The cable industry has delivered compelling and well-priced services and bundles covering television, multiscreen TV, fast broadband and telephony and is currently enjoying the fruits of its labour with some notable growth figures. But now it must look outwards beyond its own retail products and embrace what could be an even bigger opportunity, to become the connectivity provider and the platform provider for the Gigabit society.
These are the sentiments being expressed at Cable Congress in Warsaw this week, where Manuel Kohnstamm, President at the industry trade association Cable Europe (and SVP and Chief Corporate Affairs Officer at Liberty Global) put it in his own words. “It is no longer just about being the hero of our own story. Now, it is about the opportunity to become the hero of everyone else’s story too.”
Kohnstamm highlighted the importance of innovation – the umbrella theme at the conference this year. And he said the key to future success for the European cable industry is its ambition to deliver Gigabit connectivity and so underpin what is being termed the digital and Gigabit society. He talked of building Gigabit highways and creating a borderless digital world. He believes cable can be a central enabler of a digital society that is constantly adapting to disruption and innovation, connecting people with faster and better digital experiences.
Virtual reality and augmented reality were two of the themes discussed later at Cable Congress – both examples of nascent but potentially massive markets that will rely on ultra-fast and low-latency networks but which also present an opportunity for service providers to become either a platform or a retailer of services or applications.
The role of cable operators in the Internet of Things was also discussed in detail at this conference. Once again, there is an opportunity to become a retailer of smart home services but there was little doubt about where the real value-add can be found: in providing the platform that hosts multiple third-party ‘retail’ services, in providing the trusted and secure environment in which consumers will welcome smart home and IoT applications, and in providing the in-home (and wide area network) connectivity.
In both these examples, the emphasis is on cable operators enabling innovations that they do not necessarily control or sell directly, but which add to the sum total of satisfaction their customers will get from their connected digital lives. The industry is being urged to embrace change, make it work for their business, and keep innovating on their own retail products – like television and broadband access – at the same time.
Kohnstamm highlighted the most recent evidence that the cable industry is getting things right – IHS statistics released by Cable Europe on the eve of Cable Congress showing that cable industry revenues are up 7.1% year-on-year. There is strong growth across all cable services with broadband up 10%, TV revenues up 5.5% and telephony revenues 7% higher than last year.
Television continues to be the main source of profit for the industry, accounting for half of the EUR 23 billion of revenue, according to the IHS figures. Internet represents 31% of the industry’s income, up eleven percentage points compared to a decade ago.
The revenue growth for TV services is driven by a strong appetite for digital subscriptions and VOD, the IHS statistics reveal. 61% of TV subscribers are now digital and they generate 77% of TV revenue. “With 21 million homes still analogue, the sector has clear potential to continue growing in the future,” Cable Europe says.
More than 4 million Revenue Generating Units (RGUs), the industry metric for the total sum of individual TV, Internet and telephony subscriptions, were added in 2015, taking the total to over 117 million. Internet and telephony are increasingly relevant, contributing to 52% of total RGUs.
Commenting on these figures, Kohnstamm said: “They show that cable is performing strongly despite – and possibly thanks to – the challenging competition with traditional and over-the-top players. Our industry is best-in-class when it comes to combining variety of offer, quality of content and user interface. Investment in our networks and our dedication to a great consumer experience have been the foundations of this success. And in the future, Europe will continue to be a vibrant market so cable must continue to facilitate development in related industries.”
Matthias Kurth, Executive Chairman at Cable Europe, added: “The increasing appetite for connectivity is a great opportunity for us. Our networks are clearly on track to be the backbone of the ‘Gigasphere’ society. We are best placed to enable this transformation because of heavy investment in our networks and our focus on innovation. The cable industry has the ambition and the ability to drive future technology growth.”