.2bn is Germany - a factor of its huge size rather than being a particularly lucrative market. The UK ranks second at €2.9bn. France follows with just over €1bn generated in gross revenue.
There are now three markets in Europe in which the percentage of households passed with cable services exceeds 90%. The Benelux markets of the Netherlands and Belgium top the league table with 97.2%% in the Netherlands and 92% in Belgium. Portugal is in third place with 90.9%.
In the Netherlands, Belgium and Luxembourg between 95% and 99% of all homes passed by cable take cable services. In the fourth market, Switzerland, 94% of all homes passed take cable services. However, in the UK only 30% of homes passed subscribe to cable services.
The growth in subscriber take-up throughout Europe was up slightly by 4% in 2001 over the previous year. Germany lead the way with a total cable subscriber base of 22.1m, followed by the Netherlands with 6.6m and Poland following closely with 5.2m. The UK ranks fifth with a total of 3.6m subscribers.
Cable Internet, digital television and cable telephony services have been the main drivers for the technical upgrade of networks. Proportionally, reach of these new services in many countries is still too low to produce meaningful penetration rates.
The Benelux countries lead Europe in the growth of high-speed Internet. The Netherlands had 450k subscribers at year-end 2001, twice as many as the country with the next largest number - the UK, which had slightly over 200k. Belgium ranked a close third. Both Belgium and the Netherlands have focused heavily on cable Internet as a core new service offer.
Digital cable television, by contrast, has not been seen as a killer application across most European countries. At year-end 2001, there were a total of 3.3m digital cable subscribers across Europe, although this was up 114% on 2000. Contrary to the proven popularity of cable Internet services across the Benelux group, digital cable subscriber take-up is led by the UK, having just fewer than 2m subscribers at the end of 2001. France followed with 664k subscribers. The UK has a long history of cable set-top box infrastructure and triple-play and the shift to digital has been executed as a straight, if gradual, switch out of hardware. This differs from virtually all other countries where digital cable boxes are offered at a premium rate to analogue services.
In the cable telephony market, the UK again ranks well ahead of any other country in Europe with more than 4.2m cable telephony customers. Cable telephony is a much newer proposition in the rest of Europe. Spain has been the strongest new market for cable telephony. In fact, there are more customers in Spain taking cable telephony than cable television. In Italy only the new Fastweb offers telephony over its fibre-to-the-home network. Customers taking the company's Internet services also get a phone service over the fibre.
The Netherlands and Belgium also fare well in the cable telephony stakes. Telephony is currently being marketed most heavily in the Flemish part of Belgium by Telenet. Telephony services are also offered in the Netherlands with the main backer of cable telephony services now being UPC. Nonetheless, the Netherlands rank just ahead of Belgium in terms of gross number of cable telephony customers and is third in Europe to Belgium's fourth place.

KEY FINDINGS INCLUDE:

• The 15 countries of the European Union generated €10.1bn in revenue during 2001
• Television services are still the main contributor to cable revenues, accounting for €7.7bn in the European Union; €8.1bn in Western Europe; and €863.7m in Central and Eastern Europe
• Television's overall contribution to cable revenue is in decline. Television services accounted for 75.7% of total European Union cable revenue in 2001, compared to 82.9% in 2000
• Cable Internet and telephony services are increasingly important generators of revenue for cable. Cable Internet accounted for more than 5% of European cable revenues in 2001, up from less than 3% in 2000.Telephony accounted for 16.5% of revenues in Europe and up 12% from 2000
• At year-end 2001 there was a total of 62.7m cable subscribers in Europe, 47.7m being in the European Union
• At year-end 2001 cable Internet subscribers in the European Union reached 1.7m and 5.6m cable telephony subscribers
• Digital cable subscribers totalled 3.3m in Europe at the end of 2001

EDITORS' NOTES
The third annual European cable yearbook 2002, written and published by Screen Digest, presents a unique insight into the European cable market and provides an analysis of 23 countries and the state of their cable market. An executive summary of the report is available to press only on request. The report contains over 170 pages of text and 300 charts and tables. Interviews with the author of this report can be arranged on request.

this press release is about the report
European Cable Yearbook

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