Virgin Media 2008 Annual Report Download - page 28

awards and continued the ongoing refurbishment and improvement of the working environment. We
also have a number of other ongoing engagement initiatives, including employee satisfaction surveys
and action plans, a recognition scheme, brand/culture training, and local charity and community
activities.
ITEM 1A. RISK FACTORS
Our business, financial condition or results of operations could be materially adversely affected by any
of the risks and uncertainties described below. Additional risks not presently known to us, or that we
currently deem immaterial, may also impair our business.
Risks Relating to Our Business and Industry
We are subject to significant competition.
The level of competition is intense in each of the markets in which we compete, and we expect
competition to increase. In particular, we compete with BT, BSkyB, Carphone Warehouse (Talk Talk),
Freeview, Freesat, O2, Orange, T-Mobile, Tiscali, Vodafone and 3 UK, each of whom has significant
operational scale, resources and national distribution capacity. We also compete with numerous internet
service providers and indirect telephone access operators that offer fixed line telephone and broadband
internet services over BT’s network. We will face increasing competition from mobile telephone
network providers and new market entrants, including those providing mobile broadband, VoIP and
IPTV services. The increase in competition will be compounded by technological changes and business
consolidation, which may permit more competitors to offer the ‘‘triple-play’’ of digital television, fixed
line telephone and broadband services, or ‘‘quad-play’’ bundles including mobile telephone services.
Our broadband service faces increased competition from BT, BSkyB, Carphone Warehouse
(TalkTalk), O2, Orange, Tiscali and others. Competitors may use new alternative access technology such
as advanced, faster asymmetric digital subscriber lines, or ADSL+2, to deliver higher speeds.
In the digital television market, we compete primarily with BSkyB in providing digital pay
television services. Competition increased as a result of the launch of Freeview, which provides over 40
digital terrestrial television channels on a free-to-air basis to consumers who have purchased a Freeview
digital set-top box or digital television recorder. Top Up TV subsequently launched a pay television
service offering approximately 120 programs from 19 channels for a fixed fee to subscribers who
otherwise receive Freeview and have purchased a Top Up TV set-top box. In May 2008, Freesat
launched HD channels, on a free-to-air basis to consumers who have purchased a Freesat digital
receiver or digital television recorder. BT has also launched a personal computer download service of
video-on-demand home entertainment content over a broadband connection called BT Vision. BSkyB,
Tiscali and others offer a similar service.
In the mobile telephony market, we face direct competition from mobile network operators such as
O2, Orange, T-Mobile, Vodafone and 3 UK, and other mobile virtual network operators, such as Tesco
Mobile, Carphone Warehouse and ASDA, in addition to fixed line telephone operators and internet
telephony providers. Many of our competitors are part of large multinational groups, have substantial
advertising and marketing budgets, have greater retail presence and may benefit from greater
economies of scale than we do. As a mobile virtual network operator, our per unit economies may
differ substantially from our competitors with their own networks, which may impact our ability to
compete.
Our fixed line telephony business competes with fixed line operators such as BT, telephone local
loop unbundlers such as Carphone Warehouse (TalkTalk) and BSkyB, and several mobile telephone
operators such as O2, Orange, T-Mobile, Vodafone and 3 UK.
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