01 Jul 1999

Barclay Knapp takes great exception when you call NTL a cable company.

Even though the company formerly known as CableTel has its roots in UK cable TV and is one of the 'big three' operators next to TeleWest and Cable & Wireless Communications (CWC). And, of course, it is likely to play a big part in the consolidation of the UK cable business.

In fact, several commentators, myself included, think that it would be a good thing if NTL took the lead seat of any UK cable consolidation.

Like BSkyB, NTL never approached the pay-TV business as an engineering project. Sure, it recognised the value of the cable pipes, but the focus has been on what services those pipes can bring and how to make those services attractive to consumers. It is not into saying 'oh what a big, beautiful pipe company we are!'

Maybe this approach is why NTL scores the highest TV penetration rate in UK cable, with 28.1 per cent subscribing, according to UK broadcast regulator the ITC. However, NTL also has the lowest pay-to-basic ratio of the big three operators at 103.1 per cent. Point. But its idea is to sign them up first and worry about upgrading them later.

NTL's approach has always been to think bigger. It will launch full-service digital cable on all its systems on 1 September, a much faster roll-out than those planned by CWC and TeleWest. The company hopes to sign up 250,000 digital subs by mid-2000, a figure that could put cable subscriptions in the UK ahead of satellite subscribers for the first time. On the call and telephony side, NTL has announced what for UK telco BT is unthinkable, national call rates. The plan is to also offer them outside of NTL cable franchises.

Back in March, before its digital launch was announced, NTL turned on a nationally-available consumer interactive package with brand names like supermarket chain Tesco and broadcaster Discovery Networks. Today, this service uses a set-top box and the phone line. But the Internet-like content delivered to the TV will be rolled out on digital cable and also later this year as part of an NTL-branded digital terrestrial TV service.

NTL has been thinking big for a while. It bought the UK terrestrial transmission network three years ago and now counts ITV, Channel 5 and Channel 4, as well as mobile phone network Orange, AT&T and Virgin, as clients. The network provides a national transmission backbone for TV and telephone services.

Clearly seeing the advantages, earlier this year NTL bought the national transmission business in Australia. And Knapp says that he has his eyes on several more transmission privatisations coming up over the next months in Germany, Italy and the Netherlands.

This international approach also singles NTL out from its fellow UK cable operators. Besides cable in the UK, NTL has purchased a French cable system and has become the main cable player in Ireland, with the purchase of the 360,000 subscriber Cablelink system for about £450 million.

NTL raised hackles among other bidders because it offered 15 per cent more than the highest rival offer. In retrospect, Knapp says that the price was worth the asset - classic Knapp. The man who made his business mark in a US cellular firm, knows his way around financial circles. If he thinks it fits the strategic plan, he'll find a way to finance it.

He plans to fund future transmission acquisitions by setting up a separate listed company that he can borrow against.

"If you asked ten different people what NTL is you would probably come up with ten different answers, but that was actually part of the plan from the beginning," says Knapp. His vision is of a digital transmission centre in the UK that will programme and control cable networks across Europe and give NTL a cat-bird seat in discussions with programmers, media companies and other distributors as they position themselves to offer services to the expanding market for integrated communications. He calls his relationship with customers a "virtuous circle" where NTL provides transmission services for everything from one-way content like TV channels to data and telephone traffic.

Knapp plans to move NTL more into mobile communications as well. He considers not owning mobile assets as a "hole" in the company plan, particulalry as the next generation 3G mobile phones will be more like interactive content devices, than a mobile way to make phone calls. Knapp knows better that anyone that with all its moving parts, NTL is complicated to explain.

He also knows that as the communications world gets more complex those companies with high-profile brands will stand out.

To that end, NTL is spending £40 million on a re-branding effort in the UK, changing the colours of its logo from red and green to a more 'groovy' purple and green. Using lower-case letters for NTL also gives it an 'Internet-like' feel and seems to beg a .com.

The TV-brand campaign is in gritty black and white and features a man being chased into a warehouse by a car full of hoodlums, intent on beating him up with a bat. Using on-screen drawing typically seen in football matches to explain which player is going where on the pitch, the fleeing man is circled and identified as 'you' and the hoods are labeled 'all that new technology.' Suddenly a ball labelled 'NTL' drops in front of the fleeing man. The mood breaks and instead of beating 'you' up, the hoods start playing a ball game with 'you' as pitcher. The clever tag line? 'NTL: technology tamed.' Even NTL admits that the ad' doesn't say much about what NTL does, but it's not really meant to. It's all about saying NTL is friendly and helpful in a hostile world.

Positioning a company in what Knapp calls "all that technology stuff" is becoming increasingly complex and competitive. Another player with grand ambitions is United Pan-European Communications (UPC), which is also building and buying European networks and positioning itself in the Internet space as well. Maybe UPC is easier on the ear than NTL. After all, NTL stands for National Transmission Ltd, which the company has outgrown as much as CNN and AT&T have outgrown their original names. Can you remember what they were?