Virgin Media 2010 Annual Report Download - page 19

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 telephony, broadband and IP- based television services. In 2009, BT
commenced roll-out of fiber-based broadband, with coverage reaching four million homes by the end
of 2010, and in aggregate intended to reach up to 10 million homes by 2012. 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 2010, BT announced its
intention to extend its fiber roll out to reach around two-thirds of U.K. homes by 2015, with total spend
reaching £2.5bn. During the year BT Retail launched competitively priced fiber-based broadband under
the brand BT Infinity. In the summer of 2010, BT offered for the first time Sky Sports 1 and 2 on its IP
pay television service, BT Vision. Throughout the year we also saw BT adopt a strategy of discounting
its bundled packages of fixed-line, broadband and TV.
•British Sky Broadcasting Group plc. BSkyB, an established competitor in the pay television market,
offers discounted triple- play bundles of broadband, television and fixed line telephone services. In
2010, BSkyB focused its marketing campaigns heavily on the benefits of HD television and, from the
start of the year, its HD DVR was provided as standard with its basic television package to all new
customers. Towards the end of 2010, BSkyB started the roll out of its VOD service called Sky
Anytime+, which is available to customers with a HD box and Sky broadband subscription. On
October 1, 2010 BSkyB launched the U.K.’s first three-dimensional, or 3D, television channel.
•TalkTalk Telecom Group PLC. The Talk Talk group was created following a demerger from Carphone
Warehouse in March 2010. In the first quarter of 2010, the Tiscali brand, which it acquired in July
2009, was rebranded to TalkTalk. During 2010, TalkTalk continued to pursue an aggressive pricing
policy for its fixed telephone line and broadband bundle. In the final quarter of 2010, TalkTalk
launched both mobile and mobile broadband services following a MVNO agreement with Vodafone.
•Everything Everywhere. In 2010, France Telecom and Deutsche Telekom merged Orange U.K. and
T-Mobile U.K. as a 50/50 joint venture, incorporating Orange’s mobile telephony, mobile broadband,
fixed line telephony and broadband services and T-Mobile’s mobile telephony and mobile broadband
services. The joint venture has subsequently been rebranded as Everything Everywhere and is the
largest mobile provider in the U.K. In July 2010, Everything Everywhere Limited, or Everything
Everywhere, became the name of the company that runs Orange and T-Mobile in the U.K.
•O2. O2 offers mobile telephony, mobile broadband, fixed line telephony and broadband services. In
2010, O2 focused its mobile offering around smartphones, attractively priced SIM-only tariffs and its
customer loyalty program. O2 also continued its aggressive pricing strategy on its home broadband
packages and entered the fixed line telephony market in May 2010.
Broadband Internet
We have a number of significant competitors in the market for broadband internet services including BT,
which provides broadband internet access services over its own DSL network both as a retail brand and as a
wholesale service, and companies such as BSkyB, TalkTalk and O2, which are deploying their own network
access equipment in BT exchanges via a process known as local loop unbundling, or LLU. LLU allows an ISP to
reduce the recurring operating costs charged by BT by reducing the proportion of traffic that must travel directly
over BT’s network. LLU deployment requires a substantial capital investment to implement and requires a large
customer base to deliver a return on investment. Competitors may use new alternative access technology such as
fiber to the cabinet, which provides subscribers with significantly faster download speeds when compared to
traditional ADSL2+ connections.
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