Liberty Global Seeks Broadband Growth Spurt

With its broadband subscriber growth showing signs of slowing down, Liberty Global is counting on further speed hikes to keep its momentum going.

Liberty Global Inc. (Nasdaq: LBTY), Europe's largest cable operator and broadband provider with about 15 million data subscribers and 22 million overall customer relationships, is boosting data speeds in its UK home base, Germany and other European markets as it seeks to match or exceed the speeds offered by telco and FTTH rivals. It is also starting to roll out DOCSIS 3.1 technology deliberately in select markets so that it can offer 1 Gig speeds and higher to data subs.

Speaking on the company's second-quarter earnings call Thursday, Virgin Media CEO Tom Mockridge said the cableco is offering data downstream speeds as high as 350 Mbit/s throughout its growing UK footprint of 14.2 million homes passed. Virgin Media now has nearly 5.2 million broadband subscribers after picking up 31,000 in the second quarter.

"So we now have a top speed of 350, and due to the great network we have and the high-quality router, we can go out there and say that we can actually offer 362 meg across that network," Mockridge said, according to a Seeking Alpha transcript of the call. "All the other operators on the BT network are still stuck at 80, and BT itself can only say that it has limited availability for 100 meg."

While still biding its time, Liberty Global is also preparing to launch 1 Gig service in the UK sometime in the next three years, having upgraded virtually its entire HFC plant for DOCSIS 3.1 service. Although it originally planned to roll out D3.1-enabled service earlier, it just hasn't felt the competitive need to do so quite yet. (See Liberty Global Holds Back on DOCSIS 3.1.)

"Yes, we will be at 1 Gig," Liberty Global CEO Fries said. "We have the ability to take the entire Virgin platform to a gig. And when we choose to do it, which would be some time probably in the next one to three years, it will be in response to both competition and the right capital allocation decisions."

Liberty Global has also been boosting data speeds steadily in its other European markets. As a result, 72% of its 15 million broadband subs can now get speeds of at least 100 Mbit/s, with the average top speed reaching 140 Mbit/s.

In addition, Liberty Global has begun rolling out DOCSIS 3.1 service in Germany, its second biggest market, through its Unitymedia subsidiary. The MSO launched its first market, Bochum, in May and plans to extend service to a second, larger metro area, Frankfurt, in October. More launches are slated to be announced later this year as other European cable operators also ramp up with D3.1. (See DOCSIS 3.1 Ramps Up in Europe .)

All these moves come as Liberty Global continues to report steady, if slower, broadband subscriber growth. Across Europe, the company added 73,700 data customers in the second quarter, well down from its total a year ago. Plus, most of the gains came from its cable systems in Germany and Eastern Europe that it plans to sell to Vodafone. (See Liberty Stages European Retreat.)

Liberty Global officials shrugged off the smaller broadband sub increases, though, citing their heightened emphasis on bringing in higher-income, higher-value customers. They also pointed to reduced broadband churn rates, due at least partly to the company's continuing rollout of its advanced WiFi Connect boxes, which are now in nearly 5.1 million of its broadband homes.

— Alan Breznick, Cable/Video Practice Leader, Light Reading