Although its empire has expanded over the last year Liberty Global has shed over 120,000 TV customers, pending consolidation of recent acquisitions.
However, moves to increase ARPU spearheaded by the roll-out of its Horizon hybrid connected TV platform have been successful in boosting revenues and net income for the first quarter of 2013, both up 6 percent at $2.8 billion and $525 million, respectively.
But, these headline numbers masked regional variations and also a big difference between pay TV and broadband. In common with many cable operators around the world, Liberty Global has grown strongly in broadband while losing ground to satellite and IPTV operators in pay TV. The group recorded substantial broadband gains in Switzerland, Germany and Poland, contributing to a total rise of 233,000 RGUs (Revenue Generating Units) in Europe. These RGUs included both new customers taking broadband only and existing pay TV subscribers signing on for broadband as well during the year.
In pay TV, though, Liberty Global lost subscribers in all 11 European countries it currently operates in, with the saturated Netherlands and Belgium doing worst, losing 32,000 and 16,500 subs, respectively. The only market where TV homes were gained was Chile, where the group operates under the VTR brand.
Yet, it was in the Netherlands that Liberty Global, trading as UPC as in several other European countries, launched its Horizon TV service in September 2012. This has paid dividends despite having suffered from some teething troubles with high call-out rates, with 145,000 customers upgrading to the platform in the Netherlands and 55,000 in Switzerland, where it was launched in January 2013. Liberty Global’s CEO Mike Fries has confirmed that Horizon will be launched in Ireland and Germany later this this year.
Currently, Liberty Global has 18.2 million pay TV homes before adding the 3.74 million it has acquired by buying Virgin Media in the UK for about $23 billion. Virgin Media was well ahead of Liberty Global in launching a hybrid service in December 2010 but using a different box made by TiVo under a joint project. It is yet to be seen whether TiVo eventually gets replaced by Horizon, or whether the two converge under a future iteration, but, so far, it has been very successful, having being taken up by about 1.5 million subscribers and without the same technical problems.
Virgin Media has also been successful in broadband, like other Liberty Global companies gaining subscribers on the back of higher headline data rates than Telco competitors with ADSL or even VDSL2 based on FTTC (Fiber to the Cabinet). But, as was pointed out by the UK wireless and digital media analysis and consultancy group Rethink Technology Research, cable operators have been peddling an illusion here, since their access networks often do not have any greater net capacity. While ADSL or VDSL networks are one-to-one, cable HFC (Hybrid Fiber Coax) networks are shared, which means that individual customers can be offered high bit rates up to 1.5Gb/s through channel bonding with DOCSIS 3.0 technology.
But, as soon as a significant number of subscribers in a given cable area start taking the high speed option, real data rates fall until the operator splits its nodes to push fiber closer to the users and deploys more QAM to create smaller shared coaxial segments. Of course, this can and is being done, and is analogous to Telcos pushing fiber deeper to increase speeds over the remaining shorter copper loops with VDSL2, aided by interference mitigation techniques such as vectoring. The difference is that VDSL2 does not suffer from congestion as the links are one to one, so that pressure to push fiber deeper is driven by demand for higher maximum bit rates, while for cable networks it is to alleviate congestion and so preserve rates that have already been made possible through channel bonding.