|
Key players in the cable distribution market
Noos
(ex-Lyonnaise Câble) For a long
time, Lyonnaise Câble was a subsidiary of the Lyonnaise (now Suez Lyonnaise)
responsible for managing a sizeable portion of the Cable Plan's networks
(thus belonging to France Télécom) including the Parisian network in
particular. Lyonnaise acquired the Caisse des Dépôts et Consignations
(French deposit and consignment office) in a second phase. The homes
passed within the Cable Plan represented more than 71% of these sockets
overall and numerous disagreements arose between the two partners, especially
when it came to making the necessary investments for rolling out new
services. Finally, an agreement with France Télécom was made public
in September 1999 enabling Lyonnaise Câble to become the owner of all
of these systems. In exchange, France Télécom, which also contributed
its minority holdings in Lyonnaise Communications (programme company
in which it held a 17.1% stake) and its 24.5% in Paris Câble, received
49.9% of the new entity. After buying
out Paris' 24% share in Paris Câble and US West's 6% in Lyonnaise Câble,
Suez Lyonnaise was to hold a 50.1% stake. The situation further evolved in August 2000 with the
announcement of a new agreement, which led to France Telecom’s withdrawal
and the sale of its shares in Suez Lyonnaise Câble (given the new name
of "Noos" in the meantime) to NTL (27%) and Morgan Stanley
Dean Witter Private Equity (22.9%) for 1.35 billion francs. This transaction,
which gives Noos a valuation of around 2.7 billion euros (exc. debt),
was accompanied by an important investment programme to speed up the
development of the Internet, the modernization of networks and the generalization
of cable telephony services in the near future (and all of this in spite
of the 25% share in NTL's capital that France Télécom was soon to obtain).
Noos now
represents over 737,000 subscribers on more than 2.2 million marketable
sockets. It predicts a turnover of FF1.4 millions (210 million euros)
for the year 2000 and losses of FF900 millions (137 million euros).
Outside Paris and the surrounding region, Noos is present in Strasbourg,
Beacon, Cannes, Le Mans and Orléans. At the end of 1999, Lyonnaise Câble won a tender to
build and operate two cable networks in the North and South of the capital,
representing 390,000 passed homes and an investment of 152 billion euros.
NC Numéricâble NC Numéricâble
used to be subsidiary of the Canal+ Group (63%) and Exante (group of
American investors united around Callahan Associates International)
which managed another large portion of the Cable Plan's networks (accounting
for 66% of its marketable sockets) in addition to a few subsidiary networks
belonging to the Générale des Eaux Group. In December 1999 an agreement was reached with the
owner of the Cable Plan networks: in exchange for the systems managed
by NC Numéricâble under the Plan, France Télécom is to take possession
of 42.5% of the new company, while Canal+ and Exante each hold approximately
28%. NC Numéricâble represents a turnover of 900 million francs for
over 2.2 million marketable sockets and some 662,000 CATV subscribers,
91,000 of which are digital (AFCO figures 12/99). NC Numéricâble notably
serves the cities of Toulouse, Grenoble, Nantes, Versailles and a group
of towns in the Paris region (Hauts-de-Seine). Following Nice, the Nord-Pas-de-Calais and Lyons region,
NC launched an Internet service (in partnership with AOL) in Ile-de-France.
France
Télécom Câble France Télécom
still manages a certain number of its cable systems from the Cable Plan
or its subsidiaries (TDF) itself. France Télécom Câble (the company
responsible for marketing FT's cable services) currently represents
around 1.5 million homes and 660,000 subscribers (source: AFCO, 12/99).
Its relatively
good results in terms of penetration rates seem to have been put down
in part to its "Modulo carte" packages that enable subscribers
to compose their own selection of programmes. FTC serves the following main cities: Bordeaux, Montpellier,
Tours, Angers, Rennes and Rouen. UPC
Média Réseaux UPC France,
a subsidiary of the pan-European company UPC, built its strategy by
buying up French cable operators that served the country's small conurbations
(fewer than 100,000 inhabitants) like Intercom (25,000 subscribers transferred
in December 1999), Time Warner's networks (73,000 subscribers sold for
71 million dollars in March 99), Vidéopôole (143,000 subscribers bought
for 1,000 dollars a head) and Réseaux Câblés de France (74,000 subscribers
acquired in June 1999). This "daisy-chain" strategy has made
UPC the fourth-largest cable operator in France with 0.8 million sockets
and more than 325,000 subscribers (Avicam figures 12/99). UPC announced
a FF5 billion investment plan to develop its activities in France by
notably systemizing the Internet and telephony offers (8,600 subscribers
at end of 1999). It should be noted that UPC has also recently been
awarded a national WLL license within the Fortel Consortium, whose business
plan presents the originality of placing importance on residential clientele.
