Virgin Media 2007 Annual Report Download - page 22

broadband internet services) and mobile broadband may subject us to increased competition over time
in the provision of broadband services.
Fixed Line Telephone
We provide fixed line telephone services to customers who are within reach of our network by
direct connection to our network and, like our internet services, to customers off our network via BT’s
local access network. We compete primarily with BT in providing telephone services to residential
customers in the U.K. BT occupies an established market position. We also compete with other
telecommunications companies that provide telephone services, either directly through LLU or
indirectly, including Carphone Warehouse under the brand name TalkTalk, BSkyB, Tiscali, Orange and
Tesco.
We also compete with mobile telephone networks that may threaten the competitive position of
our networks by providing a substitute to fixed line telephone services. Mobile telephone services also
contribute to the downward price pressure in fixed line telephone services. Through our acquisition of
Virgin Mobile in July 2006, we now provide mobile telephony services to approximately 4.5 million
customers.
There is also competition from companies offering VoIP services using the customer’s existing
broadband connection. These include services offered by independent providers, such as Vonage and
Skype, as well as those affiliated with established competitors such as BT and Orange. These services
generally offer free calls between users of the same service, but charge for calls made to normal phone
numbers either on a flat monthly rate for unlimited calls (typically restricted to geographic calls) or on
a pence per minute rate.
Business
The U.K. business telecommunications market is characterized by strong competition and
comprised of traditional network operators such as BT and Cable & Wireless plc, or C&W, virtual
network operators such as Vanco plc, or Vanco, and systems integrators like Affiniti, a trading name of
Kingston Communications (Hull) Plc. While BT represents the main competitive threat nationally due
to its network reach and product portfolio, other providers compete within product and geographic
segments. Thus plc, Affiniti and COLT Telecom Group plc, for example, have network advantages
within certain regions.
Within retail markets, traditional competitors are becoming increasingly focused, with organizations
such as C&W, and Thus plc targeting the largest national and multi-national corporations. We continue
to focus on small, medium and large nationally oriented businesses where leveraging our network asset
can provide an economic advantage.
System integrators, or SIs, are also becoming an increasing competitive threat, as IT integration,
management and outsourcing begins to form an element of many larger organizations requirements.
ntl:Telewest Business seeks to address this as an opportunity to drive sales of access network, the
underlying infrastructure for integrated IT systems, and, in 2007, established an SI channel within the
Service Provider sales team.
In the future, further competition from mobile operators is expected, as they explore strategies to
enter the fixed line market with convergence propositions to our target customers.
Competition in the U.K. market continues to be based on value for money, the key components of
which are quality, reliability and price. Customers, particularly larger organizations that utilize the
network to enable business-critical applications and solutions, accept higher price points in exchange for
consistent delivery and performance against service level agreements.
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