Virgin Media 2007 Annual Report Download - page 10

Our Business
Cable Segment
In our Cable segment, we provide our services to residential consumers and business customers.
Consumer
We provide television, internet (broadband and dial-up) and fixed line telephone services under the
Virgin Media brand to residential customers in the U.K. Our services are distributed principally via our
wholly-owned, cabled, local access communications network and are available to an addressable market
of approximately 12.6 million homes. The network covers parts of many major metropolitan areas in
England, Wales, Scotland and Northern Ireland. In addition, we provide broadband and telephone
services to residential customers outside of our network via access to other telecommunications
networks, which we refer to in this annual report as ‘‘off-net’’. We also provide Virgin Mobile services
both on a pre-paid pay-as-you-go basis or on a contractual basis. Increasingly, we seek to grow our
mobile customer base by selling to our existing Virgin Media customer base. See ‘‘Mobile Segment’’
below.
Our Network Advantage
We believe that our deep fiber local access communications network provides us with several
competitive advantages in our addressable markets:
• Virgin Media, uniquely, has fiber already deployed to street cabinets. From there, our twin cable,
consisting of both high capacity coaxial cable and twisted copper-pair elements, provides us with
the flexibility to deliver broadband services over either or both coaxial or copper cables.
Currently, we provide our broadband internet services over coaxial cable, which we believe
allows us to provide a superior broadband experience to our customers as our network has fiber
generally closer to a customer’s home than BT or our other competitors who use BT’s access
network. BT’s access infrastructure is copper pair technology over which broadband speeds can
significantly diminish with distance from the local exchange. In 2008, we plan to use our
advantage to offer increasingly faster broadband services.
• It provides real two-way interactivity with residential customers who are connected to the
network, which enables us to offer video on demand services through the set-top box.
• It enables us to provide true ‘‘triple-play’’ bundled services of television, broadband, and fixed
line telephone services to residential customers in our franchise areas without relying on another
service provider or network.
In contrast:
• Direct to home satellite service providers do not have the capacity to offer two-way interactivity
except by adding a phone line from another service provider or other cable facility.
• Communication service providers today have only a limited capacity to provide video over
existing DSL technology, using BT’s access network, without significant capital investment in
their network.
Multi-Service Bundles
Virgin Media was the first U.K. provider of a residential ‘‘triple-play’’ offering of television,
broadband and fixed line telephone services. Our packaging and pricing are designed to encourage
residential customers to purchase multiple services from us and we frequently offer discounts to
customers taking two or more products from our portfolio. As of December 31, 2007, more than 79%
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