Making international headlines this year in Berlin, the cable industry gathered for what is undoubtedly Europe’s flagship event for cable companies, vendors, analysts, content producers and investors. This year’s Cable Congress held from March 18-20 in one of Europe’s capitals of creativity saw industry chiefs out in full force to provide a break down of the state of the industry, discuss market trends and look toward the future in what most would consider a challenging economic environment.

The cable industry stands out as one that has fared better than others during a downturn that has many viewers tuning in at home with newer and faster technological offerings. This year’s Cable Congress, “Power to Connect,” had an extensive programme welcoming more than 80 speakers representing the telecommunications industry, providing insight on the latest developments in the cable industry in the fields of strategy, investments, technology, content, marketing, and regulatory affairs.

Optimism

Opening this year’s congress, Cable Europe President Manuel Kohnstamm told reporters in Berlin “We’re seeing a healthy appetite at our customer base. This gives us reason to be optimistic for the year ahead.” Cable Europe released figures that show industry revenues at €18 billion last year. An International Herald Tribune headline read ‘Cable Mounts a Drive for Broadband in Europe’ and focused on cable’s big catch up thanks to its super fast networks that are “siphoning customers from some of the continent’s largest phone operators.”

While industry events can run the familiar risk of being self congratulatory, there was candid discussion among industry captains about a “fight for the living room” and what cable needs to do to keep its upper hand. Many observers pinpointed cable’s high speed offering as a trump card. “Only our industry has the technology network and the drive to deliver the speeds that governments want,” said Tony Ball, chairman of the supervisory board at Kabel Deutschland as quoted by Reuters. The discussion of network speed focused on DOCSIS 3.0 and the rollouts happening in Europe with this high speed technology. Others placed an emphasis on content. Screen Digest’s Guy Bisson said, “There’s a number of reasons why the telcos are not as good as the cable companies at television. They lack the content deals, the channel deals, that the cable companies have.”

Leaders meet

Representatives of the EU’s and Germany’s telecommunications regulators also met with leaders of the cable industry during the congress to debate on how to improve European and national regulation to encourage continued investment in innovative superfast broadband networks and to improve competition in Europe’s internal market.

Next stop Brussels

A bustling crossroads of business and industry will no doubt be found next year where the cable industry is already gearing up for a special annual Cable Congress due to be held in Europe’s political capital, Brussels, on March 3-5. The usual suspects from the cable industry will no doubt be wrestling with the high level issues, debating the likely direction of the industry and checking out the latest high tech offerings on the market. But next year’s event will be a unique opportunity for European decision makers to get a taste of what has been bringing back hundreds of attendees from all over the world to “the place to be” for the industry that is Europe’s home of triple play.

In the cable industry, talking about innovation and further investment is nearly the same as talking about EuroDOCSIS 3.0 (European version of Data Over Cable Service Interface Specifications). You may not see it, but you will definitely know when it is present in your home or business given its incredible speed. Europe is seeing the beginning of the rollout of super fast broadband using EuroDOCSIS 3.0 which can offer today downstream speeds of up to 160 Mbps with upstream speeds of up to 120 Mbps. And DOCSIS 3.0’s dizzying speed is not the only attribute of this transmission technology. The technology that enables greater innovation expands video content production and consumption capacities is already rolling out across Europe – here and now.

“By the end of this year, almost all consumers in The Netherlands will be able to use ultra- high speed cable internet. International broadband rankings consistently place our country at the top, and the wide availability of DOCSIS 3.0 will reinforce that position. Cable is taking the lead in a country that is already characterised by intense competition between telcos and cable companies. The Netherlands is a leading example of the greater European trend towards investing in cable networks for higher performance and constantly providing increasingly sophisticated offerings for the customer,” says NLKabel Managing Director, Rob Van Esch.

With DOCSIS 3.0, cable operators are well placed to compete with other fibre-optic providers. Consumers are already gravitating to higher speed needs as consumption and production of high definition video material increases. Many expect video-rich experiences to further dominate user activities online. As a result, cable is building out its networks to accommodate next generation service needs.

With 95% of hybrid fibre-coaxial cable networks already in place, there is an “infrastructure in waiting” for the transition to EuroDOCSIS 3.0. What EuroDOCSIS 3.0 technology does is to deliver a much higher transmission speed over the existing cable networks through a ‘channel bonding’ technology that optimizes the use and capability of high speed networks. This higher speed, five times faster than ADSL, is achieved by a smarter and more efficient transmission of the data and techniques including ‘channel bonding’ which allows more information and content to be distributed and shared. The new technology requires adjustments to the network equipment and a new higher speed modem for customers. One of the advantages of upgrading existing networks with such a technological means is not having to break ground and engage in civil works that are both time intensive and costly.

Certification Update

One of the core activities of Cable Europe Labs is to play a hands-on role in the process of innovation across Europe, particularly with the certification testing of new products for vendors. Lab-based analysis forms an essential part of ensuring that new technologies are examined carefully before going to market. Operators can be confident that new products interoperate when introduced to the market while the benefit of uniformly tested products for consumers is self evident. Cable Europe Labs – certified equipment goes through a rigorous certification regime including testing of both interoperability and standards compliance. Equipment such as cable modems, set top boxes and telephone adaptors can easily be integrated into cable networks that operate according to European cable technologies such as EuroDOCSIS, EuroPacketCable and EuroPacketCableMultimedia.

How do you think the cable industry is contributing to the NGA competitive race, and what more can it do to bring the benefit of fibre rich cable networks to more customers?

Cable is among the technologies that are today already providing forms of enhanced broadband connectivity. In terms of NGAs and looking at the current state-of the-art of technology, DOCSIS 3.0 is one of the two leading technologies in terms of quality and throughput – the other being optical fibre – that are necessary to develop high-speed broadband infrastructures.

