cable’s drive to accelerate broadband
TRANSCRIPT
Cable’s Drive to Accelerate Broadband
Manuel KohnstammManaging Director Public Policy & Communications
WIK Berlin, April 2010
April 2010 Page 2
Liberty Global Footprint
SwitzerlandSwitzerland
SlovakiaSlovakia
Puerto RicoPuerto Rico
AUSTRALIA
THE AMERICAS
WESTERN EUROPECENTRAL AND EASTERN
EUROPE
ChileChile
IrelandIreland
BelgiumBelgium
PolandPoland
AustriaAustriaHungaryHungary
RomaniaRomania
NetherlandsNetherlandsGermanyGermany
Czech RepublicCzech Republic
Video Broadband Voice
April 2010 Page 3
Infrastructure investor and competitor in Europe since 1995
Building scale, driving innovation, increasing choice for consumers
Superior network architecture and internet speeds
Pushing the customer experience
Developing Interactive Digital Television
Liberty Global Activities
April 2010 Page 4
Long-term Industrial Operator
Strong operational track record, investing in innovation and accelerating market development:
2000: LGI started real broadband forcing DSL investments
2003: LGI started (interactive) DTV in its markets
2005: LGI launches digital telephony (VoIP) forcing incumbents to follow and offer voice at lower cost
2009: LGI’s 120Mb Fibre Power broadband
forcing the competition to follow and to
accelerate investment in fibre networks
April 2010 Page 5
Cable grows, but size matters
April 2010 Page 6
German Communications Industry - a €47 market
Source: Screen Digest (2010), Wireless Intelligence
0
20
40
60
80
100%
Mobile
DT
Vodafone
O2
E-Plus
~23
Fixed telephony
DT
Other
~13.5
VodafoneDSL
Other altnets
DT
United
Kabel BW
Other
UnitymediaKDG
~6.5
Uni
tym
edia
KDG
KabelBW
Other
DT
~2
Unity-
media
Prem
iere
/Sky
Kabel BW
~1.5
Germany consumer spending telecom market (2009, €B)
KDG Other KableKabel BW
BroadbandTV
access
PayTV
Total = ~47
Vodafone
Vodafone
Vodafone
Vodafone
BasicBasic TV
April 2010 Page 7
Cable and Telco Revenues – Western Europe
D
NL
B
IR
UK
F
AT
11:1
5:1
6:1
5:1
13:1
19:1
5:1
Note: Revenues include fixed telephony, mobile telephony, internet access and TV distribution1) Figures not fully consistent due to different revenue categories2) Exchange rates as of 19.05.2009Source: Screen Digest, Annual Reports, oanda.com, Booz & Company analysis
Total Domestic Revenues of Telco Incumbent€ Bn, 2008 1)
*
*
*
* 2)
*
*
*
*
Total Cable Industry Revenues€ Bn, 2008
CableFragmentation
(# of cable operators to get acombined market share of 80%)
3
2
>5
1
1
1
>6
9:1
E
3.6 2)
April 2010 Page 8
• With limitations on size and geographic reach, we focus on our own unique selling propositions:
• Pushing the speed race: Cable starts where DSL ends
• Pushing lower tiers, the ‘sweet spot’ 25 for 25, and higher tiers at 120
• Cable acts as the catalyst for NGA investments
The European Speed Race
April 2010 Page 99
0
20
40
60
80
100%
Western Europe residential broadband internet connections(B)
2008
98
2009
105
2010
110
2011
113
2012
115
2013
117
2014
25-50Mbps
8-25Mbps
1-8Mbps
118
-45%-20%
25%
59%
65%
(08-14)>50Mbps
<1Mbps
CAGR
Note: Based on Gartner data until 2012; 2013-2014 based on extrapolation of Gartner overall growth and segment penetration evolution trend lines Source: Gartner 2008 (Dataquest Insight: The Future of Residential Broadband Internet Access Speeds)
