Virgin Media 2009 Annual Report Download - page 29

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. In 2009, we upgraded the conditional access system which we use to
encrypt pay television and broadband services transmitted to our customers. However, increasingly
sophisticated means of illicit piracy of television and broadband services are continually being
developed, including in response to evolving technologies. Billing and revenue generation for our pay
television and broadband services rely on the proper functioning of our encryption systems. While we
continue to invest in measures to manage unauthorized access to our networks, any such unauthorized
access would result in a loss of revenue, and any failure to respond to security breaches could raise
concerns under our agreements with content providers.
We rely on third-party suppliers and contractors to provide necessary hardware, software or operational
support.
We rely on third-party vendors to supply us with a significant amount of customer equipment,
hardware, software and operational support necessary to operate our network and systems and provide
our 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 is unwilling or unable to offer us competitive prices
or to provide the equipment, software or support that we require. We are also exposed to risks
associated with the potential financial instability of our suppliers, some of whom have been adversely
affected by the global economic downturn. If our suppliers were to discontinue certain products, were
unable to provide equipment to meet our specifications, seek to charge us prices that are not
competitive or interrupt the provision of equipment or services to us, whether as a result of bankruptcy
or otherwise, our business and profitability could be materially adversely affected.
We also rely upon a number of third-party contractors to construct and maintain our network and
to install our equipment in customers’ homes. Quality issues or installation or service delays relating to
these contractors could result in liability, reputational harm or contribute to customer dissatisfaction,
which could result in additional churn or discourage potential new customers.
We are licensed to use the ‘‘Virgin’’ name and logo but do not own it.
We use the ‘‘Virgin’’ name and logo in connection with our corporate activities and the activities of
our consumer, business and a large part of our content operations under a 30-year license agreement
with Virgin Enterprises Limited. The use of the Virgin name and brand carries various risks, including
the following:
• we are substantially reliant on the general goodwill of consumers towards the Virgin brand.
Consequently, adverse publicity in relation to the Virgin Group or its principals, particularly
Sir Richard Branson, who is closely associated with the brand, or in relation to another Virgin
name licensee, could have a material adverse effect on our business;
• the license agreement expires in April 2036 (subject to renewal on terms to be agreed) and we
are obligated to pay a termination payment if the license is terminated early under certain
circumstances; and
• we are required to meet certain customer service level requirements.
The service level requirements are grouped into three key categories: (i) Base Service Levels
which, in addition to ensuring that employees are fully-trained, competent, courteous and respectful, set
basic standards against which to measure complaint handling, complaint levels and call center
performance; (ii) Technical Service Levels which measure certain technical requirements that affect our
customers’ experience, such as service availability and service response times; and (iii) Aspirational
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