Dutch Cable Operators to Lose Their Monopoly

HAARLEM, NETHERLANDS (06/12/2000) - Dutch cable operators in two years will be forced to allow competing Internet service providers on their networks.

The political parties in the Dutch parliament reached this compromise on opening the networks late Friday. Originally the government wanted to leave the cable operators alone. But because of pressure from almost all the sides in the Second Chamber, more or less the Dutch equivalent of the U.S. senate, the so called Kabelnota (cable bill) was amended.

The compromise is a defeat for the VVD, the conservative party and member of the governing coalition, that wanted the cable operators to keep their monopoly. Monopoly in this sense means that in a certain area Internet users can only subscribe to the Internet service owned by the local cable operator.

The VVD argued that the operators should be allowed to earn back the investments they made into their networks and only wants to take action against the companies when the power is abused.

The Netherlands is one of the most densely cabled countries in the world. A large majority of the households has cable and many subscribe to cable Internet services. The largest players on the Dutch cable market are United Pan-Europe Communications (UPC), a unit of Denver-based UnitedGlobalCom, Casema, part of the Dutchtone Group and a subsidiary of France Telecom, and Essent, a large electronics and utility company.

All three cable operators have their own Internet service providers and do not allow others on their networks. UPC has Chello with about 200,000 subscribers in The Netherlands, which is the vast majority of the Chello subscriber base.

Casema offers Wanadoo Cable to around 60,000 Internet customers and approximately 15,000 Essent customers subscribe to Internet service from @Home Benelux. For UPC, the uncertainty of the outcome of the political debate was one of the reasons to postpone the Chello IPO (initial public offering).

UPC and Casema have said that it would take them four to five years to earn back the billions of dollars they have spent to acquire cable networks and upgrade their networks. The Dutch government thinks that two years is "a reasonable time frame."

Dutch ISP's, led by KPN subsidiary XS4ALL, Finland's Sonera, and VIA.Networks-owned bArt, lobbied fiercely to get access to the cable networks.

A spokesperson for XS4ALL said that two years is not good enough. "They (the government) agreed on access in two years, it will take at least a third year to actually get access. Three years is an eternity in internet time."

Opening the networks is a hot topic. In the United States the openNET Coalition (www.opennetcoalition.org), which represents over 900 ISP's and internet related companies, fights for access to cable networks. The coalition has been successful in numerous cases. Leading ISP America Online also lobbied for open access to cable networks, until it announced the merger with Time Warner. AOL however, says it is still for open access.

UPC, in Amsterdam, can be reached at +31-20-7789840 or http://www.upccorp.com.

Casema, in Delft, can be reached at +31-15-8881000 or http://www.casema.nl/.

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