Predicting demand starts getting more accurate
Range 1-7 Mbp/s 10-30 Mbp/s
April 2010 Page 10
Country Max. speeds
Sweden 100 Mb/s
Germany 100 Mb/s
France 100 Mb/s
Finland 200 Mb/s
Belgium 100 Mb/s
Austria 100 Mb/s
Czech Republic 100 Mb/s
Hungary 120 Mb/s
Netherlands 120 Mb/s
Poland 120 Mb/s
Slovak Republic 120 Mb/s
Switzerland 100 Mb/s
Portugal 200 Mb/s
10
Next-Generation Cable Broadband
April 2010 Page 11
Broadband subs: Continued double-digit growth
21.5 mn European cable broadband subscribers, a 18% jump from 2008German cable broadband subscriptions almost double compared to 2008
Source: Screen Digest; YE 2009 – EU 27
Total European Cable Internet Customers
11
April 2010 Page 12
Source: Solon
Cable pushed broadband penetration
Broadband penetration significantly higher in active Cable markets
Western Europe: + 30% penetration in cable driven markets
Central & Eastern Europe:
+ 50% penetration in cable driven markets
"Cable markets" reached higher penetration
quicker
Broadband Penetration in Europe (in % of HH, 2008)
Market Share of Cable > 20% Market Share of Cable < 20%
CEE
74% 74% 71%62% 60% 55% 54%
45%39%
66% 61% 57% 55%43%
33% 31%22%
74% 74% 71%62% 60% 55% 54%
45% 39%
DK NL SE UK BE MT AT ES PT
Ø 59%
66% 61% 57% 55%43%
33% 31%22%
FI LU FR DE IE CY IT GR
Ø 46%
54% 50% 45% 43% 40% 40% 38%28%28%31%
54% 50% 45% 43% 40% 40% 38%
EE SI HU LT CZ LV PL
28%28%31%
RO SK BG
Ø 44%
Ø 29%
WE
+30%
+50%
April 2010 Page 13
Cable operators structurally invested more
Source: Ovum; Credit Suisse; Annual reports
0
10
20
30%
AT
Cab
le
Form
erPT
T
16%
13%
DE
24%
16%
NL
20%
15%
PT
22%
14%
CH
24%
18%
06-08 average capex/sales ratio
Cable operators have invested over €22bn into the network over the past 6 years
On average, this is a Capex of 25% of revenues, compared to 15% for telco’s
Cable invested structurally more in past years
NGA requires investing
April 2010 Page 14
Leapfrogging DSL with 2.0, now DOCSIS 3.0Source: Solon
0.0646
50
25
50
>400 400
ISDN/ Modem ADSL EuroDOCSIS2.0
ADSL2+ VDSL EuroDOCSIS3.0
FTTH
2002 2004 2006 2007 2008 2010+Indi-
cative 20092002 2004 2006 2007 2008 2010+Indi-
cative 2009
Music/Video
VOD IPTV Single Stream UGCPhotoproc./
Gaming HDTVSingle Stream
HDTVMultiple Stream
Music/Video
VOD IPTV Single Stream UGCPhotoproc./
Gaming HDTVSingle Stream
HDTVMultiple Stream
NGA Networks
Cable technologyFixed-line / Fibre technology
April 2010 Page 15
Beyond speed: integrate the connected home
In your living room
On portable TV
Over the top on a PC
Over the top on a TV
On many different STBs
On Ethernet connected TVs
April 2010 Page 16
And enable any to any communication
STB/ PVR
Hybrid-STB (TiVo)
Satellite,Cable,IPTV
Internet
Desktop PC
Broadband STB
Game Console
DVD-Player
Open Box
iPadMobile TV
Smartphones
Widget Portale
Tru2Way
DVB-H / DMB
Source: Bitkom, TNS Infratest 2009, Typologie der Wünsche, Booz & Company analysis
April 2010 Page 17
Match the Telco challenge
Accelerating Docsis 3.0 roll-out
Forcing the next wave of infrastructure competition
Based on superior networks and good customer care
Constantly evolving the Digital Home
Future focus on Personalisation and Web integration
Cable’s Roadmap