Cable operators can resist commoditisation, says executives

Cable operators will be able to resist the advance of over-the-top TV as well as competition from telcos and other service providers through their ability to bundle a range of services, deliver faster broadband and invest in new services, Cable Congress attendees heard yesterday.

Cable operators will resist the march of internet TV and over the top offerings because they sells bundled service offerings, said Andrew Barron, chief operating officer, Virgin Media, speaking on the C-Suite panel at the end of yesterday’s Congress. He said that Virgin Media already offered over the top TV as part of its overall offering. Cable’s ability to deliver bundled offerings meant that its business was secure even if TV increasingly went online, he said.

Barron said cable was an innovative industry. “In five years time many of us will be talking about mobile and mobile data and that will be a very significant part of that business,” he said.

Barron said the next step for cable would be to extend its relationship with customers beyond the home. Business services represented a very strong opportunity, he said. Small cell deployments, WiFi and business services were the next frontier for the industry, said Barron. Teaming up with mobile operators to provide WiFi access from Virgin Media street cabinets and other local sites to complement mobile networks represented a significant opportunity, he added.

Barron said that Virgin Media would move from a “light touch” MVNO partnership to a situation where it could choose which network to use, but it had no intention of acquiring spectrum to build its own mobile network. This, he said, was not necessary to achieve its goal of offering wireless services outside the home.

Luis Lopes, chief operating officer, Zon Multimedia, said that the threat to cable and its ability to make money differed from market to market. In the case of Portugal, operators had the ability to differentiate through broadband speed, as in many other markets, he said. Zon was trying to move more towards selling an experience. “What consumers want is that it has to work, it has to be relatively simple and it has to keep them entertained,” said Lopes.

Unlike Virgin Media, Zon is betting on the benefits of merging fixed and mobile infrastructure. Lopes said that Zon’s merger with mobile operator Optimus was justified because mobile services were becoming more important and Portugal had seen aggressive moves by mobile operators to deliver mobile services for a low price to subscribers bundled with quad-play, which called for a response from the cable operator. He said that owning a mobile network would provide an opportunity to target the enterprise market and delivery synergies with the fixed network.

Other executives on the panel session highlighted a number of alternative ways in which cable could differentiate its offering and avoid the fate of being seen as a commodity service.

Using the word ‘fibre’ as part of its marketing strategy was remarkably effective, said Manuel Cubero, chief operating officer, Kabel Deutschland. Cable’s USP currently was selling broadband speeds that no-one else could reach.

Consumers were becoming more sophisticated and knew what type of network they were using and the difference between network types, said Gunnar Evenson, CEO, GET Norway. While consumers can get content from multiple sources, cable operators were investing in advanced user interfaces became familiar to viewers, he said.

Evenson said the main objective was to get broadband penetration to 100% and to add new services.