Digital TV will be available in 60pc of European homes by 2010 and is forecast to overtake broadband, the strategy and technology consultancy Booz Allen Hamilton has claimed.
In a new study, entitled The Future Role of Cable in Shaping the Digital Home in Europe, the firm said that the market for digital home services, comprising TV, broadband internet and telephony in Europe will start to take off this year. Digital TV in particular will give consumers access to a range of new services such as interactive television.
Investment in the industry will be to the order of €100bn, the report claimed. Of this figure, €35bn will be spent on developing new TV programmes.
The study positions cable TV providers head to head with telecoms operators in competing for the so-called triple-play market. This involves providing customers with internet, telephony and TV from a single company. Cable firms and telcos both have the technical capabilities to deliver these services – recently the former have begun to provide internet access in addition to TV services, while the latter have begun to make inroads into the TV market.
Booz Allen Hamilton found that national telecommunication incumbents are in a better starting position relative to their cable TV rivals. Telcos dominate the infrastructure industry in their respective countries by a factor of 1:7 or more in terms of revenue, the firm said.
In addition, European telecommunications incumbents have a customer base of around 151 million. Cable network operators have one third of this customer base with close to 51 million subscribers. “Nevertheless, in many markets cable operators will be the only credible contenders to challenge the telecommunication incumbents,” Booz Allen Hamilton said.
Thomas Künstner, partner at Booz Allen Hamilton responsible for the study, commented: “The pressure to consolidate in the European cable TV industry is further increasing. Moreover, we can also expect to see mergers which cut across the traditional boundaries of the industry, as the example of Virgin Mobile and the leading British cable TV provider Ntl/Telewest shows.”
Three factors will influence how the market develops in future, Booz Allen Hamilton said. These are: the regulative environment, the structure of the competitive landscape and consumer behaviour. Regulatory bodies will play a key role and could ultimately prove to be catalysts – or barriers – to how the market grows. “If a balanced competition cannot unfold and the market develops unfavourably, the cumulative investments may fall by more than 40pc to around €59bn, the consultancy firm said.
By Gordon Smith