Virgin Media 2011 Annual Report Download - page 10

This extends from the street cabinet to the customer’s home within reach of our access network by direct
connection to our cable network, allowing us to deliver high-speed broadband internet services without
degradation over distance. We believe that this deep fiber access provides us with several competitive advantages
in the areas served by our network. For instance, our cable network allows us to concurrently deliver downstream
broadband services, together with real-time television and video-on-demand content, or VOD, at higher speeds
and with less data loss than comparable services of other providers. Our competitors are reliant on the access
infrastructure of BT Group plc, or BT, which typically relies on copper-pair technology from the local exchange
to the customer’s home, which delivers an average of 5Mbit/s. BT is upgrading its infrastructure to provide data
services capable of higher speeds, using fiber-to-the cabinet technology, but service providers using BT’s
existing network are, and may remain, subject to capacity limits which can affect data download speeds. Our
cable network also offers benefits over the infrastructure of satellite service providers, which are unable to offer a
full array of interactive services in the absence of a fixed line telephone connection, using third party access
infrastructure. By contrast, our cable 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.
Our network capacity is dimensioned to support peak consumer demand. 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
has an advantage over 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, 2011, 86% of our cable customers received multiple services from us and 64% 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,
2011, we provided cable broadband services to over 4 million subscribers. We continue to lead the U.K. market
for high-speed broadband, having introduced both 50 Mbit/s and data over cable services interface
specification 3.0, or DOCSIS 3.0, rollouts in 2009 and having launched 100 Mbit/s in December 2010. In
December 2011, the average speed experienced by customers on all tiers was above 90% of headline speed, and
we are completing an upgrade program to increase upload speeds to a minimum of 10% of download speeds. In
January 2012, we announced a program to double the speed of our broadband, involving a significant investment
in network capacity and in the rollout of DOCSIS 3.0 wireless gateways. All our customers currently on 10
Mbit/s, 20 Mbit/s, 30 Mbit/s and 50 Mbit/s will see their headline speeds at least doubled under this program. In
January 2012, we also commenced a marketing campaign starring Usain Bolt to communicate this news to our
customers.
Today we have four tiers of high-speed cable broadband services. We offer download speeds of 100 Mbit/s
to more than 10 million homes, and more broadly offer download speeds of up to 10 Mbit/s, 20 Mbit/s, 30Mbit/s
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