Q&A with Ross Sampson, senior vice president communications, chello broadband nv

About chello broadband nv
chello broadband is one of the world's leading broadband internet companies, active in Europe, Latin America and Australia and recipient of the Best European Consumer ISP award. chello has corporate offices in Amsterdam and local offices in Amsterdam, Paris, Vienna, Hamburg, Brussels, Oslo, Stockholm, Washington DC, Sydney and São Paulo. chello broadband is an operating company of United Pan-Europe Communications (UPC).

chello broadband provides a service to cable operators and other broadband networks and is committed to delivering next-generation, 24-hour accessible internet services and broadband content to consumer and business subscribers. chello broadband operates via satellite in Australia and will be via cable in New Zealand. As of March 31, 2000, chello had 171,000 subscribers.

chello delivers text, sound and video through local language portals over AORTAtm, chello's own broadband IP backbone, bringing customers a high-quality broadband internet experience with minimal cost.

Q: Ross, can you describe chello broadband and the relationship to UPC?

A: The chello broadband story is a remarkable one. Following our official launch in March 1999, we have expanded rapidly across Europe and beyond, and now provide high-speed Internet access in Austria, Belgium, France, Norway, Sweden, The Netherlands and Australia. At the end of March 2000 we had 171,000 paying subscribers, representing an annual growth rate of over 350%!

In Europe we deliver our broadband services by cable, but chello is spearheading industry innovation in new delivery platforms. Our Australian service, for example, is delivered using a MMDS (wireless) and satellite platform, with a telephone line return path, and it may eventually be delivered using two-way MMDS. We are also testing chello across DSL and fixed wireless technologies, so we are clearly are not limited to any one delivery platform.

chello broadband is well placed for further growth, because as an operating company of UPC, we have access to its cable networks and those of its majority shareholder UGC. This relationship gives us the rights to provide broadband Internet services to homes in Europe, Australia, New Zealand and South America. We see tremendous growth potential for broadband in all these regions and chello will benefit from being a first broadband player in the majority of these new markets.

In addition to the exciting opportunities for expansion provided by our unique relationship with UPC and UGC, chello will also use the broadband communication networks of other companies to enter other markets, so we really are committed to bringing broadband Internet to the world.

The key to our plans for expansion is AORTA, our own global broadband IP backbone, which currently connects Amsterdam, Frankfurt, Strasbourg, Paris, Brussels and London with 2.5 gigabits per second of capacity, with additional links connecting other cities within Europe, Scandinavia, North America and Australia. Over the coming months this capacity will scale to 10Gbps, giving us tremendous flexibility and a strong competitive advantage.

In our broadband laboratory in Amsterdam, we are working with world class technology partners such as Inktomi, GTS carrier systems and Microsoft to constantly improve our caching infrastructure - that is, our ability to provide even quicker access to the most popular websites - our bandwidth capacity and ultimately the service we provide to our customers.

Q: What is the difference between broadband and narrowband Internet? What are the challenges chello has to face?

A: There are clear technical differences between broadband and ordinary dial-up Internet. The limitations of ordinary telephone lines mean that dial-up Internet is restricted to transmission speeds of between 14.4kbps to 56kbps, and even ISDN has a maximum speed of only 128kbps. Most readers will be familiar with what this means in practice. At these rates it takes between 6 and 8 minutes to download a single 500kb image using an ordinary telephone modem, and 1 to 1½ minutes using ISDN.

But because broadband Internet uses cable, digital phone lines or even wireless technologies, it is possible to transmit at speeds of 300kbps or faster. chello broadband, for example, offers maximum speeds of 1.5Mbps, and we are constantly working to improve this. As far as the user is concerned this means streaming high-quality audio and video is at your fingertips.

This is the next generation of the Internet, and it is clearly what most Internet users want. In fact one of our greatest challenges is finding enough qualified installers such is the demand.

Q: Can you give us some examples of streaming media activities by chello?

A: Of course the best way to get the full picture of streaming media activities is to sit in front of chello and experience it yourself. chello is committed to a ‘local everywhere' strategy, which means that we provide the best local, national and international broadband content in the language of the subscriber. We are constantly teaming up with the best broadband content providers to increase our offerings.

Our broadband content varies from market to market, and we provide the latest short films, animations and digital media from Atom Films, international news from the BBC, sports including NFL in Holland, and ice hockey in Sweden, music sites such as Click2Music and Music Choice, movie previews, specially developed children's entertainment such as ‘eefje wentelteefje', and Fever TV and online games such as ‘Down on the Farm'.

Q: What's your vision of how consumers will use broadband services in, let's say, another 4 years.

A: The most significant thing about broadband is that it transforms the user's Internet experience. Earlier this year chello conducted Europe's first broadband Internet usage and attitudes survey of approximately 3,500 users, which turned up some remarkable results. In part, the survey found that broadband Internet users are online on average 72 hours per month for broadband compared to 36 hours per month for dial up; broadband users access the internet an average of 116 times a month for broadband, up from an average of 68 times a month for dial-up; the average number of users increases from 1.8 people per household for dial-up to 2.5 people per household for broadband; 94% of chello subscribers access the internet daily from home, compared to 77% of narrowband users; and chello subscribers who shop online had spent € 471 in the previous 6 months as opposed to narrowband users who had spent only € 283 online.

These results prove that there is a huge market demand for the next-generation of Internet. As supply catches up with demand, you will find a much greater depth of broadband content and applications than is currently available. For example, consumers will find e-commerce a much safer and more useful experience, as they will be able to do everything but touch and smell the product they are about to buy. Broadband will bring a huge choice of entertainment options such as video-on-demand, video games, high-speed net surfing, video chat rooms and even photography. Business users will find that telecommuting and video-conferencing will finally become practical which will lead to significant savings and efficiencies.
The next four years will be the most exciting period of innovation in communication in generations.

Q: Recently there was a streaming media festival in Sweden. What was chello's contribution?

A: There is no doubt that the Scandinavian countries are among the most sophisticated Internet users in Europe, and are driving innovation in hardware and applications. The streaming media festival held in March was an opportunity for chello to showcase the opportunities provided by broadband to record labels, music portals, radio stations and film companies and to encourage them to use this important new delivery mechanism.

chello's contribution was hosting the first such festival in Stockholm, bringing local and international broadband content providers together on chello.se, and at the same time conducting a technical trial of Microsoft Windows Media Technology. The unique effort of combining a technical trial with a live festival was very successful, proven by extensive press & media coverage, very favourable responses by chello users in Stockholm and positive feedback from all content providers.

Also, chello contributed by marketing the festival with posters, banners, ads and commercials in Stockholm during the festival period. As a bonus, new chello subscribers were given the opportunity to win an MP3-player from Diamond/S3. MP3 is the most commonly searched word on the web at the moment and broadband Internet provides an ideal platform to enjoy the new possibilities offered by the technology.

Apart from building significant interest for broadband among Swedes, one of the most valuable outcomes as far as chello is concerned is that we were able to form relationships with many content providers who will be able to supply us with great content in the future.