Virgin Media 2009 Annual Report Download - page 21

customers a limited range of television channels, which include traditional analog channels as well as
BBC HD and ITV1 HD. 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. Freeview also
offers a range of DVRs under the brand ‘‘Freeview+’’. Residential customers may also supplement
Freeview DTT offerings by subscribing to additional content through Top Up TV. Top Up TV is a pay
television service offering selected programs, which are typically downloaded to the set-top box
overnight, for a fixed fee to subscribers who receive Freeview and have purchased a Top Up TV DVR.
There is also a growing demand for full-length video content via broadband connections to the
personal computer. Content owners, online aggregators and television channel owners are increasingly
using broadband as a new digital distribution channel direct to consumers. In 2008, the BBC launched
an initiative know as Project Canvas, to develop technical standards to enable content typically accessed
via a computer on the internet to be delivered directly to the television. Project Canvas is intended to
provide an open platform, allowing any broadcaster to make its content available via Project Canvas
enabled set-top boxes. Participants in the Project Canvas joint venture include ITV, C4, Five, BT and
Talk Talk. If Project Canvas is implemented in its current proposed form, in which adoption of a
prescribed interface is a condition for competing platforms to use the ‘‘Canvas’’ brand, the availability
of a standardized broadband-enabled television platform may result in increased competition for pay
television broadcasters. In December 2009, the BBC Trust published a consultation on its provisional
decision to approve BBC’s participation in the project. We have responded to this consultation and are
proactively engaged with the BBC Trust and key policy makers to ensure that Canvas does not distort
effective competition.
BBC and ITV also offer a free-to-air digital satellite alternative to Freeview DTT service, known
as Freesat. Freesat offers approximately 85 subscription-free channels, including select high definition
channels such as BBC HD and ITV HD. Freesat channels are delivered to the home through a
separately purchased satellite receiver. Freesat also offers a range of DVRs under the brand
‘‘Freesat+’’.
Residential customers may also access digital television content by means of internet protocol
television, or IPTV. BT Vision, a combined DTT and VOD service offered by BT over a DSL
broadband connection, is available throughout the U.K. BSkyB also offers a VOD service over a
broadband connection, Sky Player TV, which provides live streamed TV and VOD on a subscription
basis.
The U.K. government has stated that it will terminate ATV transmission by 2012. Consumers
wishing to receive television services will have to convert to DTV, currently available via cable, digital
satellite, DTT or DSL. However, when ATV transmission is terminated, the DTT signal and network
may be strengthened. This will enable DTT to be made available to additional customers’ homes that
cannot currently receive a signal. It may also provide additional capacity to allow the Freeview channel
line-up to be expanded to include new channels.
The communications industry is constantly evolving and there are a number of new and emerging
technologies which can be used to provide video services that are likely to compete with our DTV and
VOD services. These include DSL services mentioned above and next generation LTE services. We
expect continued advances in communications technology and in content, such as 3D TV. As a result of
changes in technologies, consumer behavior, and in the regulatory and competitive environments, it is
difficult to predict how our operations and businesses may be affected in the future.
Fixed Line Telephony
We compete primarily with BT in providing telephone services to residential customers in the U.K.
BT occupies an established market position as the incumbent. We also compete with other
telecommunications companies that provide telephone services directly, through LLU, or indirectly,
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