Cable operators change strategy

Newsroom 19/09/2007 | 15:23

With the aggressive entrance of Romtelecom on the satellite television market with Dolce, the interest of the companies on the market seems to have moved towards Internet, multimedia and satellite television, leaving aside the core initial business of the CaTV operators, cable television, although this generates the biggest revenues.
The development strategy of RCS&RDS includes now the entrance in the mobile telephony business as well, after winning the bid for the last 3G licenses available on the local market. RCS&RDS might be the first operator on the local market to offer quad-play services, meaning cable television, DTH television, Internet access, fixed-line and mobile telephony. Might be, however, because Romtelecom is also preparing to launch a joint offer with the mobile telephony operator of OTE, Cosmote, which will make the two companies compete with similar services on the same markets.
Romtelecom recently announced that it will focus as much as possible on offering broadband Internet access and content, including digital satellite TV, Dolce and IPTV, which will by launched on the market in 2008. In regards to the business it started from, fixed-line telephony, the operator decreased prices by half in order to maintain the number of customers and revive the interest of consumers.
With about 3.7 million users of cable television by mid-2006, operators will still have room to grow, as data from the National Regulatory Authority for Communications and Information Technology (ANRCTI) show that by the middle of last year, the coverage of the cable TV networks was of about 5.5 million households. The leaders on this market remain UPC with 1.4 million customers and RCS&RDS with about 1.2 million clients. Mihai Springer, executive manager of DCS, considers that there is a great potential of growth for video services if you take into account the number of households with TV sets, which is of about seven million. In 2007 the focus of UPC Romania confirms the trend of the market and is directed towards more Internet services as this is considered to generate the biggest growth in the future. The operator has an investment budget of EUR 30 million for this year for the infrastructure development and modernization of the network.
In terms of DTH services, Focus Sat, the service of UPC, has 85,000 clients, said Cristinael Popa, DTH manager for UPC Romania. He also considers cable and satellite television have equal growth premises as they have different targets. “Digital satellite TV targets usually rural or remote areas and small cities, where the development of the cable infrastructure would not be viable from the economic point of view, while cable TV developed especially in the urban areas,” he added.
On the other side, about 44 percent of the households with TV sets are located in the rural areas, which in the opinion of Springer from DCS means that the DTH technology relaunched the industry with a bigger growth dynamics than cable. The advantage cable has over DTH is the possibility of transmitting additional services like telephony and Internet access, while DTH has smaller a operating cost and initial investment. Even so, is hard to believe that DTH will outrun cable in terms of customers on the local market, as the situation in other European countries is not clear either with countries where the cable rules and others like Italy where cable doesn't even exist.
Ionut Bodea, marketing manager of Boom, considers digital technology to be the future of customers in entertainment services including television. “Looking over the shoulder to our more experienced neighbors we can see the migration from analog to digital is a one-way process, of course in the sense of upgrading the quality of image and interactivity from analog to digital,” he said.
The fast development track from analog to digital services in Romania is a particularity of the local market in comparison with more mature markets, but is still behind from the development point of view. Looking to the U.S., we see cable companies already changed the infrastructure from analog to digital moving their customers to digital services in order to expand the service and technical capabilities including TV station, radio music, VOD (video on demand), PVR (personal video recording) and a lot of other interactive applications.
Boom is currently focusing in creating its name on the market and less in attracting high market volumes. “We believe this business is not about selling channels, but content. Our target is to build a good content, brand-based, and we believe that Romanians also like to buy and use competitive offers, not a few channels for a low price,” Bodea said talking about the development strategy of the operator.
Max TV currently has more than 100,000 customers, Dolce from Romtelecom has more than 200,000 and Digi TV has 400,000 including the regional market.

Roxana Mihul

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