Consolidation in Cable and Mobile Is Key: Fries

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Jan. 24 (Bloomberg) – Liberty Global CEO Michael Fries discusses consolidation in the international cable television landscape and regulatory challenges facing Europe at the World Economic Forum in Davos, Switzerland on Bloomberg Television’s “Market Makers.” (Source: Bloomberg)

To what extent are netflix and other services a long-term threat to the cable business?

They do a lot of things well.

They have shown us consumers care about functionality.

They care about ease of use, user interface, being able to move content from one device to another.

The content is the same as we have on television.

Sometimes less.

Sometimes a lot less.

We are learning if woodbridge the functionality gap, which we have done in europe with verizon -- we are learning if we bridge the functionality gap, which we have done in europe with horizon, that you will hang onto them because we provide all the content.

That is the lesson we have learned.

Netflix will get a customer base.

Remember, in europe, video is cheap.

In the u.s., it is $120. we come from a different history.

Our programming costs are less.

If you watch european t.v., you will realize why it is cheap.

Our broadband speeds are faster.

We offer all content available.

Our bundles look the same but our prices are lower.

We do not have espn and he is programming costs driving the video rates up.

We are not that expensive.

The underbelly is not as soft as in new york.

What is the challenge in the market?

We always have regulatory challenges, even though europe is one market and brussels is supportive of our industry.

We have national regulators to contend with.

They all have their own perspective.

Sometimes they have ownership in telecom, so regulatory issues are always front and center for us.

Just today, a company said there are talks underway for u2 by the rest of the company is progressing.

What does that mean?

I think discussions are progressing.

I is it taking so long?

I cannot say much more.

They are a public company.

They have their issues to do with.

We are a happy shareholder.

We are in discussions with them, but these things take time.

Give us a sense of how you feel about the prospects of things coming together.

Should we assume based on what we know it will wind up in a happy place?

A good question.

I cannot say more.

There is industrial logic to put together cable operators in one country.

Our businesses need to be national.

Consolidation is needed.

It will happen across europe in cable, mobile.

It is inevitable.

Is consolidation necessary?

Ziggo said higher marketing costs will eat into profitability next year.

Is that a phenomenon you see?

Not necessarily.

Consolidation is needed because europe has too many operators.

The u.s. has three or four.

You have 110 or something in europe.

Do you need five mobile operators in one country, of a small size: for example -- hol land, for example?

We want a healthy environment for our ecosystem so.

We are supportive of consolidation it is going to happen.

What do you want to get out of this trip?

I meet with a lot of regulators and politicians.

I have met with the chief regulator or politician in almost every country we do business in.

We meet with our peers in the i.t. and telecom sector.

I am one of the governors so we get private sessions where we compare notes.

We do our own work.

We had a breakfast where we introduced a policy study we're doing trying to demystify the internet.

We always worry about the last mile and neutrality, but nobody is worried about the rest of the internet where content is originating.

That whole part of the web is going to be the most important topic in the next few years.

What do you mean?

We're building broadband networks everywhere.

Sometimes faster.

We cannot control how much content is coming into those networks.

Between connect points, content providers are flushing networks with capacity.

The manner in which it arrives and the way the data flows around the web before it gets to us is under stress.

If you could control, by virtue of pricing, what came in to the network and what speed?

We are not trying to control it.

We are trying to point out to everybody the way it works today is not necessarily going to guarantee the best experience down the road.

What is the alternative?

The alternative is to get closer.

Netflix and google are moving their content closer to our networks.

What do you mean?

Less of it has to travel from silicon valley to europe.

They are caching content.

That is an investment they determine they need to make to improve the expense of their consumers.

We are supportive of that.

You are supportive because they are bearing the cost and not you.

Sure.

We invest $3 billion a year in our networks.

20% of our revenue goes back into it.

Is the cloud killing it?

Not really.

Not at all.

We are all rely on the cloud more broadly.

He just -- it just means there needs to be sharing of cost.

Consumers will win in the end.

That is the main point.

The ceo of liberty global

This text has been automatically generated. It may not be 100% accurate.

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