Virgin Media 2010 Annual Report Download - page 12

infrastructure allows us to provide “triple-play” bundled services of broadband internet, television and fixed line
telephony services to residential customers in areas served by our network, without relying on a third-party
service provider or network. See “—Our Network” below for more detailed information relating to our network.
Furthermore, our network capacity is dimensioned to support peak consumer demand. Consequently, in
serving the business market, many aspects of the network can be leveraged at very low incremental cost given
that business demand peaks (and at lower levels than any consumer demand) at a time when consumer demand is
low. As such, Virgin Media enjoys economies of scope not realized by competitors who serve either consumer or
business segments but not both.
Consumer Segment
Cable Products and Services
We provide cable broadband internet, television and fixed line telephone services under the Virgin Media
brand to residential customers in the U.K. Our cable services are distributed via our wholly owned, local access
cable network. Our cable network covers parts of many major metropolitan areas in England, Wales, Scotland
and Northern Ireland. We offer our customers a choice of several packages and tariffs within each of our cable
product categories. Our bundled packaging and pricing are designed to encourage our customers to purchase
multiple services across our product portfolio by offering discounts to customers who subscribe to two or more
of our products. The types and number of services that each customer uses, and the prices we charge for these
services, drive our revenue. For example, broadband internet is more profitable than our television services and,
on average, our “triple-play” customers are more profitable than “double-play” or “single-play” customers. As of
December 31, 2010, 86% of our cable customers received multiple services from us and 63% were “triple-play”
customers, receiving broadband internet, television and fixed line telephone services from us.
Broadband Internet
We deliver high-speed broadband internet services to customers on our cable network. As of December 31,
2010, we provided cable broadband services to over 4 million subscribers. We continue to lead the UK market
for high-speed broadband, having introduced both 50 Mb and DOCSIS 3.0 rollouts in 2009. In December 2010,
the average speed experienced by customers on all tiers was above 90% of headline speed, and we commenced
an upgrade program to increase upstream speeds to a minimum of 10% of download speeds.
In December 2010, we launched download speeds of 100 Mb in limited areas, thus offering four tiers of
high-speed broadband service at download speeds of up to 10 Mb, 20 Mb, 50 Mb and 100 Mb. Our customers
within each of these tiers also benefit from unlimited downloads, subject to our fair usage and traffic
management policies, and advanced security software, including anti-virus and anti-spyware protection. Our
customers also benefit from our online data storage service, which allows our top tier subscribers to back-up,
store and share specified amounts of data and photographs online for no additional charge.
We operate a web portal, virginmedia.com, which offers a broad range of content, such as music, games,
movies and television programming. We also offer an online gaming channel. In January 2010, we also launched
a music channel offering streaming video content. Our customers are also able to access their email accounts and
customer care information through our website. We generate revenue from our website, primarily from
third-party advertising and search engines. We also use the website to cross-promote our product portfolio.
Television
We offer a wide range of television services to customers on our cable network. As of December 31, 2010,
we provided cable television services to approximately 3.78 million residential subscribers, of which
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