Virgin Media 2009 Annual Report Download - page 19

business intelligence, corporate network, payroll, data center and desktop infrastructure. We are also
continuing to decommission or consolidate a number of diverse software applications and hardware
platforms in order to reduce our dependency on high cost external support and management services.
In 2009, we also completed the in-sourcing of services from one of our outsourced providers, as part of
our plan to consolidate systems and partners.
Competition
Consumer Segment
We face intense competition from a variety of entertainment and communications service
providers, which offer comparable broadband internet, television, fixed line telephony and mobile
telephony services. In addition, technological advances and product innovations have increased, and will
likely continue to increase, the number of alternatives available to our customers from other providers
and intensify the competitive environment. See ‘‘Risk Factors—We operate in highly competitive
markets.’’ However, we believe that we have a competitive advantage in the U.K. residential market
due to the superior technical capabilities of our cable network over the network of the incumbent BT,
which many of our competitors rely on to provide their services. We also face intense competition in
the mobile telephony market, primarily driven by increased pricing pressure from both established and
new service providers, evolving customer needs and technological developments.
We offer most of our products on a stand-alone basis or as part of bundled packages designed to
encourage customers to subscribe to multiple services. We offer broadband internet, fixed line
telephony and mobile telephony and data services throughout the U.K., and currently offer television
services exclusively in areas served by our cable network. Key recent developments among our primary
competitors include:
•BT Group plc. BT offers fixed line telephone, broadband and IP-based television services. In
2009, BT commenced roll-out of fiber-based broadband, with coverage expected to reach up to
four million homes by the end of 2010, and in aggregate up to 10 million homes by 2012. While
the full implementation of this £1.5 billion program has been made subject to the continued
existence of favorable regulatory conditions, it is intended to deliver a range of services using a
mixture of fiber-to-the-premise or fiber-to-the-cabinet technology, to approximately 2.5 million
homes and 7.5 million homes, respectively. During 2009, BT began offering customers within
enabled areas broadband download speeds of up to 20 Mbps via next generation Asymmetric
Digital Subscriber line, or ADSL2+, technology. BT also continued to expand its library of on-
demand programming through a number of agreements with content partners for its IP pay
television service, BT Vision.
•British Sky Broadcasting Group plc. BSkyB, an established competitor in the pay television
market, offers aggressively discounted triple-play bundles of broadband, television and fixed line
telephone services. BSkyB currently has a limited ‘‘push’’ VOD service, branded Sky Anytime,
pursuant to which content is downloaded to compatible DVRs overnight, but has announced its
intention to launch a ‘‘pull’’ VOD service in 2010, which will allow BSkyB to provide a real-time
VOD offering. In 2009, BSkyB focused its marketing campaigns heavily on the benefits of HD
television and began offering its HD-enabled DVR to subscribers at a substantially reduced cost,
or free of charge. In 2010, the BSkyB HD DVR was available free of charge with its basic
television package. BSkyB has also announced its intention to launch a three-dimensional, or
3D, television channel in 2010.
•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. In July 2009, TalkTalk completed the acquisition of
Tiscali’s U.K. broadband business, making it the U.K.’s largest residential broadband provider.
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