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European cable industry continues strong growth, says report

The European cable industry is expected to grow by between 6-8% in revenue terms in 2009-10, outperforming the wider economy, according to a new report from Solon Management Consulting commissioned by industry association Cable Europe.

Overall, the cable industry in the 27 EU countries plus Norway and Switzerland serve about 72 million households and generates revenue of €18.2bn (with the EU 27 contributing €17.5bn), according to the report, Cable in Europe: Delivery the Future Today. Capital expenditure remains fairly constant at 25% of turnover.

Solon found that broadband penetration in active cable markets in western Europe was about 30% higher than in those dominated by DSL providers, while the equivalent figure in central and eastern Europe was 50% higher. Cable CEOs surveyed by Cable Europe estimate that 40% of their customers will be using broadband speeds of between 10-50Mbps by 2012.  EuroDOCSIS 3.0 services have already been launched in the UK, Belgium, the Netherlands, Luxembourg, Spain, Portugal, Switzerland, Denmark, Norway, Sweden and Finland, and services are expected to be launched by the end of this year in Ireland, France, Germany, Austria, Slovenia, Poland, the Czech Republic, Slovakia, Hungary and Romania, the report said.

Solon’s report suggested that these figures reflected the strength of the infrastructure-based competition provided by cable, despite the fact that in most European countries the incumbent telco alone had a turnover of five to six times that of the whole national cable industry. “No service-based competitor, be it a reseller or an LLU-based alternative carrier, has shown the same competitive impact as cable,” the report said. “This casts the cable industry as one with significantly positive leverage on Europe’s drive to innovate in the information society.”

Solon also found that cable was actively pushing digitisation of its TV customer base, with the number of digital TV subscribers increasing by 32% to 17.8 million in 2008, representing 28% of the overall cable TV subscriber base.

The report found that the cable industry employed about 84,000 people across the countries surveyed, 43% higher than the equivalent figure five years ago, with a further 94,000 jobs being provided by cable industry suppliers, including cable programming. 

Solon’s report highlighted a number of key policy areas that need to be addressed. First, it said, there is a need for policy that supports next-generation access network investment that was technology-neutral. Allied to that, public support for broadband development should recognise and secure existing next-generation access competition, and “refrain from any interference where competition works”, the report said. It also called for a change in thinking about “must carry” rules for content, arguing that digitisation shifted power to broadcasters and called for a “a shift from cable’s ‘must carry’ to broadcaster’s ‘must offer’”. Moves to impose new taxes on broadband providers and commercial broadcasters to support public broadcasting should not “disproportionately burden a single market participant”, the report said. It called for care in allocating digital-dividend spectrum to wireless telecom applications that “potentially interfere with existing cable services and customer equipment” and also called for an approach to digital switchover that was market-led.

Solon released a separate report at the CTAM Europe conference in Lisbon last week, identifying key marketing priorities for cable.