Virgin Media 2006 Annual Report Download - page 20

meters) provide a structural advantage over traditional all copper local distribution networks (which are typically up to 5,000 meters)
in delivering very high−speed data services (for example 20Mbps ADSL2+ services).
Because of the extensive use of fiber in our access networks, we are also able to provide high speed ethernet services directly to
business customers and provide nationwide area networking to these customers via our core networks.
We have a variety of alternative methods to connect our national telecommunications network over the “last mile” to the
premises of those customers that are located outside of our cabled areas. We:
• obtain permits to construct telecommunications networks and build−out our network to reach our customers. Although this is
often the most costly means of reaching a customer, the expense can be justified in the case of larger customers, or where a
significant level of traffic is obtained from a customer; and
• lease circuits and DSL connections on the local networks of other service providers to connect to our customers’ premises.
Although this may reduce the operating margin on a particular account, it requires significantly less capital expenditure than a
direct connection and can often be put into place relatively quickly, and can be replaced with a direct connection at a later date
if traffic volumes justify doing so.
Nationally, approximately 94% of the homes passed by our cable network can receive all of our broadband, digital television and
fixed line telephone services. We cannot however currently provide all three of the main services on some older parts of the network.
In 2006, we continued a cable network upgrade program targeting more than half a million homes in the London area, where there was
an older, less robust cable network. Approximately 239,000 of the London homes were upgraded during 2006, compared to 230,000 in
2005. These homes can now be offered broadband, interactive digital television and fixed line telephone services. Approximately
80,000 further homes will also be able to receive these services when the upgrade program completes in the middle of 2007.
Our mobile telephone services are provided over cellular networks owned by third parties. Our main mobile network provider is
T−Mobile. We also use networks owned by other partners to provide some ancillary services. T−Mobile currently operates 2G, 2.5G
and 3G networks in the U.K.
Information Technology
We outsource and internally manage the operation and support of our information technology systems. These systems include
billing, enterprise resource planning, business intelligence, corporate network, payroll, data center and desktop infrastructure.
Although we outsource a portion of our information technology systems to various suppliers, we retain control of the information
technology activities that are fundamental to our competitive advantage and key to the development of our intellectual property.
We are in the process of integrating our key information technology systems and are focused on improving the operational
efficiency of our systems. The first legacy billing system migration of 1.6 million customers was completed successfully in
December 2006. Work will progress to bring merger integration activities to completion through the course of 2007, with key
milestones being the second and third legacy billing system conversions presently scheduled for the second half of 2007, the
completion of the enterprise resource planning integration across all finance and human resource functions in April 2007 and the final
stage of the corporate network integration in March 2007.
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Source: VIRGIN MEDIA INVESTM, 10−K, March 01, 2007