Virgin Media 2008 Annual Report Download - page 32

In addition to providing programming to us, BSkyB competes with us by offering its programming
directly to its digital satellite customers. As a result of BSkyB’s ownership of this content, it is able to
charge us a price for its content that makes it challenging for us to compete with BSkyB’s own retail
pricing and still maintain a profit margin on the sale of that premium programming. BSkyB also offers
content, such as HD, some sports programming and interactive content, exclusively to its digital satellite
customers and not to us.
In addition to BSkyB, our significant programming suppliers include the BBC, ITV, Channel 4,
Five, Viacom Inc., HBO, Discovery Communications Inc. and Turner, a division of Time Warner Inc.
Our dependence on these suppliers for television programming could have a material adverse effect on
our ability to provide attractive programming at a reasonable cost. In addition, the loss of programs
could negatively affect the quality and variety of the programming delivered to our customers, which
could have a material adverse effect on our business and increase customer churn.
Unauthorized access to our network could result in a loss of revenue.
We rely on the integrity of our technology to ensure that our services are provided only to
identifiable paying customers. The number of devices available in the U.K. which facilitate theft of our
television and broadband service has increased. Unauthorized access to our network results in a loss of
revenue, and failure to respond to security breaches could raise concerns under our agreements with
content providers. We continue to work on controlling unauthorized access to our networks.
The sectors in which we compete are subject to rapid and significant changes in technology, and the effect of
technological changes on our businesses cannot be predicted.
The broadband internet, television, fixed line telephone and mobile telephone services sectors are
characterized by rapid and significant changes in technology. Advances in current technologies, such as
VoIP (over fixed and mobile technologies), mobile instant messaging, wireless fidelity, or WiFi, WiMax
(i.e., the extension of local WiFi networks across greater distances) or internet protocol television, or
future technological breakthroughs, may result in our core offerings becoming less competitive or
render our existing products and services obsolete. We may not be able to develop new products and
services at the same rate as our competitors or keep up with trends in the technology market as well as
our competitors. The cost of implementing emerging and future technologies could be significant, and
our ability to fund that implementation may depend on our ability to obtain additional financing.
We depend on equipment and service suppliers that may discontinue their products or seek to charge us prices
that are not competitive, either of which may adversely affect our business and profitability.
We have important relationships with several suppliers of customer equipment, hardware, software
and services that we use to operate our network and systems and transmit our services. We also
outsource various customer services. In many cases, we have made substantial investments in the
equipment or software of a particular supplier, making it difficult for us in the short term to change
supply and maintenance relationships in the event that our initial supplier refuses to offer us favorable
prices or ceases to produce equipment or provide the support that our network and systems require.
We are also exposed to risks associated with the potential financial instability of our suppliers, some of
whom are being adversely affected by the global economic downturn. If equipment or service suppliers
were to discontinue their products, seek to charge us prices that are not competitive or interrupt their
provision of equipment or services to us as a result of bankruptcy or otherwise, our business and
profitability could be materially adversely affected.
Furthermore, we rely upon a number of outside contractors to install our equipment in customers’
homes. Delays caused by these contractors, or quality issues concerning these contractors, could cause
our customers to become dissatisfied and could produce additional churn or discourage potential new
customers.
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