Despite competition from OTT providers and recent pay-TV subscriber losses, European cable broadband grew over the past five years in both scope and profitability.
As a result of steady investments in ultra-broadband, cable operators added more than 6 million new revenue-generating units between 2014 and 2016, according to "Cable in the Gigabit Era," a presentation by independent analyst Ben Keen (formerly of IHS Markit), during Cable Congress this week.
And after operators have made their infrastructure investments, broadband subscribers become two to three times more profitable than pay-TV subscribers, on average, said Keen.
"Once the infrastructure investment is made -- and the capital is in the ground -- the broadband service is mostly profit as the ongoing costs are tiny compared to the ongoing content costs," he told UBB2020.
MSOs also are spending on original content: Video revenue accounted for £12.8 billion (about $15.6 billion at today's rate) of video revenue in 2016 versus £11.4 billion (approximately $13.9 billion) in 2010, IHS Markit reported. But content is expensive. Both
Sky and Liberty Global spend about 60% of total video revenue on content. Competitor
Netflix Inc. (Nasdaq: NFLX) lays out about 58%, while
Amazon.com Inc. (Nasdaq: AMZN) expends over 130% of its video revenue on content, the research firm found. (See Liberty Global Bases Growth on Speed, Content.)
"Long term there is little they can do to keep content costs down as they are being driven up by forces beyond their control. The global OTT players have changed the rules of the content game as they buy up exclusive worldwide rights to drive their internationalization," Keen said. "Operators like Liberty have started to invest in exclusive content on an opportunistic basis to generate a positive halo effect they hope will advance their brand appeal with consumers."
Average revenue per unit for Western European cable operators' pay-TV net subscriber additions increased 16% between 2011 and 2016. And all but two countries -- Armenia and Lithuania -- saw broadband gains, said Keen.
DOCSIS 3.0 is ubiquitous in Belgium, Cyprus, Finland, Netherlands, Norway, Portugal, Spain and the United Kingdom, and available at almost 100% of cable homes in Denmark, Switzerland, Germany, France and Ireland, according to IHS Markit data. In Croatia, which has the lowest adoption, 80% of networks use DOCSIS 3.0, the report found. By 2020, 15.8 million Western European connections will use VDSL, DOCSIS 3.0 or 3.1, compared with 12.2 million connections last year, the research firm said.
"At least six European operators are already testing or starting small scale commercial deployments of 3.1 and I definitely expect that to continue," added Keen.
In a flurry of activity throughout the week, Donald (DJ) LaVoy, Deputy Under Secretary for Rural Development at the US Department of Agriculture, and his team spent about $145.8 million in the non-urban or suburban areas of seven states.
Calix reported revenue of $120.19 million – up 4% – in Q4 2019, putting a bounce in the step of company president and CEO Carl Russo and a shine to Calix's ongoing transition from hardware vendor to a provider of platforms enabled by cloud, APIs and subscriber experience.
Looking to curtail e-waste and improve the bottom line, BT will require customers to return routers and set-top boxes, although subscribers will not have to pay a fee when they receive regular broadband equipment.
Deploying DOCSIS 3.1 across its entire footprint gave Rogers Communications the ability to offer speeds of up to 1 Gbit/s,
contributing to a broadband segement that generated about 60% of the Canadian operator's $3.05 billion (US) in Q4 cable earnings.
Today’s access network architecture is under mounting pressure due to a continued surge in the number of connected devices, a proliferation of bandwidth-intensive customer applications and dramatic shifts in usage patterns related to the pandemic, such as work-from-home and e-learning.
Learn why now is the right time for cable operators to build greenfield networks or expand their existing networks with 10G PON, arming customers with high-speed symmetrical broadband. Gain a clear understanding of the drivers impacting the access network and the various approaches being considered to deliver higher speed services. Plus, find out the best practices that operators are employing as they leverage the latest in passive optical technology to future-proof their networks.
Topics to be covered include:
Node + 0 (Fiber Deep)
DOCSIS 3.1, DOCSIS 4.0 (FDX/ESD)
FTTP and 10G PON
Provisioning 10G PON within a DOCSIS B/OSS environment