This year could see an intensification of the battle for market share between cable and satellite tel...
Satellite has the first mover advantage, as new customers do not require the laying down of wires.
Stephen Powers of Telewest Communications says: "Satellite relies on customers to build the network by installing the equipment. We have to install the cable, dig a trench and put a cable through to your living room."
Telewest aims to convert existing analogue cable connections to digital in London by summer next year and to cover the whole of the UK by the end of 2000.
At that point the cable companies will have a big advantage, according to Justin Seager, fund manager of the Dresdner RCM UK Growth fund. They can provide a comprehensive set of services - telephone, digital television, video on demand and, now, internet access.
A technical advantage comes from the fact that cable is a full two-way network, while satellite users require a separate 'phone' to send requests for information. The speed of a cable network is simply faster as well, according to Powers.
The two big cable companies in the UK are Telewest and NTL, of which only Telewest is listed here. Seager thinks a merger may be on the cards, as long as the Government gives the go ahead.
He thinks the 'all in one' cable option will tend to appeal to relatively affluent, middle class families who want a telephone, extra TV channels and internet access for the children, without the hassle of dealing with multiple companies.
"A lot of people do not want a dish on the side of their house or they are not allowed to have one because of local planning issues."
An important determining factor in the staying power of customers is the quality of customer service, traditionally seen as a weak area for both cable and satellite providers. The whole sector is starting to deal with this area, and cable companies have a lead, but victory is by no means in the bag. Companies such as BSkyB are dynamic and aggressive and will exploit any mistakes made over the next year.
For internet service provision, an obvious route to take would be for a cable company to hook up with an internet service provider.
Seager says: "Freeserve has got the dominant brand in the UK. We think that a lot of companies would be happy to team up. Both parties would be extremely keen."
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