Lorenz Glatz is the newly appointed chief technology officer of Kabel Deutschland.

Are you moving toward a “quad play” model? What are the main technical challenges linking fixed and wireless services?

We are constantly monitoring market trends. “Quadruple play” is surely a strategic option for the future. But at the moment we do not speculate on future developments.

When we spoke to KDG last year, you said one of the main things you were doing technically was upgrading your networks to support two-way connectivity and that you were launching further new services such as voice and data. Could you give us an update on how these have gone?

The upgrade of our cable network is progressing. At the moment, we are upgrading our network in the German federal state of Bavaria—for example in Munich or Nuremberg. Until the end of 2006, more than 8 million cable access users will be able to purchase our new services. It is our target to offer triple-play services to close to 90 percent of our 15.6 million homes passed in Germany. Therefore, KDG invests about 500 million euros until end of March 2009. Actually 212,000 customers of KDG are using broadband Internet and telephony via cable. In comparison to 2005, we note down about 200,000 new Internet and telephony customers.

KDG spoke last year of providing people “seamless consumer experiences” and sharing content between different devices.

At the end of the day we need to connect the existing triple-play services we are providing to our customer base today. To name an example for such a service: CLI on TV. Having the telephone number of an incoming call show up on the TV screen even before the phone starts to ring is a service making our customers’ lives more convenient.

With most cable operators looking at more progressive VOD and á la carte services, technically what are the main challenges in executing a strong strategy here?

KDG already launched a PPV service in July 2006. We are also thinking about VOD, which will probably be realized next year. In our case, the main challenge certainly is to reduce node sizes to a level that is suitable for VOD. Fortunately for us, a lot of the U.S. operators have already resolved a lot of the teething problems of VOD. We are thus optimistic to be able to achieve swift deployment once we pull the trigger on the program.

What would you say are your main technical achievements over the last 12 months? If we have this conversation at the same time next year, what major technology achievement would you like to have executed in that timeframe?

We developed Kabel Deutschland from a traditional analog cable TV operator into an innovative provider of various multimedia services including pay TV, PPV, broadband Internet and telephony. In terms of technical achievements, we upgraded up to 6 million homes passed for triple-play services and started an HDTV offer—content from pay TV provider ‘Premiere’ through our network—as well as our PPV service this summer. Furthermore, we switched the modulation of our digital TV signals from 64-QAM to 256-QAM. Due to this modulation change, we are now able to utilize our cable capacity more efficiently. As a result, we were able to further improve our digital Free-TV offer up to 76 channels.

Our next key launch will be the service Kabel Digital+ in November 2006. This product includes an electronic program guide (EPG) and a digital video recorder (DVR) and enables cable customers to step into a new dimension of television and video recording: Stopping live TV and continuing after a break, repeating the last minutes, watching a program while recording another one, setting up recording with just one click in the program guide.

With telcos moving en masse into IPTV, and therefore triple play, what can cable players to leverage the strengths of their networks?

We take competition on our core market very seriously; however, we see ourselves in a good competitive position with a strong brand, a stable customer base and an attractive offer in the still growing broadband market. The TV market in Germany is already distributed; customers have already decided on cable, satellite or antennae. Contrariwise, half of the broadband market in Germany is still not divvied. With now more than 70 digital Free TV channels, triple play services, PPV and pay TV, we are composing the most attractive cable access offer ever.

In addition, looking into the future, the cable network infrastructure is uniquely positioned to support a gradual migration to all IP-based services. Breaking down the entire spectrum in the cable network into a pure IP pipe would yield more than 5 Gbps, which significantly exceeds what DSL will ever be able to offer. Admittedly this is still many years out, nevertheless the potential is already there today.

What impact will the new DOCSIS 3.0 specifications have on your business? Could you tell us about the advanced digital services you are looking to deploy over the next two years?

DOCSIS 3.0 is a key tool in the strategy of eventually moving into an all-IP world on cable. In the midterm, however, it will simply allow cable operators to provide broadband high-speed data products of unparalleled speed at a highly competitive price point. This capacity certainly can be utilized in multiple ways for new services, but I don’t want to spoil the fun for our competitors by speaking out too early.

What is your organization’s current balance among video, voice and data technologies? How do you see that portfolio shifting or evolving over the next three to five years?

Kabel Deutschland started to engage in voice and broadband data services relatively late in the game. The key focus of our revenue base, therefore, currently is focused on the video side. As we continue our network upgrades, I expect that to gradually start shifting more and more toward IP-based services to eventually and finally turn even video into an IP service and thus once and for all blur the technical boundaries between the triple-play services.

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