Bertelsmann Goes Broadband with Cable Deals

FRANKFURT, GERMANY -- The Bertelsmann Broadband Group (BBG)recently said it has reached agreements with some of Germany's leading independent cable

operators to test its new interactive and Internet-based TVservices.

BBG officials declined to reveal details of the agreements.But the group apparently has inked deals with MSOs --

including those owned by Telecolumbus and Bosch Telecom --that collectively serve some 4 million cable households. Earlier this year, BBG hadreached an agreement with NetCologne, which has a system in Cologne, as well as HanseNetin Hamburg.

Bernd Schiphorst, a board member of sister companyBertelsmann New Media, said there has been no decision on how many homes will participatein the tests, nor on which interactive and Internet services will be the first offeredcommercially.

"That's what we are doing the tests for -- to find outwhat offer sells, how much subscribers are willing to pay for them, and how big the

demand is," he said.

The test is also not limited to a specific period of time."If we find out there is a huge demand, we have to try to launch commercially as fastas possible," Schiphorst said.

BBG chief Werner Lauff added that the new interactiveservices developed by his group can run on any available technical platform, includingdigital set-top boxes, cable modems or digital-subscriber-line distribution. The serviceswill include "true" video on

demand, which enables subscribers to download certain TVprograms from local servers.

BBG isn't the only firm testing such services. Kirch Group

recently launched a new unit, Kirch New Media, headed byRainer Huether, general manager of Kirch sports channel Deutsches SportFernsehen. Thatunit also is developing broadband services, such as movie distribution via the


"In the long term, it could be disastrous not to givesome thought to this field," said one industry source of the new Kirch andBertelsmann units. The development of such services is still at a very early stage inGermany, he noted.

Bertelsmann's Lauff agreed, adding that growth in theseareas is tied to upgrades of Germany's cable systems. That won't happen until at least twoto three years after Deutsche Telekom A.G.'s imminent decision as to who its newcable-system partners will be.