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Interview with Matthias Kurth
In the run-up to Cable Congress 2013 we speak to Matthias Kurth, Executive Chairman of Cable Europe.
What stand out as some of cable’s priorities as we look at the state of the industry in 2013? I have been talking a lot about the consumer since arriving here at Cable Europe, but that’s nothing new for me. Having previously worked as President of BnetzA*, I once called it Europe’s largest consumer protection organization. Having a healthy focus on who we are working for is vital in a business where our direct business relationship with customers is certainly coveted.
So what does the consumer want? The answer to that reveals cable’s priorities. The top priority is not to keep up but to keep ahead of what consumers want. How do we do that? By having the best infrastructure that delivers the best content out there. Consumers don’t really care about what the infrastructure is until it doesn’t work. But they do care more and more about moving their premium content around devices seamlessly and with the sort of high speed cable customers have grown to expect.
So there you have it, we expect to continue upgrading speeds so that consumers have the best quality of service out there. Cable Europe’s members are offering 100Mbps across Europe but speed for speed’s sake isn’t interesting. What is interesting is the high quality experience consumers can have with our continually upgraded networks. We are proud of the contribution we make to Europe’s high quality infrastructure. And it keeps customers coming back for more which, of course, makes everyone happy.
Can you tell us a bit about the importance of investing in next generation broadband to keep these positive trends on track? Investment and innovation go hand in hand, it’s as simple as that. Cable’s ultra fast broadband services are achieved by relentless re-investment in our networks. We invest, on average in Europe, around 20-25% of revenues annually. And when talking CAPEX, it is worth recalling that the expenditures are made with the goal of both adding value and creating future benefits – for both the consumer and our businesses. There is an element of risk for the investors who make careful decisions based on consumer demand and other vital market condition indicators.
Last year was a turning point where Cable Europe opened Cable Congress with a press briefing that shared the news of 7% top-line revenue growth across the industry. We attributed strong revenue and subscriber growth to a harvest from steady investments that have brought us to where we are today: providers of a great service over a super infrastructure. A recent European Commission report had some great feedback for us. It said that:
- Cable networks account for the next largest contribution to standard broadband coverage
- The most important coverage across Europe or fixed next-generation access (NGA) is from cable
- Docsis 3 cable is the biggest contributor to rural NGA coverage (RNC)
- Docsis 3 services over the cable networks make a very important contribution to the availability of NGA in the study countries
- Cable networks make about the same contribution to rural coverage as WiMAX
So it would seem that our investments help bring us to the point of having an infrastructure that is recognized by the European Commission for its wider benefits.
One of Europe’s most prominent tech women recently reminded us of the fibre power in cable networks. European Commissioner Neelie Kroes tweeted a photo of a piece of fibre from Cable Europe on her desk. Tell us a bit about the fibre power in cable’s networks and why it matters to consumers in Europe. Vice President Kroes has the mind of a board member. Neelie always seeks to better understand business. If you ever have had a meeting with her, you know what I am talking about. She understands the need to encourage investment given its link to innovation. There is an element of pushing for higher speeds in her plan called the Digital Agenda. And we’re already achieving important parts of the Digital Agenda. The numbers in a Solon report that we presented to her personally back this up: 95% of households in the reach of European cable networks will be able to subscribe to high speed internet services from cable in 2020. By the end of 2013 nearly all cable operators will have upgraded to DOCSIS 3.0, enabling 100-200 Mbps speeds — and higher. With DOCSIS 3.0 rolled out, 100 Mbps speeds are already becoming the standard and cable is projected to offer 51% of EU households 100Mbps or more by 2013.
One thing that we insist on is the recognition of the value of incremental upgrades to our fibre-rich networks. And here, Neelie has done that in speeches and over Twitter. She is also trying to encourage others in the market to upgrade. It’s worth noting that one need not convert an entire network to FTTH overnight to get results. Cable is famous for pulling fibre closer to the home where it is needed as we are very sensitive to customers’ usage of our networks. And we always seek to stay ahead of their needs. So the next time someone mentions FTTH think of another abbreviation: FTWIN – Fibre to Where It’s Needed. That’s our philosophy and both the markets and consumers seem to think it’s working rather well.
Lots of people talk about the threat of OTT How is cable positioned for developments in this space? I like to quote one of the CEOs in Cable Europe’s membership. Last year Tomas Franzen of Com Hem in Sweden said this about OTT: It’s not a threat, it’s a reality. And he’s right. It shows that the market is always changing and our job is to keep up…and keep ahead of the consumer. One of the big trends for cable is the advent of multi-screen offerings which we’ll hear much more about for sure whether it be Liberty’s Horizon product or Virgin Media’s TiVo product. If you take care of your customers and provide them with great content over a great service, you are focusing on the right things. I think of Guy Bisson at IHS Screen Digest’s definition of OTT as “channels that happen to use an alternative means of distribution.” Do our CEOs keep an eye on OTT? Sure. But more importantly, we collectively have our eye on the core business of getting content to our customers just the way they want it. That’s partly why cable is well positioned in this space. And the other reason is that we are a trusted platform for premium content which is a strong foundation for our many relationships with the many content providers with whom we work.
And what about connected TV. How is cable positioned for developments in this space? TV is in our DNA. We are in the European living room. And there are more and more devices in the living room, being used next to the TV which itself is becoming increasingly connected.
Last year Rovi Corporation had some interesting data on the connected TV. Did you know that the connection rates are higher in Western Europe than in the United States? Rovi’s research showed that the connection rates in the US are around 25% to 30%, but in Germany and Western Europe the rates are closer to 67% to 68%. It’s important to remember that having the connection is different than using the connection. And we’ll continue to work to make the connected TV an important part of the cable experience.
How is the consumer benefiting from developments in the cable industry? There are so many developments to talk about and I’ve already mentioned many whether it be network upgrades, higher speeds and evolutions in our offerings that put our content on multiple screens.
But it is interesting to look at some other developments like smart grids which will not only benefit consumers but also where they work and live. Cable is helping to lay the groundwork for broadband providers to offer a huge variety of services so that consumers can better manage their lifestyles and their energy need. New web-based services will enable self-monitoring of the status and activity in the home from different sensors and connected devices. If that sounds too theoretical, imagine motion detectors in the home. If motion is detected by a sensor, real-time alerts in the form of video or photo clips can be transmitted over email, text message, or a smart-phone app. Automation will also be an interesting development. Imagine the “intelligent” benefits where lighting, heating, cooling, and smart use of appliances is concerned. This can be done through a touch-screen, web portal, or smart-phone application.
Cable has traditionally talked about its presence in the living room. I think it’s fair to say that cable is expanding and will have a presence throughout the whole house. Or as we should say, the smart home! And the fun thing is that you don’t even have to be at home to benefit from developments in what the cable industry will be offering consumers.
* Editor’s note: BnetzA or Bundesnetzagentur refers to The Federal Network Agency, the German authority for telecommunications, postal, energy and railway markets in Germany
