Spains Pay TV Market Heading Arriba

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Madrid, Spain -- After years of struggling to get started,Spain's direct-to-home satellite and cable-television markets are hitting theirstride with strong subscriber growth.

The gains over the last year and the sector's brightfuture growth prospects were key topics of discussion at last week's Kagan WorldMedia conference here.

Spain's digital DTH market, which did not exist priorto early 1997, is taking off faster than expected through sales by Via Digital and CanalSatélite Digital, the two operating digital platforms. CSD has 412,000 subscribers, andVia Digital has 130,000.

Kagan forecast that the total digital-subscriber base willsurge to 971,000 by the end of the year, and that Spain will have almost 2 million digitalDTH subscribers in 2000.

Spain's DTH market will grow 10 percent per year until2010, or double the average European growth rate during the same time, according toSocieté Européene des Satellites. SES forecast that 4.2 million Spanish households willhave digital DTH by 2010.

Meanwhile, cable operators are just beginning to play theirpart in the market. They're expected to have 350,000 subscribers at the end of thisyear, 820,000 in 2000 and 2.8 million by 2007. Despite cable's impressive growth,it'll be dwarfed by DTH, which will boast 3.5 million subscribers in 2007, accordingto Kagan.

"Cable regulation came too late, which has benefitedDTH," said Salvador Magdaleno, president of the National Association of Cable,Wireless Communications and Telecommunications.

"It will be difficult for cable to prosper due to thetwo digital DTH platforms' growth and the future competition of [nationaltelco]Telefónica [de España]," Magdaleno said. After a 16-month moratorium,Telefónica will be free to operate its own cable systems to compete with thecable-franchise winners in each region.

A more optimistic view of Spanish cable's future wasoffered by Carlos Aguinaco, general manager of Supercanal de Cable de España, a unit ofArgentina's Supercanal. His company has already won several franchises as part of aninvestor group.

"The DTH market will delay cable penetration, but justin the beginning," Aguinaco said. "In the medium term, cable subscribers will belocated in big cities, and DTH subscribers will migrate to cable." He believes thatcable and DTH are not competitors, but complementary services.

Carmen Fuente, programming director of Cableuropa,Spain's second-largest MSO, voiced concerns that "cable will be the uglyduckling, having to pass households, whereas DTH will enjoy the next two years ofopulence."

However, the real driver of cable penetrationis "the wide availability to choose from different content and programming,"said Pablo Barrenechea, sales managing director for Via Digital. 

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