Outlook: Cable consolidation is not over yet
Wednesday 17 June 1998
Unhappiest of all, however, must be the mainly American players who bankrolled the exercise, as well as those poor unfortunates subsequently seduced into participating in their UK flotations. None of them has yet seen anything like a positive return on the billions they've sunk into the ground.
The response has been our old friend consolidation. The ludicrous legion of area franchises by which the previous government chose to license the cable operators has - through merger, acquisition and takeover - been progressively whittled down to fewer and fewer players, allowing economies of scale and reduced duplication of cost. With yesterday's news that NTL is acquiring ComTel for pounds 550m, the number of serious players in the market has been reduced to just three - Cable and Wireless Communications, Telewest, and NTL itself.
Even so, only C&W Communications of the three has anything like the critical mass to provide a credible national service in telecoms and cable TV. Competition authorities allowing, the process of consolidation might therefore not have come fully to an end, even with this latest deal. This is especially the case as, with the advent of digital terrestrial and satellite TV, many of the advantages cable has had, but failed to exploit, in interactive and pay TV will disappear.
Cable's future, it would seem, lies less in the realm of providing conventional TV to its subscribers and more as a competitive force to BT in telecommunications. To do this credibly, the remaining three would probably have to merge into one. Since on an area-by-area basis the telephone network is already a duopoly of BT and the local cable operator, this may not prove as unpalatable to Oftel and the Office of Fair Trading as might be thought.
For the time being, ego and a healthy jostling for premier position prevents such a get-together. But if digital terrestrial and satellite proves the success the City thinks it will, then cable will struggle to find an alternative way forward.
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