Virgin Media 2007 Annual Report Download - page 20

•Carphone Warehouse Group plc. Carphone Warehouse resells mobile phone services (including
Virgin Mobile) via its own retail distribution channels and offers fixed line telephone and
broadband services under its TalkTalk brand. During 2007, Carphone Warehouse continued to
pursue an aggressive pricing policy by introducing a cheaper TalkTalk fixed telephone line and
broadband bundle and offering free laptops with AOL broadband.
•Tiscali S.p.A. Tiscali offers fixed line telephone, broadband and, following the acquisition of
Video Networks Limited in 2006, IP-based television services. During 2007, Tiscali acquired
Pipex Communications plc, which consisted of several smaller retail broadband internet service
providers, such as Bulldog and Toucan. Tiscali’s IP-based television service was re-launched in
2007 under the brand name Tiscali TV and offered as part of an aggressively priced bundle. In
2007, Tiscali also introduced a free line rental bundle which was available in selected areas.
•Orange. Orange offers a triple play of mobile phone, fixed line phone and broadband services.
During 2007, Orange entered the fixed line telephone market, having previously only offered
VoIP calls, by offering the service as part of a bundled package.
•Vodafone and O2. Vodafone launched a fixed line and broadband package in early 2007.
Following the acquisition of Be Internet in 2006, O2 launched a broadband service in late 2007.
Cable Television
We compete primarily with BSkyB in providing pay DTV to residential customers in the U.K.
BSkyB is the only pay-satellite television platform in the U.K. and has a high market share of the U.K.
pay television market. BSkyB owns the U.K. rights to various sports and movie programming content
which it has used to create some of the most popular premium pay TV channels in the U.K. BSkyB is
therefore both our principal competitor in the pay television market, and an important supplier of
premium television content to us. The Office of Fair Trading, a U.K. regulatory agency which we refer
to as the OFT, has previously determined that BSkyB is dominant in the wholesale supply of channels
carrying certain premium sports content and premium movies. Subject to a continuing finding of
dominance, European and U.K. competition laws prevent BSkyB from abusing its market position in
relation to the supply of these channels to us. Even so, we believe that the current terms for this
content are not reasonable and should be improved. We currently trade on BSkyB’s rate card terms
and pricing for their premium movie and sports channels. These terms can be changed by BSkyB on
45 days’ notice. Additionally, BSkyB has refused to supply us certain enhancements to these services,
such as High Definition TV content, some sports programming offered via ‘‘red button’’ functionality
and other ‘‘red button’’ functionality features.
Residential customers may also receive digital terrestrial television, or DTT. Digital signals are
delivered to customer homes through a conventional television aerial and a separately purchased
set-top box or an integrated digital television set. The free-to-air DTT service in the U.K. is branded
Freeview. This service is provided by a consortium of operators, including the BBC, and offers
customers a limited range of television channels, which include the traditional analog channels.
Customers do not pay a monthly subscription fee for basic Freeview service but must acquire a
Freeview enabled set-top box or a television with a digital tuner. During 2007, according to the Office
of Communications, or Ofcom, Freeview became the U.K.’s most popular digital television service.
Other developments included the launch of a new range of Freeview digital television recorders under
the brand ‘‘Playback’’. BSkyB has also announced its intention (subject to an Ofcom consultation) to
remove its free channels (Sky News, Sky Sports News and Sky Three) from Freeview and to substitute
pay channels in their place.
Top Up TV is a pay television service offering selected programs from over twenty pay television
channels for a fixed fee to subscribers who otherwise receive Freeview and have purchased a
Top Up TV digital video recorder.
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