Q&A with Monique van Dusseldorp, CEO, Van Dusseldorp & Partners

The rapid growth of broadband connectivity and the convergence of some major traditional-media and Internet content providers is driving potential for the streaming media industry in Europe. But such a fast pace of development stirs up a lot of questions for companies hoping to compete in that space - questions Internet research and strategy development company Van Dusseldorp & Partners strives to answer for its clients.

The Amsterdam-based company's "TV Meets the Web" business unit provides European companies and those interested in the European market with information and research on the latest Internet, broadcasting and media convergence developments. The unit monitors broadcasters' use of the Internet, the use of video online, the integration of PC and TV functions, and additional developments related to broadband infrastructures and content.

Founder and CEO Monique van Dusseldorp has worked at the European Institute for the Media in Dusseldorf, Germany, and more recently served as a media analyst for a Dutch publishing and media house. In this exclusive interview with Streamingmedia.com, she outlined some of the problems facing the European market, and pointed to some possible solutions.

Streamingmedia.com: What particular market conditions in Europe are drawing clients to your company's services?

Monique van Dusseldorp: At this point, TV producers are realizing they have to learn new skills, and infrastructure providers are trying to make their networks more interesting with relevant content. I ran the European Television Forum for five years, and I know that only now broadcasters are really starting to take the net seriously. But I must admit that we have many U.S. clients with plans to roll out services here. Especially in Europe, it is not always easy to know who to work with, who your competitors and potential partners are, and what they are up to. We work with broadcasters, Internet start-ups, multimedia content developers, broadband and wireless infrastructure providers, but also with some hardware producers. Companies as well as industry associations and research institutions can become clients by joining our TV Meets the Web Corporate Network. Members receive specialized services in the form of pan-European and country-specific information and research.

Streamingmedia.com: Widespread broadband connectivity is clearly a prerequisite for the growth of the streaming media industry. What do you see as the most relevant developments regarding broadband in Europe?

Monique van Dusseldorp: We are about to co-publish a report with ScreenDigest of London on the European broadband landscape. At this moment, the development of broadband Internet networks is absolutely the most dominant issue facing the European ISP market. The European rollout of broadband services has been rather slow, especially compared with the United States. Currently, around 425,000 households in Europe have wired broadband connections. In addition to this, another 10,000 households get broadband access via satellite systems.

The bulk of wired broadband connections are via cable modems; DSL technologies are still a small part of the total number of subscribers. We believe, however, that this is going to change. Although the cable networks in Europe show staggering growth in the number of subscribers to their broadband services, many telecommunications companies are on the verge of offering DSL services. In the Netherlands, for instance, KPN Telecom started its MxStream service in April, but already is facing competition from a company like Versatel . Since the general penetration rate of fixed telephony lines (that are suitable for DSL technology) in Europe by far exceeds cable penetration, the future for DSL looks bright.

Streamingmedia.com: What are the key companies driving this broadband development?

Monique van Dusseldorp: Presently UPC's service, Chello, controls more than half of the European cable Internet access market, followed by Telenet, Cybercable, Wanadoo, @Home Benelux, Quicknet, Telia, and Telenor. It is not strange that the biggest parties originate in the Benelux region. Cable penetration in that area is among the highest in the world -- over 90 percent of all households have access to cable. Market leader Chello has seen its subscriber base rise from 35,000 to 180,000 in a year.

Developments are very fast right now. Chello has a potential deal with Telewest, a potential joint marketing agreement with Excite At Home (as well as the just-announced cooperation with France Telecom's Dutch subsidiary, Dutchtone), and plans for Internet TV services, although some of these models will suffer when the Dutch regulators decide that they will open up their networks to other ISPs, as is presently being discussed. And as you know, their IPO has been delayed and UPC has suffered a severe drop in share price, as well.

Streamingmedia.com: Who is challenging Chello's dominance?

Monique van Dusseldorp: Some stiff competition is coming their way. Looking at DSL developments, one can clearly see that Germany and France are leading the way in Europe. Deutsche Telekom is the largest provider of DSL services in Europe, followed by France Telecom, Telia, Belgacom, Telekom Austria, Sonera, Telefonica and Portugal Telecom.

Many new parties are entering this market, especially when the local loop is unbundled. The European Commission has stated that by the end of 2000, incumbent PTTs should offer unbundled local loops under non-discriminatory terms and conditions in order to allow all operators to provide innovative services. Leased-line tariffs should be significantly reduced, including cross-border leased lines.

In some areas, broadband is going to be through satellite Internet access, and you see that SES Multimedia from Luxembourg can now provide two-way broadband Internet access for really interesting prices. So in all of Europe we see broadband competition, not only between DSL operators and amongst cable providers, but also between the different infrastructures -- cable and DSL, especially, with satellite as a relevant new factor in some regions.

Streamingmedia.com: What about wireless Internet access?

Monique van Dusseldorp: This year most European carriers plan to offer GPRS (General Packet Radio Service), which can transfer data at 115,2Kbps - more or less ISDN speed. This will allow people with newly equipped wireless phones to transmit data fast enough to browse the Internet in full color. And in 2002, UMTS (Universal Mobile Telecommunications System) is expected to offer 2Mbps services.