Finally, following the teaming up of Liberty Media
(controlled by AT&T) and UPC, the two companies' cable Internet
access services, i.e. Excite@Home and Chello should merge (outside North
America). NTL The leader
of the UK cable market, NTL, made its first forays into France by purchasing
270,000 sockets (in other words 70,000 customers including 48,000 individual
subscriptions) from France Télécom, divided up over five sites (Evry,
Mantes, Massy, Sèvres-Suresnes-Saint-Cloud and Toulon). This FF350 million-deal
valued the subscriber at over FF4.600. Although this figure may seem
very low in comparison to transactions across the Atlantic, it obviously
needs to evaluated in relation to the FF350 mn investments that NTL
is going to have to agree to over two years in order to transform the
outdated IG networks (multimode fibre optics with a star-shaped topology)
into a HFC-type infrastructure. The operator has announced audiovisual
and Internet services for summer 2000 and telephony for 2001. It is now likely that NTL and Noos will discuss joining
forces and co-operating with each other as the UK operator takes shares
in Noos. |
Deployment of new services
There are
two general trends in French cable marketing policies. To begin with, audiovisual
content is taking on a much more modular aspect as "modulocable"-type
offerings are put into place, for example, enabling every home to pick and
choose the channels it would like to subscribe to, and even sign up for only
one, if this is what the viewers desire. In addition to this, cable operators
are also driving the high-speed Internet access offering. UPC France launched
"Chello" in July 1999, NC Numéricâble brought out "AOL par
NC Numéricâble" at the end of the same year and France Télécom Câble
also introduced "Câble Wanadoo".
Lyonnaise Câble, the first operator to have marketed Internet services on
its network in 1999, was forced to suspend its services during the second
half of 1999 due to technical problems.
Money began to be invested in network upgrades for digital
broadcasting services in 1997 and 1998 but up until now, cable operators have
mainly focused their attention on implementing Web access and equipping cable
homes with digital set-top boxes for TV services. The cable operators' digital
TV offering seeks to be exhaustive most of the time and usually takes on board
channels broadcast by TPS and CanalSatellite.
Market structure
French cable networks display economic opportunity potential
by offering an alternative to the telecommunications network, which if backed
by considerable investments, could become a credible rival to ADSL technologies
on the French market. There seems to a great deal of market opportunities
for cable networks in France, provided that operators correctly apprehend
the scale of the work to be carried out on their networks so as not to engender
problems related to Quality of Service.
Appeal of the cable medium
Cable in Spain
History
1993 Cable bill
The cable sector had not been regulated up until now,
and was thus a free market. Nonetheless the sector was made up of around thirty
operators. 400 to 500 "community video networks" served around 200,000
to 250,000 households.
1995 The Spanish parliament approves the "Cable
Telecommunication" law
This law,
ratified by the public, specifies the terms and conditions for awarding franchises
and operating cable systems in Spain. It divides the country into 43 operating
regions. Two licenses are awarded in each region: the first is issued to a
private operator and the second goes to Telefónica Cable, which has to observe
an 18-month moratorium (later extended to 2 years) before launching its cable
activities when its competitor receives its license.
1998 The new Telecommunications law of 1 st
December 1998 is adopted
38 out of a total of 43 licenses were awarded for setting
up and creating cable networks at the end of 1998. This license award process
got underway in 1997. The main awarders were, on the one hand, the Endesa-Retevision
Consortium comprising Retevision, Endesa and Union Fenosa (national electricity
companies) as well as Telecom Italia (65% of potential sockets) and on the
other hand, Cableuropa (the subsidiary of Spaincom, Banco Santander, Ferrovial
and Multitel), which markets its offers under the brand name ONO (35% of potential
sockets).
Birth of a new Spanish telecommunications operator, AUNA
Telecom Italia, Endesa and Union Fenosa sign an agreement
to establish a holding which must pool all their assets in the telecommunications
field, and in particular companies involved in cable distribution such as
Menta, Madritel, Supercable de Andalucia, Cabletel, Euskaltel and Aragona
Cable.
Establishment of Estrano Digital
The aim of this company, created by the Spain's top cable
operators, is to feed digital content and services into cable head ends via
satellite. This will allow Able, Euskaltel, Canarias Telecom, Madritel, Retena,
Reteriora, Retecal, Supercable and Telecable to offer their customers the
6-channel pay-per-view service called "Mirador".
