Cable continues to outperform economy but challenges remain, says Solon

Based on a survey of 17 European cable operators, Germany-based research group Solon Management Consulting expects its participating operators’ revenues to grow by 6.6% between 2008 and 2010.

Presenting the results of Solon’s annual cable survey to the CTAM Europe conference in Lisbon yesterday, managing director Dorothea Wichert-Nick told attendees that, in the wake of the economic downturn, cable operators were increasingly focusing on “customer value optimisation”, meaning upselling basic subscribers to new services, and customer retention. While many expected broadband sales to increase, operators may face some challenges to meet network investment targets.

By 2012, following the rollout of EuroDOCSIS 3.0-based services, Solon expects the average broadband speed in western Europe to be 60Mbps and the average in central Europe to be 30Mbps. While usage of video-on-demand remains limited (to an expected two to four per cent of subscribers overall by next year, according to Solon’s estimates), DVR growth has taken off, with about 37% of subscribers expected to have DVRs by 2010. The current revenue split between services is about 50% from basic TV access, 30% from broadband and the remainder split between pay-TV services and telephony, Wichert-Nick said she expected the proportion derived from basic TV access to begin falling next year.

Solon said the overall revenue of European cable had grown by 17% since 2006, while overall economic growth had been only 8%. However, that growth has its price, Wichert-Nick said. Capex requirements remain stubbornly high, at about 25% of revenues, with little sign of reduction in the near future. “The next stage will be bringing fibre closer to the customer and there will be high investment in new consumer premises equipment,” she said. CPE remains the key element in subscriber acquisition costs, meaning operators need to upsell subscribers to the new services that the boxes can deliver to make them pay.

Operators are also increasingly turning their attention to attempts to upsell subscribers to mobile services, as well as addressing the possibility of selling higher-bandwidth services to small-to-medium sized enterprises, Wichert-Nick said.