Monday, November 11, 2013

Cable companies getting ready for IP and FTTH

According to Sandvine, Netflix is starting to have an impact in Europe. With traffic growing so rapidly, network operators must be worried.

In the cable sector, upgrades only buy so much time, as does the new HEVC standard. A 50% efficiency or capacity gain is nice, but it's wiped out after two years of traffic growth.

Looking at Ziggo and UPC Netherlands, we indeed see things moving:
  • At UPC NL, capex almost doubled in 4 years time.
  • UPC NL is stating publicly that EBITDA (OCF) margins are permanently going down. 
  • At 13Q3, UPC NL's revenue was down 4.0%, while 'opex' (content rights, network ops, interconnect, customer ops) was up 7.4%.
  • At Ziggo, capex is doubling in 3 years time.
What could be happening underneath, is cable companies preparing for the inevitable: IP (besides DVB) and FTTH (fiber deep). UPC has its Horizon smart STB out, which is fully IP-ready. And when adding homes passed in newly built areas (roughly 10k per annum at UPC and 15k at Ziggo), they have started laying empty ducts besides the coaxial local tails.

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