Virgin Media 2009 Annual Report Download - page 22

including Carphone Warehouse (TalkTalk), BSkyB, and mobile telephone operators such as O2,
Orange, T-Mobile, Vodafone and 3 UK.
We also compete with mobile telephone networks that offer consumers an alternative to fixed line
telephone services. Mobile telephone services also contribute to the competitive price pressure in fixed
line telephone services.
In addition, we face 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
fixed line or mobile numbers either on a flat monthly rate for unlimited calls (typically restricted to
geographic areas) or based on usage.
Mobile Telephony
In the mobile telephony market, we face direct competition from mobile network operators, or
MNOs, such as O2, Orange, T-Mobile, Vodafone and 3 UK, and other mobile virtual network
operators, such as Tesco Mobile, Lebara, Carphone Warehouse and ASDA. We also compete with fixed
line telephone operators and VoIP providers.
Business Segment
The U.K. business telecommunications market is characterized by strong competition and ongoing
consolidation. Competition in the U.K. business telecommunications market continues to be value
driven, the key components of which are quality, reliability and price.
Virgin Media Business competes primarily with traditional network operators, such as BT and
C&W. BT represents the main competitive threat nationally due to its network reach and product
portfolio. We also compete with regional providers, such as COLT Telecom Group plc, or COLT
Telecom, which have a strong network presence within limited geographic areas. Recently, we have
faced increasing competition from the launch of services by MNOs targeting small business customers.
Within retail markets, traditional competitors are becoming increasingly focused, with organizations
such as C&W targeting larger national and multi-national corporations. We continue to focus on small,
medium and large nationally oriented businesses and public sector organizations. SIs, such as Affiniti, a
trading name of Kingston Communications (Hull) Plc, are also becoming an increasing competitive
threat, as large organizations continue to focus on IT integration, management and outsourcing.
Content Segment
Virgin Media TV’s television programming competes with other broadcasters and its advertising
revenues are dependent on market share. Our most significant competitor in the content market is
BSkyB. Virgin Media TV competes for program rights with broadcasters transmitting similar channels.
As a result of this and competition for a limited number of well-known program rights, the price of
these program rights is increasing and could increase further, thereby limiting Virgin Media TV’s ability
to purchase that programming for transmission on its channels or adversely affecting the profitability of
its channels. UKTV, Virgin Media’s joint ventures with the BBC, could be affected by similar factors,
although this is less likely due to a ‘first look’ program agreement with the BBC.
Virgin Media TV’s advertising sales department, IDS, competes with the sales departments of
BSkyB, ITV, Channel 4 and Five. Consolidation in the advertising sales market could have an adverse
effect on IDS’s ability to sell advertising at attractive rates.
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