KPN has entered the Belgian pay TV market with a new triple-play service known as SNOW. The IPTV service makes use of incumbent IPTV operator Belgacom's network, and KPN Group Belgium is positioning the service as a direct competitor to Belgacom and national cable operators Telenet, Tecteo and Brutele. Tecteo and Brutele together offer cable TV under the brand VOO.
SNOW's basic TV offering gives the consumer a choice between a double-play or triple-play package offering a combination of 33 digital TV channels, Internet and fixed-telephony, with both packages at €39 per month. This constitutes the cheapest triple play offering in Belgium, albeit with a relatively small channel range. On top of this, the consumer has the option to add channels on an a la carte basis, ranging from €1 to €15 per channel.
The launch of SNOW echoes the foray into digital TV by KPN's Belgium mobile competitor Mobistar in 2010. Mobistar's hybrid TV service, the satellite portion of which is re-sold through satellite incumbent the M7 Group, has been relatively unsuccessful in forging a significant subscriber base, having failed to meet its 50,000 subscriber target at the end of 2011. Mobistar's subscriber base has since fallen from 34,194 at Q4 2011 to 27,846 at Q4 2012.
SNOW will be Belgium's second IPTV service after incumbent Belgacom which launched IPTV in 2005. Belgacom TV has gained more than 1m IPTV customers and more than 1.2m multiplay packs since launch. While Belgacom's success story relies heavily on its Jupiler Pro League football rights, and more recently the launch of multiscreen services, SNOW currently lacks the content and interactivity offered by Belgacom. The launch of multiplay by KPN is likely to be a customer retention mechanism for its broadband and mobile services as KPN's ISP service BASE has been seeing a declining subscriber base since Q1 2010. Currently, BASE has an ISP market share of 2.3 per cent while Belgacom has nearly half the market. KPN will be looking to take advantage of the availability of Belgacom's IP network to provide its BASE customers with what would effectively be a quad-play service.
Contrasting KPN's position in the Netherlands and Belgium when compared to US cable giant Liberty Global's operations sheds further light on KPN's strategy. Telenet, which is majority-owned by Liberty, launched a pay digital terrestrial television (DTT) service over 2012, and also holds the fourth Belgian 3G spectrum licence for mobile services. In the Netherlands however, Liberty's UPC faces more of a credible threat from KPN, where it has reported a 1,012,000 IPTV subscriber base at Q4 2012 and dominates the DTT market with 705,000 subscribers to its pay DTT service Digitenne. The introduction of a digital TV service via Belgacom's network provides SNOW with quick access to Telenet's footprint in Flanders, where KPN will be hoping to replicate the strength of its Dutch Digitenne service.
The limited channel offering of SNOW may be a hindrance to KPN Belgium in its intentions to claim subscribers from Telenet, VOO and Belgacom, however. In comparison to its 33 channels, SNOW's three major digital TV competitors offer over 70 channels each. Instead, the likeliness of SNOW succeeding as a competitor against these operators will depend on whether there is demand for a lower-tier triple play service in Belgium. SNOW may also be thinking to the future and a possible expansion onto cable. Belgium is considering 'open cable' regulations, proposed by Belgium's three telecommunications regulators, which could come fully into force during 2013. This regulation requires Telenet and VOO to provide access to its cable networks, and would potentially open up the Belgian TV market to even more competition. At present a consultation evaluating reference offers from Telenet and VOO is in progress.