Excite@Home Corp. widened its international footprint last
week, landing a deal with German MSO Tele Columbus GmbH and Deutsche Bank A.G. that will
help the high-speed-data-over-cable provider to reach 2.2 million homes in Germany.
The deal will boost Excite@Home's international
presence to more than 16.3 million cable homes in six countries.
Excite@Home launched its initial international service in
the Netherlands, @Home Nederland, in May. The company also has deals to launch high-speed
Internet service in Japan and Australia. Its largest customer base is in the United States
Tele-Columbus -- which is 100 percent-owned by Deutsche
Bank affiliate Deutsche Bank Investor -- is the second-largest cable operator in Germany
behind Deutsche Telekom A.G. Tele-Columbus has about 1.7 million subscribers, including
major markets such as Berlin, Stuttgart and Hanover.
The new venture, called @Home Deutschland, could also
involve other cable companies that are acquired by Deutsche Investor.
The unit was set up by Deutsche Bank in 1998 to manage the
lending institution's industrial portfolio, and it has a market capitalization of
about $25 billion.
However, Deutsche Investor is setting itself up as a
consolidator of the cable industry in Germany, in light of Deutsche Telekom's
previously announced strategy to divest its cable holdings.
"With 11 million Internet users, Germany is an
extremely promising market for high-speed cable Internet services to the PC and other
devices," Excite@Home senior vice president of international John O'Farrell said
in a prepared statement. "This proposed venture is a tremendous next step in
@Home's European expansion, building on our successful launch of @Home
The @Home Deutschland service will provide broadband
content and applications such as news, video-on-demand, compact disc-quality audio,
high-speed games and software downloading, along with access to the Internet at speeds
significantly faster than previously available.
@@Home Deutschland expects to combine Excite@Home's
broadband product with high-quality German and other European content to create a service
that meets the unique needs of Germany's online customer base, which is the
third-largest in the world.
Excite@Home director of European business development
Christian Dahlen said penetration rates for the German service are expected to be
comparable with those in the United States. Currently, U.S. penetration rates for
Excite@Home are about 3 percent overall, reaching 5 percent to 20 percent in selected
Dahlen said the upgrade of the German cable network is just
beginning, and penetration rates for high-speed services are expected to grow once that
upgrade begins to take hold.
He added that as Deutsche Telekom begins to divest its
cable assets -- with Deutsche Bank Investor being one of the major bidders -- upgrades
should occur more quickly than they have in the United States.
"Once the ownership issues are resolved, the upgrades
will be faster than in the United States," Dahlen said. "The overall market has
a really huge untapped potential."
Dahlen added that Tele-Columbus has already launched a
high-speed Internet service -- InfoCity -- in a limited number of markets with about 1,000
subscribers. Those subscribers are expected to be switched over to @Home Deutschland when
it becomes available.
More important, Dahlen added, there is little competition
in the high-speed-data market in Germany at the moment.
"There is a huge demand," Dahlen said. "In
the high-speed market, nobody has high-speed access. Deutsche Telekom is just starting to
roll out DSL [digital subscriber line]."