COLOGNE — For American cable guys Richard Callahan, Gary Klesch and Mark Schneider, upgrading Germany’s aging cable networks to 21st century standards looks easy compared to the task of unraveling the intricately tangled web of regulatory bureaucracy they face.
Speaking at the annual Medienforum here, the heads of Callahan Associates Intl., Klesch Associates and UPC presented their companies’ visions for the various regional networks they have acquired or are bidding for.
Except for Berlin, the sale of Deutsche Telekom’s remaining cable franchises is to be completed by summer, said Telekom cable exec Franz Arnold, also on hand with the group’s new partners.
Telekom is holding on to Berlin’s network and upgrading it on its own. The telco giant is selling off its cable operations in Bavaria, Rhineland-Palatinate and Saarland in June, to be followed by its cable businesses in northern Germany.
Callahan already has 55% stakes in both the North Rhine-Westphalia and Baden-Wurttemberg franchises. The company is investing several billion marks and will soon be hooking up around 100,000 households a month to new broadband cable, which will offer goodies like high-speed Internet access, digital TV, video-on-demand and telephony. In NRW alone there are some 4.2 million cable households.
The London-based Klesch, which acquired 65% of the Hesse network, is looking at spending around $730 million on the infrastructure upgrade.
The demand is there for greater Internet capacity, more TV channels and e-commerce, Klesch said, pointing out that the Teutonic propensity for catalogue shopping can easily be transferred to e-commerce opportunities.
UPC in talks
UPC is in talks for the Rhineland-Palatinate/Saarland network and holds stakes in local cable operators PrimaCom and TSS/EWT.
Telekom has priced the entire network, which services some 17.5 million homes, at around $14.6 billion.
Callahan and UPC’s Schneider both commented on the difficulties of Germany’s cable industry.
“There’s nothing more complex than cable in Germany,” noted Callahan.
Schneider also described a seemingly uphill battle with regulation authorities.
Callahan and Klesch, however, did put to rest talk of problems with Telekom over the use of the Kirch Group’s set-top D-box.
“It doesn’t matter what kind of box we use as long as it does the job,” said Callahan. “We’re just looking for the equivalent of a universal trailer hitch that anyone can use to hook on with.”
UPC, which is developing a computer set-top box of its own, has made it clear it isn’t interested in the D-box.