Streamingmedia.com: What kind of services can we expect to see emerging from this growth in broadband connectivity?

Monique van Dusseldorp: The websites that go with the hugely popular, live soap opera Big Brother illustrate the development of this industry very well. Big Brother is a TV show developed by Dutch producer Endemol, which shows a group of people locked up in a house for three months. Not only has this resulted in popular TV shows, as shown in the Netherlands, Germany, and Spain, but in all cases the websites have seen high traffic. On the website, there is live monitoring, all day and all night, of events in the house.

Broadband mass-market entertainment, driven by the combination of TV and Internet -- that is, of course, the first observation. But in addition there is the whole question of Internet rights - who gets to keep the Internet rights of popular TV shows? The Internet results in interactivity, and who best to interact with? The producer, or the broadcaster? Endemol is keen to keep Internet rights to itself, and is now directly in contact with the end users. Big Brother's website is also part of deals with infrastructure provider World Online in Germany. And for the planned U.S. version with CBS, there is a deal with AOL.

Streamingmedia.com: Will this success among content providers translate into gains for broadband access providers, as well?

Monique van Dusseldorp: Popular content is highly desired for ISPs: It serves to make their offer more interesting. In Germany, only World Online members could peek into the ladies' bedroom, [a shot] that was webcast 24 hours a day. For access providers, it is very important that they compete on content services, as competing on price will result in free services eventually, as we have seen with narrowband Internet services. So I think we are going to see a lot of new "walled gardens" -- broadband services with special content. KPN, the Dutch telco rolling out DSL services, has announced it would like to buy the Internet rights to the national football competition. And we are seeing more of that - access providers trying to get hold of interesting content one way or the other, also in joint ventures and cooperation.

An example of cooperation deals is Italy's e.Biscom, a partnership formed in September 1999. The mission is to develop innovative activities in the area of broadband communications, multimedia, and Internet services in Italy. RAI and e.Biscom have settled a preliminary agreement for the start-up of a new company that will realize the first Italian broadband interactive Internet Video Portal. RAI and Rainet will make all legally owned content available, and e.Biscom will offer, through FastWeb, the first Italian network able to distribute broadband services with complete video interactivity.

And we see some broadcasters gearing up for all the broadband to come. Dutch private broadcaster Veronica, which recently left the Holland Media Group, will invest 7.5 million Euro in broadband Internet content, to be developed by Internet company United Resources of Jamby. Veronica aims to relaunch itself as a multimedia company in the fall of 2001.

Bertelsmann has chosen to concentrate on content and get out of access services. But this is also being done because of this new need for content. Bertelsmann is bundling its electronic commerce activities into a single division as it prepares a major push to develop media content and services for wireless Internet networks. Headed by Andreas Schmidt, who previously ran AOL Europe, the Bertelsmann e-Commerce Group bundles activities with sales of around $500 million a year and 1,500 employees. This includes the Bertelsmann Broadband Group; strategic alliances with Internet service providers such as AOL and TerraLycos; and a venture-capital fund that will focus on start-ups in e-commerce, mobile e-commerce, and broadband.

Streamingmedia.com: What are the other European markets to watch?

Monique van Dusseldorp: A very interesting market is Sweden. At the moment, broadband is a hot item in Swedish media. Almost everybody is talking about broadband and the need to have all people connected by a broadband connection. On March 29, the Swedish government presented the so-called IT-prepositionen, in which the Swedish government, among other groups, announced its intention to invest 8.3 billion Swedish crowns in "broadband". The IT-kommissionen (IT committee) advised the government to build a nationwide network connecting all Swedish households and companies by at least a 5Mbps symmetrical connection. At the moment, many landlords are signing agreements with broadband ISPs to deliver broadband connections to their tenants. According to a SIFO poll, more than 70 percent of all Swedish tenants wish to get broadband-connected.

Jonas Birgersson founded Bredbandsbolaget, a company that wants to bring broadband to the people -- not by offering broadband over existing infrastructure (like cable or DSL), but by pulling brand new lines into households so people can get broadband-connected by an Ethernet LAN, which gives more bandwidth than cable or DSL. Right now, companies like Bredbandsbolaget (and most of it's competitors, amongst them Telia) offer 10Mbps for 200 SEK per month. Bredbandsbolaget had its first households connected by March. It is expected that about 1 million households in Sweden will have a "true broadband" (Ethernet LAN) connection by the beginning of 2001. According to Bredbandsbolaget CEO Peter Ekelund, about 70 percent of Sweden's population will have broadband access (10Mbps or faster) by 2003.

Streamingmedia.com: What direction will Van Dusseldorp & Partners take in the future?

Monique van Dusseldorp: So far, most of our research has been for clients, and we could not publish the results. In the near future we intend to bring out several European reports that should be of use to the sector. And we are running seminars on broadband design this fall, as well as further events in our TV Meets the Web series.