Posts tagged ‘vodafone and virgin media’

The Expert View: Vodafone Interest Says Cable Got It Right

Technology is increasingly about mobility and choice, but there is a balance to be met

Guy BissonBy Guy Bisson, Research Director, Television at IHS Electronics & Media

Now there is a new word for people who break off from a social interaction to answer a mobile phone or browse social media: Phubber, meaning mobile snubber. Vodafone has built a £46bn a year business on the back of mobile telephony. With the rise of tablets, national Wi-Fi networks, Apps, 4G auctions and Cloud access, its services are at the cutting edge of the emerging media consumption trend. Why, then, is Vodafone bidding for a major cable operator in Germany where analogue TV still reigns and uptake of broadband and telephony among its customer base remains low? If the future is on-demand, on the go, what exactly does Vodafone see in this wired asset?

Much has been made of the cost savings Vodafone will make by using Kabel Deutschland’s fixed line infrastructure instead of leasing capacity from Deutsche Telekom, but do the touted savings of €200m a year justify on their own the €7.7bn deal, or is there something else to this transaction?

pie chart for guy bissons postOne thing is clear. Vodafone’s interest in cable is a vote of confidence in the cable business model. And more than that, it is a vote of confidence in the way that cable has positioned for the future of entertainment. A future at which television remains centre stage, but in which broadband (and increasingly mobile) take near equal billing.

Let’s take a step back. We all know people who seem to spend their lives glued to a mobile device. People who would rather walk into a lamp-post than lift their gaze from the mobile screen. But the average European spends nearly four hours of every day watching a much larger screen: the television. Video entertainment in the home is by far the biggest segment of consumer entertainment spend. IHS figures show that paid multichannel TV accounts for 64 per cent of Western Europe’s €52.5bn consumer-level spend on screen entertainment. Further, the average revenue generated by a TV customer in Europe has grown almost continually year-on-year, something that is astounding, indeed puzzling, to a pure-play telecoms company used to increasing commoditisation in fixed line.

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