Cable and Wireless cut its second deal this week to try to leverage its growing assets as a UK unbundled local loop (ULL) carrier by delivering Inuk TV services. C&W has invested heavily in ULL since its acquisition of ISP Bulldog for $34 million in May 2004.
The latest deal is to take what are described as IPTV services from Inuk out of the student market into the wider unbundled loop market, in a deal it somehow calculates as worth £70 million ($140 million) over the next five years, which is probably cut as a percentage of revenues as customers sign up. C&W was originally the overseas trading arm of British Telecom and is a global power in operating and building overseas networks, and was only allowed back into the UK during the 1980s as the UK re-wrote its telecoms regulations.
Love it or hate it, the unbundled local loop (ULL) regimes created by the European Union have promoted the opening of local telco networks to smaller rivals, and in the UK when incumbent British Telecom agreed to dramatically cutting its attachment rates for ULL by a total of 70%, under pressure from watchdog Ofcom, it made the business viable and C&W was one of the first to move in its acquisition of Bulldog. France has probably led the way in this, and Germany and Spain are at loggerheads with the EU because they are still dragging their heels and making the ULL investment case unattractive.
Back in May C&W cut a deal to take Virgin Media TV services to a wider area than just that passed by Virgin’s cable, taking in a further 4 million of the UK’s 24 million homes. Now the same reach is being offered to the Inuk services and this will now clearly be C&W’s approach, to offer the underlying IP capabilities to other services rather than invest heavily in a swathe of services on top of its network.
Previously Inuk had delivered a free student TV service over the Janet universities internet backbone, using IGMP multicasting to PCs only. It has recently added paid options of soccer and music and VoIP voice capability. Inuk has customers in forty universities reaching 100,000 student rooms.
To do that it needed a private network, not the public internet and it needs multicast routers and quality of service protocols supported in the network, and probably MPLS for rapid video transport (no sure if Janet has that). If C&W can support the Virgin channels it can certainly support the Inuk channels.
When it bought Bulldog C&W only had 38 exchanges connected through its own DSLAMs, and that figure has now risen to over 400, including many of the larger exchanges out of the 5,500 or so that British Telecom operates.
C&W also said it will offer Inuk’s IPTV platform as a white label solution to other wholesale DSL providers who want to provide their customers with a digital television offering.
The existing British Telecom network cannot support multicasting, and won’t be able to until it completes the build out of its 21st Century Network, which is all IP.
The chances of one of the big mobile carriers making C&W an offer that it cannot refuse to purchase or partner on the new network, to produce a quadruple play, is extremely high. However Orange has its own ISP, Vodafone has already contracted with BT, and that only really leaves Telefonica’s O2. Virgin Media’s mobile operation in an MVNO on the T-Mobile network.