Unitymedia: can the German cable market deliver its promise?

By Robert Briel
November 13, 2009 09.48 UK

Just last month, I had the pleasure of visiting the Network Operation Centre of Unitymedia in the small town of Kerpen. Located about twenty minutes from Cologne, I found a state-of-the-art hub serving the 4.5 million connected homes in the states of Northrhine-Westphalia and Hesse. Capable of delivering digital television, telephony and Docsis 3.0 fast Internet access, the network showed it had come a long way from the days of Deutsche Telekom.

With massive investments, the operator has upgraded the old networks to be ready for the demands of the 21st century and now is certainly on par with ‘the best of class’ networks in Europe such as Telenet in Belgium, UPC in The Netherlands and Vienna. And under the leadership of the always publicity-conscious Parm Sandhu we all know about it. The time had clearly arrived for the next phase for the country’s second largest operator. And indeed, the past few weeks, rumours were abound, speculating about a possible IPO or a complete take-over.

Today we learned that Liberty Global is acquiring the operator in a move that makes sense. In Continental Europe, the company is the most experienced in delivering advanced services over their networks, which they can now put into practice on a network that is ready. For UPC this is not the first expedition on the German market. In the past, it owned shares in both PrimaCom and EWT/TSS, but that was too early for the at that moment under-developed cable market.

So the next question will be: is the German cable market finally ready to deliver its promise? Being one of the richest markets in Europe with consumer spending, premium TV products have always met with much resistance. Because of lack of competition between infrastructures and the dominant position of the incumbent on the ADSL market, broadband Internet access has also lagged behind.
With Unitymedia, the technical infrastructure is in place and now the big challenge will be to win the minds and hearts of all the Oskar Normalverbrauchers, the average German consumer.