Industrial organization
Regulatory
framework
Regulatory authorities' role
The ministry of Development (Ministerio del Fomento),
which delivers licenses to build and operate cable networks, and the CMT,
which monitors professional practices in the sector to make sure that the
various provisions of the law are respected, are both in charge of regulating
the cable distribution sector in Spain.
In addition, town councils approve the service areas
that operators propose. The government grants building permission after consulting
the municipalities.
Regulation
The following reference texts set down the regulatory
framework for cable distribution:
- the Law
42/1995 of 22 nd December 1995 on cable telecommunications,
- the Decree
2066/1996 of 13 th September 1996,
- the Resolution
of 9 th December 1998 by the ministry of Development which extends
the moratorium concerning the beginning of Telefónica's activities from
18 to 24 months.
The 1995 Cable
Telecommunications Law, in particular, specifies the terms and conditions
for awarding 25-year franchises after public consultation. When taken collectively,
these licenses cover 10.8 million households, in other words, almost the entire
Spanish population.
The Law divides
the Spanish territory up into 43 operating regions and provides that each
of these geographical areas has to be served by one private cable operator
as well as Telefónica Cable. To make sure that these cable infrastructures
develop sufficiently it also stipulates that the different franchise holders
invest a minimum amount of money.
To foster
the emergence of real competition in the cable sector Telefónica Cable must
respect a 2-year moratorium once its rival becomes a franchise holder.
Finally, the Law sets down that cable networks must carry
a minimum of 2 public TV channels, private national over-the-air channels,
the public regional channels covering the area and other existing services
upon the local council's request. The government is responsible for fixing
the price of this minimum service.
The Law also
stipulates the nature of relations between cable operators and independent
broadcasters (private law contract) as well as the arbitrator role of the
ministry of Public Works, Transport and Communication to guarantee cable users
a varied service offering.
Key players in the cable distribution market
The cable distribution sector in Spain is currently organized
around three poles:
- the cable
operators grouped together within the AESDICA association, which is for
those that began their activity before the 1995 Law and which did not obtain
a franchise. There are 24 operators in all and together they represent over
one million sockets and 300,000 subscribers. The government has let them
continue their activity for the moment but they do not have the right to
upgrade their infrastructure,
- the cable
operators in the AUNA holding uniting Retevision's, Endesa's, Union Fenosa's
and Telecom Italia's cable assets,
- Cableuropa,
which markets its offer under the brand name ONO and which has obtained
11 franchises.
At the end of1999, the market could be broken down as
follows in relation to the % of passed homes:
- ONO:
22%,
- Retevision:
12%,
- Telefónica
Cable: 17%,
- Other
cable operators: 49%.
ONO
On is the
number one Spanish cable operator in terms of potential subscribers (365,000
sockets at the end of 1999).
It exploits 11 of the 38 franchises awarded by the Spanish
government to create and operate cable networks. These represent a potential
market of 3.8 million households and around 300,000 businesses.
Spaincom,
a subsidiary of the North American group Callahan Associates owns a 32.43%
stake in ONO and the Santander Central Hispano bank 32.41%.
At the end
of 1999 ONO boasted 40,306 residential customers.
The operator has been offering its customers digital
TV, telephony and high-speed Internet access services since November 1999.
In March 2000 it also launched a pilot interactive TV service based on Future
TV and nCube technologies (including an Internet access via the television
set and VOD) on its Santander and Albacete networks.
Retevision
Retevision
ranks second in the Spanish telecommunications market and it is the first
to have competed with Telefónica in the area of fixed telephony.
The company's
main shareholders are Endesa and Union Fenosa (national electricity companies)
as well as the Telecom Italia Group.
Retevision
is active in the fields of fixed telephony, Internet (Retevision Interactiva
EresMas), mobile telephony (Amena), DTT (Quiero TV) and cable.
It holds a
number of shares in the following cable distribution companies: Madritel,
Menta, Retecal, Telecable, Supercable, Grupo Cable and Retena.
Telefónica Cable
The Spanish
incumbent operator Telefónica has only been allowed to deploy its cable infrastructure
in the regions where private operators were granted franchises in 1997 since
1999.
By the end of this same year, Telefónica Cable already
represented 17% of connectable sockets.
Telefónica
Cable has planned to invest over 4 billion euros on deploying its cable infrastructure
over the next 10 years.
However, the Telefónica Group is also very much involved
in deploying ADSL technology (which should cover all of Telefónica's telephone
service subscribers as from the end of 2001) and in developing the services
it supports like high-speed internet access, for example (which has been in
operation since summer 1999).
Prospects for 2010
Market structure
The market
should continue to structure itself around the three ONO, AUNA and Telefónica
Cable poles over the next few years.
Given the size of the investments in infrastructure announced,
the market should remain dynamic with new operators looking to make their
activities as profitable as quickly as they can by offering different and
innovative services.
