UPC planning cable access to internet, in battle for home use
The Amsterdam-based, multi-media service company plans to begin rolling out its chello broadband service by the end of this year, said Nimrod Kovacs, chairman of UPC's Central Europe Group. (See also Interview, page 12)
Unlike other ISPs who have to fight and scrape among themselves for every new internet user they attract, UPC enters this market with instant access to the almost 1 million cable subscribers of Polska Telewizja Kablowa (PTK) and Wizja TV, companies which UPC acquired in August with its purchase of @Entertainment for about $1 billion.
UPC will pour an additional $500 million into expanding its cable network in Poland and making its existing lines internet compatible, Kovacs said. The firm plans on having 2 million homes hooked up to its cables by the end of next year, through acquisitions of existing cable companies. The company envisions eventually signing up from 15-20% of its cable subscribers to the chello broadband service, the same penetration rate it has achieved in Western Europe, Kovacs said. That would mean 150,000-200,000 customers, paying $20-$25 a pop for the superfast internet access made possible over cable lines.
So far only one other company is offering cable internet access. Aster City, an Elektrim-owned cable company with about 300,000 subscribers, is offering cable internet access to about 1,000 customers in Warsaw, but has plans to expand that service to all its customers, said Ewa Bojar, Elektrim's spokeswoman.
UPC offers chello broadband already in Austria, Belgium, France, the Netherlands and Norway. The service will begin a "staged rollout" by the end of this year in Warsaw, Kovacs said, with Gdansk and Katowice following up in the new year.
The company is rolling out chello in Hungary at the same time as Poland. It has 530,000 cable subscribers in Hungary. Eventually UPC wants to add telephony to its cable and internet offers, as it has in Western markets, creating a "three-legged stool," Kovacs said.
"We expect telecoms to be deregulated by 2001, and after that we'll be able to make our triple play," he said.
UPC is also considering spinning off its chello division and listing it as a separate company in Amsterdam and on the U.S's Nasdaq market.
Most existing ISPs have pockets that are far shallower than UPC's, but they claim they are not in imminent danger from the cable giant's new offer.
"We don't expect any problem," said Tomasz Kepinski, CEO of Polbox, the fifth largest Polish ISP in terms of domains hosted. "This is dedicated more for the individual home user, and our customers are mainly companies."
"There will always be a place for dial-up services," agreed Wojciech Gaweda, president of SM Media, a Warsaw-based ISP.
But if an ISP is not specialized in a niche market or providing some extra value-added services, they could be knocked out of the competition in the mass market by such a challenger, Kepinski said.
"This (chello broadband) is going to be more in competition with TPSA than with our kind of ISP," Kepinski said.
"Dial-ups who serve residential customers will suffer," said Rafal Plutecki, CEO and co-founder of Internet Partners, the biggest ISP. "Cable lines are laid predominantly in residential areas, and for these customers, cable provides a much better service than dial-up."
But chello will not pose a threat to ISPs who focus on business users, Plutecki agreed.
"Business customers generally require a much deeper integration of their local network with the internet" than home surfers, Plutecki said. This includes higher value-added services like firewall protection and other security measures, Plutecki said. "Residential customers wouldn't pay for that kind of service, and cable access providers don't want to worry about it either," he added.
Cable access allows data to be transmitted over the internet and to the surfer's computer desktop at speeds much faster than that of traditional dial ups. A good dial-up modem may achieve 58 kilobits per second, while cable can go to 600 kilobits or faster. A cable modem costs about $300, though, which might also cut into UPC's growth prospects.
"Not everyone will be able to afford cable service," Gaweda said.
Andrzej Piotrowicz, CEO of AJP Communications, an IT and telecom consultancy, also gives the traditional ISPs a chance. "They have the advantage of experience on the market," Piotrowicz said.
UPC has a market capitalization of $7.8 billion and 7.8% of the company is owned by Microsoft.
Unlike other ISPs who have to fight and scrape among themselves for every new internet user they attract, UPC enters this market with instant access to the almost 1 million cable subscribers of Polska Telewizja Kablowa (PTK) and Wizja TV, companies which UPC acquired in August with its purchase of @Entertainment for about $1 billion.
UPC will pour an additional $500 million into expanding its cable network in Poland and making its existing lines internet compatible, Kovacs said. The firm plans on having 2 million homes hooked up to its cables by the end of next year, through acquisitions of existing cable companies. The company envisions eventually signing up from 15-20% of its cable subscribers to the chello broadband service, the same penetration rate it has achieved in Western Europe, Kovacs said. That would mean 150,000-200,000 customers, paying $20-$25 a pop for the superfast internet access made possible over cable lines.
So far only one other company is offering cable internet access. Aster City, an Elektrim-owned cable company with about 300,000 subscribers, is offering cable internet access to about 1,000 customers in Warsaw, but has plans to expand that service to all its customers, said Ewa Bojar, Elektrim's spokeswoman.
UPC offers chello broadband already in Austria, Belgium, France, the Netherlands and Norway. The service will begin a "staged rollout" by the end of this year in Warsaw, Kovacs said, with Gdansk and Katowice following up in the new year.
The company is rolling out chello in Hungary at the same time as Poland. It has 530,000 cable subscribers in Hungary. Eventually UPC wants to add telephony to its cable and internet offers, as it has in Western markets, creating a "three-legged stool," Kovacs said.
"We expect telecoms to be deregulated by 2001, and after that we'll be able to make our triple play," he said.
UPC is also considering spinning off its chello division and listing it as a separate company in Amsterdam and on the U.S's Nasdaq market.
Most existing ISPs have pockets that are far shallower than UPC's, but they claim they are not in imminent danger from the cable giant's new offer.
"We don't expect any problem," said Tomasz Kepinski, CEO of Polbox, the fifth largest Polish ISP in terms of domains hosted. "This is dedicated more for the individual home user, and our customers are mainly companies."
"There will always be a place for dial-up services," agreed Wojciech Gaweda, president of SM Media, a Warsaw-based ISP.
But if an ISP is not specialized in a niche market or providing some extra value-added services, they could be knocked out of the competition in the mass market by such a challenger, Kepinski said.
"This (chello broadband) is going to be more in competition with TPSA than with our kind of ISP," Kepinski said.
"Dial-ups who serve residential customers will suffer," said Rafal Plutecki, CEO and co-founder of Internet Partners, the biggest ISP. "Cable lines are laid predominantly in residential areas, and for these customers, cable provides a much better service than dial-up."
But chello will not pose a threat to ISPs who focus on business users, Plutecki agreed.
"Business customers generally require a much deeper integration of their local network with the internet" than home surfers, Plutecki said. This includes higher value-added services like firewall protection and other security measures, Plutecki said. "Residential customers wouldn't pay for that kind of service, and cable access providers don't want to worry about it either," he added.
Cable access allows data to be transmitted over the internet and to the surfer's computer desktop at speeds much faster than that of traditional dial ups. A good dial-up modem may achieve 58 kilobits per second, while cable can go to 600 kilobits or faster. A cable modem costs about $300, though, which might also cut into UPC's growth prospects.
"Not everyone will be able to afford cable service," Gaweda said.
Andrzej Piotrowicz, CEO of AJP Communications, an IT and telecom consultancy, also gives the traditional ISPs a chance. "They have the advantage of experience on the market," Piotrowicz said.
UPC has a market capitalization of $7.8 billion and 7.8% of the company is owned by Microsoft.
