Annual and Sustainability Report 2011 - Teracom

Denmark has been and continues to be the Group's major
growth business where we have invested heavily to build a
stable customer base of Pay-TV customers. Growth began to take
off during the summer of 2010 and in the second half of 2011
customers were pouring in. We are experiencing the same phenomenon
as when we started Boxer in Sweden – slow growth at
first, then an explosion. Through attractive pricing and packaging
combined with clever marketing, we managed after a few years
to become the largest digital Pay-TV operator in Sweden. I am
convinced that we will achieve the same result in Denmark.
Through the acquisition of BSD, which we renamed
Teracom A/S in January, we now have both network and
Pay-TV operations in Denmark and can begin to develop the
business in a significantly simpler way than if we only owned
the one company. As a concrete example, we were able to
quickly draw up a larger-scale plan for the spring 2012 introduction
of HDTV with the new DVB-T2 broadcasting technology.
Part of the network will switch completely to DVB-T2, at
the same time as we increase the efficiency of the rest of the
network by investing in new equipment.
We successfully introduced HDTV in Sweden following
exactly the same strategy. By upgrading our terrestrial network
to modern technology over time, we can offer more and better
services. The long-term plan, is to completely transfer to the
new DVB-T2 technology, and to switch off DVB-T, but this must
be done in a commercially viable way, and must benefit both
broadcasters and viewers. Such a transition requires far-reaching
commercial consensus between the network and Pay-TV
operators, as well as a synchronization of the companies'
long-term and short-term plans.
A seamless value chain
An integrated business, like we have in Sweden and Denmark,
provides a seamless value chain in our business. Between
encoders in the broadcast station and the service organization,
through quality assurance of boxes, packaging of TV channels,
marketing and the store where Pay-TV subscriptions are sold to
individual viewers. We are a Group that work as if we were a
single company. Through integration, we take full responsibility
for our infrastructure and our services, that the broadcasters’
content reaches out, for the experience of viewers and for the
public benefit provided by the terrestrial networks. The terrestrial
networks are crucial for ensuring that, in the long-term, a
platform is available where countries can guarantee a variety of
TV channels for most tastes and from many independent broadcasters.
Our integration aims to increase the competitiveness of
the terrestrial networks so they can continue to contribute to a
comprehensive freedom of speech and communication. This is
the most central part of our sustainability work; a direct relationship
can be found between the business challenges we face
and our contribution to society.
broadcast. The great advantage of the transition to DVB-T2 is
that we can eventually change over all channels to HDTV, the
video standard that is designed for TV screens larger than 40
inches. Another major advantage of our terrestrial networks
is the ability to regionalize channels, to broadcast regionally
adapted versions of a channel from different masts. Sveriges
Television has been using this technology for regional news
for a long time. The commercial channels use their regional
versions to send advertising to a specific area that is of high
commercial interest. In 2011 we signed agreements for 2012
that allow us to broadcast 168 versions of eight channels in
both high definition and standard formats. We would like to
continue with this development and we believe that, within
a few years, 500 HDTV channels will be broadcast in different
versions, all over the country, but broken down by region.
The flexibility of the terrestrial network is its great
strength; we will develop that strength because it will make
a major difference when HDTV is all that is marketable, when
all broadcasters will demand regional breakdown and when
the broadband networks are bottlenecked by the growing
video streams over the open Internet.
Supplementary services
We have supplemented the linear selection of On Demand services
with Boxer Sweden's launch of Boxer On Demand last fall.
Our new product department is now working with the next
generation of recording boxes, which offer new opportunities
for customers to watch what they want, when they want. The
Boxer box of the future takes maximum advantage of the terrestrial
network’s ability to transmit all channels simultaneously,
and has a connection to the Internet for On Demand and Play
services. It has a large hard drive, many receivers that simultaneously
record several channels and endless opportunities
for customers to sort the content by personal preference. This
is how we see our future – our terrestrial network delivers the
primary service, linear broadcast TV, while the additional services
are delivered via the Internet. Broadcast is what we know, linear
TV is what our customers want, that is our role and our future.
Broadcast TV also plays another important role in addition
to being a good commercial business. Broadcast television
in every country, all over the world, is the most important
common arena for public debate. »We have all seen the disturbing
pictures on TV,« said President Barack Obama, for example,
when commenting on NATO’s upcoming intervention in Libya in
the spring of 2011. That's what television is – a mass medium
with well-known broadcasters that have earned the trust of the
audience. That’s where the important things happen. The broadcasters’
brands and the trust they signal is a key component of
our business. With our talented employees and our investments,
I know that our TV business is long-term and highly competitive.
The terrestrial networks have room for many highquality
channels
Broadcast is a superior method for transmission to an infinite
number of receivers. The terrestrial networks specialize
in broadcast and we will develop our business based on
CRISTER Fritzson
President and CEO of the Teracom Group
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