Two Major Digital Projects Slated in Holland

Author:
Publish date:
Updated on

Amsterdam, Netherlands -- After contemplating the
introduction of extended digital services for a number of years, some major Dutch cable
operators have started upgrading their systems to two-way services, and they plan to add
digital services to the mix late next year.

Mediakabel B.V., a joint venture of eight Dutch cable
operators, recently said it plans to start offering digital services next September.

KPN Telecom NV -- the country's primary telecommunications
carrier, which was formerly run by the government -- also announced that it will merge its
"Eurorings" fiber optic network into an equal partnership with U.S.-based
telecommunications operator Qwest Communications International Inc. Qwest's prime European
asset is EUnet, one of Europe's largest Internet-service providers, which it acquired in
March.

The existing assets of the combined venture are valued at
$700 million. The partners have committed themselves to an additional investment of $500
million over the next two years. Turnover for 1999 is expected to be $400 million, and the
partners hope that revenues will grow by 40 percent annually.

Together, the two major digital Dutch ventures represent a
significant step forward in one of Europe's most highly penetrated cable markets. The
projects will help to bring the outdated Dutch cable systems into the digital age, and
they will offer both business and residential subscribers access to digital services.

The new KPN venture will initially be a
business-to-business proposition, providing large international companies, other
telecommunications operators and ISPs with high-capacity virtual-private networks for
converging communication applications. "Eventually, we will also reach the private
customer," said Wim Dik, KPN's chairman.

Mediakabel, on the other hand, will provide a fully
interactive service to the private consumer. Internet access will be limited to an
Internet-over-TV service, using an OpenTV application.

According to Hans Boom, CEO of Mediakabel, the service will
make television more interactive, but it's not aimed at the traditional Internet market.
"This will not compete with the cable operators' current Internet activities, which
are all aimed at high-speed and [personal computer] applications," he said.

Mediakabel will start to offer digital services Sept. 1.
Over the next four years, the operators will invest $21 million, plus any future income
earned through the venture, in the service.

According to Boom, the 45-channel interactive service will
be fully operational by June 1, "but this is a commercially inconvenient time,
because everyone will be thinking about their vacation." Boom feels that the summer
launch has an advantage, however. "The soft launch will give us two months to test
our marketing," he said.

The digital service will be offered on the partners' cable
systems, reaching 1.6 million subscribers, in addition to the current analog service. In
the Netherlands, analog services offer about 31 channels.

To prepare for the digital launch, the Mediakabel
consortium has ordered a 45-channel Digital Video Broadcasting-compliant digital headend
from Norwegian supplier Tandberg Television ASA. The headend will be installed in January.
Mediakabel has also ordered 80,000 digital set-top boxes from French manufacturer Groupe
de Sagem S.A.

The set-tops will incorporate DVB-compliant cable modems,
OpenTV application interfaces, Viaccess conditional access and an electronic program guide
that is expected to be supplied by France Telecom. For subscriber management, a $2 million
"Wizard" system from Israel's Wiztec Solutions Ltd. will be used.

The only commercial target that Boom was prepared to reveal
is his aim to deploy the 80,000 set-tops by the end of 2000.

Related