Appeal of the cable medium
Nevertheless
cable may have a few problems developing in view of very stiff competition
from transmission networks and alternative broadcasting.
ADSL will be deployed very quickly in the short-term
and, what is more, is encouraged by the government.
Digital TV via satellite has already achieved a satisfactory
penetration rate and the recent launch of digital terrestrial TV (DTT) constitutes
a veritable threat.
Cable in Italy
History
1994 Establishment of Telecom Italia
Telecom Italia is set up following the merger of SIP,
Iritel, Italcable, SIRM and Telespazio.
1995 The SOCRATE project is launched
In a television context dominated by over-the-air TV,
the public telecommunications group STET announces the start of the Socrate
project aiming to provide 10 million Italian households with digital cable.
1997 Merger of STET and Telecom Italia
The government decides to merge Telecom Italia and STET
to create a single public company, Telecom Italia.
1999 Stream finds new partners
Olivetti, owner of a 55% stake in Telecom Italia since
February, parts with 65% of its shares in the company Stream for 130 billion
lira (67 million euros) in June. The Rupert Murdoch Group, News Corporation,
acquires a 35% stake, the Cecchi Gori Group, 18%, and the Italian football
club consortium (SDS), 12%.
Industrial organization
Regulatory
framework
Regulatory authorities' role
The ministry of Posts and Telecommunications supervised
audiovisual broadcasting in Italy until July 1998. This role was then allocated
to the AGC (Autorità per le Garanzie nelle Comunicazione) established in September
1997 after Law 249 was passed.
|
Autorita per le Garanzie nelle Comunicazione |
|
Awards licenses to deploy cable networks Awards licenses to deliver cable services Responsible for allocating frequencies Supervises the broadcasting of audiovisual program
|
Regulation
Before Law
249 of 31 st July 1997 was adopted in Italy only the State could
set up a cable network for public use. Henceforth, licenses for cable network
deployment have to be issued by the regulatory authorities. Furthermore, the
building of a telecommunications network on public property is only authorized
as long as a license is obtained from the town council in question.
Telecom Italia, the owner of Italy's cable network, is
the only cable operator in the sector. It has an exclusive cable infrastructure
provider franchise until 2012.
Key players in the cable distribution market
Stream
(Telecom Italia 35%, News Corporation 35%, Cecchi Gori
18%, Società dei Diritti Sportivi - SDS -12%)
Stream was
set up in 1996 by Telecom Italia to promote and market interactive services
delivered via cable. In September 1996, when the Socrate Project had got underway,
Telecom Italia's subsidiary brought out a cable TV offering. Two years later,
it shifted the focus of its strategy towards satellite to counter the leading
operator in this sector, Telepiù, an 80%-owned subsidiary of the French group
Canal+.
The arrival of News Corporation and Cecchi Gori on the
scene in June 1999 enabled Stream to enrich its cinema offering and in the
same manner, SDS brought about the signing of an agreement with football clubs
in Fiorentina, Lazio de Rome Parme and AS Roma to rebroadcast matches. This
led Stream to launch a second TV platform, broadcast by satellite this time,
which necessitated 2.000 billion liras (1billion euros)' worth of investments
Telecom Italia
(Olivetti 55%, other 45%)
Telecom Italia is Italy's incumbent telecommunications
operator. Mid-1999, it had 26.2 million fixed telephony subscribers and 16
millions in mobile telephony. After building a cable network throughout 54
towns for digital interactive TV, it preferred to develop products using ADSL
technology such as video-on-demand and Internet access. In August 1999, Telecom
Italia announced that it was setting back in motion the Socrate project until
2002 and that it would like to use a 'last mile' ADSL connection to the end-user.
Prospects for 2010
Market structure
Over-the-air
broadcasting dominates the Italian TV market. However, the DTH sector is growing
very rapidly through the use of loss leaders like football, which attract
a large public in Italy. Telepiù is the number one satellite operator in Italy
with 1.72 million subscribers in June 1999. Stream, which entered the market
in 1998, had 170,000 subscribers at the same point in time.
Since 1995, little financial effort has been made on
behalf of cable and marketing has chiefly focused on satellite. Nevertheless,
given the relative failure of Stream, Telecom Italia seems to be displaying
renewed interest in the Socrate project. Although it seems difficult to imagine
the creation of telephony services in such a context given the presence in
this market, it is more likely that a high-speed Internet offering will develop.
However, this will have to vie with the ADSL offering (Turbolinea 640) proposed
by Tin.it, Italy's leading ISP and a subsidiary of Telecom Italia.
Appeal of the cable medium
