Special Report on Cable & Satellite: New markets open up in telephony: The technologies are having an impact in a variety of fields, writes David Guest

David Guest
Sunday 04 April 1993 23:02
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THE ORGANISERS of this week's Cable & Satellite '93 exhibition and conference made their intentions plain as early as October last year. 'Cable & Satellite '93 set to cover new areas angled towards business market,' their advance publicity declared.

As a subject for a show most readily associated with the glossiest of home entertainment, business inevitably seems worthy but dull. It is, however, a natural extension of the infrastructure built to deliver entertainment.

Where technology is concerned, suppliers often identify two distinct groups of potential customers. The first, representing the mass market, is the general public; the second, usually much smaller numerically but where the prospects for profit margins and repeat business are greater, is in the corporate world.

Cable and satellite companies approach business users primarily as providers of means of communication. In the case of cable, the physical medium is an alternative to the copper wires and fibre optic cables of British Telecom. Satellite service providers offer alternatives for a variety of business functions - publishing, broadcasting and the holding of meetings, for example.

Cable telephony is estimated to have 100,000 converts in Britain. Comcast International, with cable networks in Birmingham, Cambridge and London, has 26,000 residential telephone subscribers and 2,000 business users in Birmingham. The number of residential phone users represents a 25 per cent penetration rate.

Dick Davis, Comcast's president, notes: 'Cable has been hampered by the extremely high cost of building the infrastructure, but now we are at a point where 50 per cent of our revenues are from telephony. The margins are lower than on cable (television) but they will improve later this year, when we will no longer be reliant on Mercury for our switching.'

The needs of business phone users - for facsimile and computer data communications as well as standard voice traffic - oblige cable operators to take note of emerging telecommunications technology. One of the sessions at the Cable & Satellite show addresses this topic. One of the exhibitors, Northern Telecom, brings its experience of the computer communications market to the cable arena and to the show for the first time.

The business market for satellite television services has changed in the past three years, says Stuart Baxter, head of commercial television for Maxat. 'In the early days, it very much followed the US market,' he says. 'There were one or two well- known champions of the technology, typically in the motor industry - especially BMW - and that created some market awareness but little else. About 26 companies applied for satellite licences, six got them, but only two or three are actually offering services.'

Satellite business services made a faltering start in the 1980s. Companies approached the technology in a spirit of experimentation, trying it out on events like product launches or the announcement of financial results, but when the recession settled in, much of the demand died away.

'So you've ended up with a smaller number of suppliers and a small user base,' says Mr Baxter. 'But the typical use is no longer the glorified press announcement but linear communications (ie continuing transmissions) and training. Now, there is a very much greater emphasis on content. Programmes tend to be very much operational, and they are all cost-justified.'

Maxat, part of Groupe France Telecom, specialises in the distribution of sound, vision and data signals by satellite. Its chief direct competitor, again, is British Telecom. Indirectly, the services it provides may put it into competition with its clients' in-house publishing operations.

Renault, for example, is working its way through a programme of equipping 2,500 sites across Europe to receive data and video signals. The material that will be transmitted by satellite includes marketing support information, product literature and spare parts catalogues. This type of material previously went point-to- point along terrestrial data communications and fax lines. 'People are starting to move away from video alone, to broadcast data and video,' says Mr Baxter.

Videoconferencing - the holding of meetings with participants convened by television - may be satellite television's most versatile contribution to business. It is still not universally popular with 'attendees', however. Where conference rooms are not specifically set up for the purpose, there are complaints about acoustics. People also report inhibitions about interrupting another speaker - the format of speaking in turn encourages the feeling that once your slot has passed, your chance to make a point has also gone.

'ICI is trying to sell business television within the organisation because they want everyone to use it,' says Mr Baxter. Regular videoconferences now take the place of international travel, with its expense and the inconvenience of hours or days lost to jet- lag. Drug development meetings, for example, may involve 40 to 50 people in meetings over three hours long.

The economics of videoconferencing are relatively straightforward. It costs about pounds 1,500 to equip a site, and the satellite time costs about pounds 1,000 an hour. Less simple, perhaps, is the calculation of the cost of conventional meetings.

Videoconferencing may also compete with company newsletters. Mr Baxter says: 'We are working with a large retailer to use videoconferencing as a low-budget means for the chairman to address the troops once a week.' Maxat has also set up an interactive link between the president of the US-based computer giant Digital Equipment and members of staff in the company's European subsidiaries. 'He's trying to give his people the news before the press gets to it,' says Mr Baxter.

There are more than 300 business television networks in the US. 'I don't think you'll ever see it as a market with hundreds of users in the UK,' he says. 'We have 12 active networks now, we might be up to 16 or 18 by the end of the year, and 40 or 50 beyond that.' But there is a further question over how many of these networks will be legitimately described as 'British' business networks in the future. 'Almost all the networks now are European,' says Mr Baxter.

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