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FEATURE CABLE NETWORKS


Cable consolidation raises regulatory questions


The merger mania on the European cable scene is creating powerful companies with the scale to challenge traditional telecom operators. James Hayes reports


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able companies are highly attractive acquisition targets, as illustrated by recent deals such as Liberty Global’s acquisition of Dutch cable provider


Ziggo, Vodafone’s acquisition of Ono in Spain and Kabel Deutschland in Germany – not to mention the Comcast/Time Warner deal in the United States. Tis ‘blitz’ of mergers and acquisitions (M&As) in the telecoms and cable sectors since 2013 has led to speculation that the European Commission is less concerned than it used to be with maintaining the competitive but fragmented structures once deemed necessary to stabilise market pricing. Te full repercussions of the M&A splurge are


still to play out as the market landscape reshapes, and there may be more to come. As yet most brand identities involved in takeovers have been upheld, so the consolidation is less overt. Reassuring news for vendors of network technology – and the communications systems professionals who build and manage them – is that the M&A activity is, in the main, driven by a


desire to acquire network infrastructure assets that can be combined or expanded, rather than scaled back to add value to a purchaser’s capitalisation profile. Te European Commission’s plans for a Digital


Single Market could have something to do with Brussels’ receptivity toward deal-making: big, unifying ideas usually need big market powers to bring them into being, and a competitively fragmented market lends itself less elegantly to visions of unification. Tis predicament resonates particularly in respect to broadband provision from the telecoms and cable sectors. Te Digital Single Market strategy would require major cable network operators to extend broadband connectivity geographically, and enhance their service offerings in terms of speed and variety. Te more ‘relaxed’ attitude of the European


Union toward market consolidation between major players has been attributed partly to the European Commissioner for Digital Economy and Society, Günther Oettinger. Chief executive of Liberty Global’s Unitymedia cable business,


Lutz Schüler, is on record as having pronounced that ‘the Commission’s view of consolidation in the telecom sector in Europe has changed’, and suggested that Oettinger ‘has recognised that size for European network operators is important – because size, ultimately, means increased investment’. However, size is also how communications providers come to fall under the piercing scrutiny of the regulator.


History lessons Telecoms companies may have borne the brunt of regulatory curbs and requirements over the last decade, while cable network companies have been less in the searchlight. For instance, while incumbent telecoms companies like BT have had repeated calls to open their infrastructure to rivals, cable infrastructure owners have not been subject to similar demands. Tere may be historical reasons why cable


operators have been less the focus of regulatory activity than the incumbent telecoms players. As they started to offer broadband internet connection in addition to broadcast TV,


Big, unifying ideas usually need big market powers to bring them into being


geographically constrained cable networks were seen as playing second fiddle to incumbents with national telephony infrastructures and growing interests in mobile network coverage. But the market has moved on, and any contentions that ‘cablecos’ are entitled to operate under different rules from ‘telcos’ have become increasingly open to challenge. In response to the threat of DSL-based


Virgin Media building out its network in Manchester


broadband, cable operators clubbed together with the purpose of enhancing their technology so it could support two-way services. Te Data Over Cable Service Interface Specification (DOCSIS) standard that resulted from this effort allows cable operators to pipe telephone, TV and internet signals down the same coaxial wires in an efficient


Issue 11 • Spring 2016 FIBRE SYSTEMS 31


Virgin Media


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