A representative of KPN, the main Dutch operator recently said that investment by cable operators in the Netherlands in next-generation broadband is strengthening the decision by other operators to invest in fibre-optic networks. If we take a closer look at this Dutch case, the most recent data on the pervasiveness of fixed retail broadband lines in the EU clearly show that the Netherlands is already a top performer in terms of broadband penetration per household (80%), of which 31% depends on broadband delivered over cable networks.

Since a massive presence of cable has contributed to a very rapid take-up of broadband in the Netherlands, we could conclude from this that infrastructure competition from cable could also similarly lead to a more rapid take-up also of NGA in the next few years – supporting the view expressed in KPN’s recent statement.

However, cable networks are not evenly developed across the EU and uncertainties in global equity and capital markets can negatively affect investment decisions in high-speed networks. The current review of the EU’s Regulatory Framework for electronic communications and the ongoing work on the Recommendation on Next Generation Access Networks are designed to set the broad framework in which investment and innovation can flourish. In addition to these, the Commission will soon publish a communication setting out a comprehensive European broadband strategy.

Given mobile broadband offerings currently being rolled out by European cable operators, when do you think mobile broadband will become a truly competitive service to fixed broadband offerings?

We are following the developments in mobile broadband with a lot of interest as this alternative infrastructure could become very important and a credible infrastructure-based competitor to fixed broadband in the near future. For the time being, in a large number of Member States, mobile broadband is still not considered a true substitute for fixed broadband for a number of reasons like transmission speed, potential capacity constraints, and quality of service.

We have seen that in many cases, people use mobile broadband as a complement to their fixed broadband connection, particularly since many people want to use these new communication tools whenever they want and wherever they are.

What should be expected of the cable industry to help the European Commission meet its objectives to boost digital confidence among its consumers?

Giving consumers clear information about their rights will increase trust and confidence in the digital environment. This is why the Commission launched on 5 May the “eYouGuide to your rights online” (www.ec.europa.eu/eyouguide), the first online guide to consumers’ rights under EU law when surfing the web for business or leisure. This initiative aims at improving confidence in online transactions and helping to unlock the potential of the EU’s digital internal market, which is still largely unexploited.

What technologies do you personally rely upon the most?

Like everybody else, I rely on a computer connected to the internet. In the office, or at home over the weekend, I switch the computer on first thing in the morning and it stays on until the moment I leave the office to go home or or last thing at night i, if I am at home. I use my computer for all the usual purposes: working on documents, accounts or to go on line. I rely on my mobile phone much less than many other people. When I am in the office I keep it locked up in a drawer and only check for possible messages at lunch or break or in the evening before I head home. I assume that anyone who needs to contact me urgently can reach me on my office number. At home or holiday, I’m equally relaxed. I’ll check for message every now and then, but I do not feel the need to have my mobile phone next to me all the time.

Looking back over your public policy career, what have been some of the events that stand out from the daily grind of working on an ever closer union?

The cheerfulness and joy of the Schuman Parade in Warsaw on the 9th of May of this year. It was a beautiful reminder of what the European integration process has achieved.

Taking the world by storm with an announcement while all eyes were already on the UK for the launch of its Digital Britain report, Virgin Media and Universal Music Group set out plans for what amounts to a “world first” musical buffet for consumers. There has already been a great deal of analysis following the unveiling of the new service which is intended to launch later in 2009. Already hailed as a positive step in a new direction, the plans represent a dramatic shift where latest business models have left off. The Virgin Media/Universal Music Group partnership will give users unlimited access to the whole catalog of Universal for a monthly fee. The Financial Times’ tech blog cheered the move, “Creative thinking ahead of Digital Britain” while Business Week’s technology section notes that “Virgin Gets Tough on File-Sharing.”

How to address a pirate

What has happened is nothing short of the beginning of a new era. Virgin Media has made it clear that the service is designed to bring about a rapid and permanent change in the way consumers buy and listen to music. Forrester Research Vice President Mark Mulligan said, “There’s nothing else like this out there. Both parties have brought everything they have to offer to the table.” The companies’ agreement, which does not use Digital Rights Management or DRM, seeks to address a lack of availability for legitimate and consumer-friendly online music sources while aiming squarely at illegal downloading and piracy currently afflicting the content industry.

Help yourself

Policy makers have been quick to applaud what is widely seen as an innovative and new business model driven solution. The “all you can eat” monthly service is likely to be watched carefully by many beyond the UK, especially policy makers who have no doubt been on the receiving end of calls to help address internet piracy. The UK’s Minister for Communications, Technology and Broadcasting, Stephen Carter lauded the commercial efforts to address what is no doubt a major policy headache elsewhere in the EU. “Government has a role in creating the right legal and regulatory framework for rights and copyright. However, the market will flourish through innovative commercial agreements between companies, and agreements such as this will help significantly in reducing any demand for piracy,” said Lord Carter.

More carrot, less stick?

Commentators were quick to look at the fundamentals of the new service that the companies aim at a growing demand for online music. Naturally, the piracy issue is the proverbial elephant in the room but is something that Virgin Media is sanguine about. Disincentives for illegal downloading are part of the plan and make part of the “learning process” that this venture represents. Neil Berkett, CEO at Virgin Media, was quick to clarify that such last resort disincentives for persistent offenders would not result in a permanent disconnection to the internet, something that represents a “disproportionate penalty.” Perhaps the biggest change with this new offering is that music is being used as a service rather than a product due to changes in consumer habits that have not gone unnoticed by a company like Virgin. “You require commercial solutions to be able to change consumer behaviour…and show some thought leadership in this space. Change the business model! If customers don’t like the current business model, change it. Don’t ignore it. But we have always believed that to change consumer behaviour you require more carrot and less stick.”