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European cable TV set for renewed growth

Any idea that the European cable TV sector is in decline under siege from OTT operators with lower cost bases has been scotched by a report from analyst group IHS. The sector is in good health with prospects of further growth and set to attract further investment from mobile operators and other possible entrants, according to the report. Such predictions are based on solid growth data, combined with several recent major acquisitions indicative that European cable TV remains an attractive field for leading players such as Liberty Global and Vodafone.

The European cable industry grew in value by over 5% in 2012, with revenues scaling €22.4, reaching 61.3 million households and accounting for 112.9 million revenue generating units at monthly ARPU of €26.60, according to the European Broadband Cable Report, published by IHS in collaboration with industry association Cable Europe.

However drilling into these figures, it emerges that broadband rather than TV has driven most of that growth, as it has in some other regions. While cable operators mostly began purely as pay TV service providers they have moved increasingly into telecoms, which now accounts for 46 percent of total European revenues in the sector. In 10 European countries, cable operators now earn more from broadband plus voice than from pay TV.

IHS argues this is actually a positive development, since broadband footprint will increasingly determine success in pay TV. Cable operators will be locked into ever more intensive battles to own the whole home digital real estate through multi-play services that will start to include smart home services like energy management as well. However, there is also a battle developing outside the home for provision of broadband and TV services to mobile devices, and here European operators have been investing wisely in Wi-Fi hotspots through various strategies, according to IHS. The ability to serve subscribers with content and broadband access wherever they are will be crucial to success.

IHS also pointed out that Vodafone’s recent $10.3 billion acquisition of Kabel Deutschland, Germany's largest cable operator, now approved by the European Union, is more than just a bid to establish a fixed line infrastructure underpinning mobile services, but is a vote of confidence in European cable. The same could be said of Liberty Global’ s continued expansion in the region as a pan European cable operator, capped by its $23 billion takeover of Virgin Media, the UK’s biggest MSO, early 2013.

Meanwhile, consolidation is taking place in a different sense on the global cable TV stage, since Cable Europe, the collaborator in the IHS survey, is in the process of merging with CableLabs, its counterpart in North America. Historically, Europe and North America have had slight differences in cable TV standards, but now the two bodies have decided it is time to converge around common technologies and strategies to maintain cable’s competitiveness.