Bertelsmann Goes Broadband with Cable Deals

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FRANKFURT, GERMANY -- The Bertelsmann Broadband Group (BBG)
recently said it has reached agreements with some of Germany's leading independent cable

operators to test its new interactive and Internet-based TV
services.

BBG officials declined to reveal details of the agreements.
But the group apparently has inked deals with MSOs --

including those owned by Telecolumbus and Bosch Telecom --
that collectively serve some 4 million cable households. Earlier this year, BBG had
reached an agreement with NetCologne, which has a system in Cologne, as well as HanseNet
in Hamburg.

Bernd Schiphorst, a board member of sister company
Bertelsmann New Media, said there has been no decision on how many homes will participate
in the tests, nor on which interactive and Internet services will be the first offered
commercially.

"That's what we are doing the tests for -- to find out
what offer sells, how much subscribers are willing to pay for them, and how big the

demand is," he said.

The test is also not limited to a specific period of time.
"If we find out there is a huge demand, we have to try to launch commercially as fast
as possible," Schiphorst said.

BBG chief Werner Lauff added that the new interactive
services developed by his group can run on any available technical platform, including
digital set-top boxes, cable modems or digital-subscriber-line distribution. The services
will include "true" video on

demand, which enables subscribers to download certain TV
programs from local servers.

BBG isn't the only firm testing such services. Kirch Group

recently launched a new unit, Kirch New Media, headed by
Rainer Huether, general manager of Kirch sports channel Deutsches SportFernsehen. That
unit also is developing broadband services, such as movie distribution via the

Internet.

"In the long term, it could be disastrous not to give
some thought to this field," said one industry source of the new Kirch and
Bertelsmann units. The development of such services is still at a very early stage in
Germany, he noted.

Bertelsmann's Lauff agreed, adding that growth in these
areas is tied to upgrades of Germany's cable systems. That won't happen until at least two
to three years after Deutsche Telekom A.G.'s imminent decision as to who its new
cable-system partners will be.

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