Virgin Media 2011 Annual Report Download - page 17

Our primary competitors are BT, British Sky Broadcasting Group plc, or BSkyB, TalkTalk Telecom Group
PLC, or TalkTalk, Everything Everywhere and O2.
Broadband Internet
We have a number of significant competitors in the market for broadband internet services.
BT provides broadband internet access services over its own DSL network both as a retail brand and as a
wholesale service. BT is currently rolling out fiber-based broadband, with coverage reaching around six million
homes by the end of 2011 and expected to reach up to 10 million homes by the end of 2012. During 2011, BT
announced that it was bringing forward its fiber roll out to enable it to provide services to around two-thirds of
U.K. homes by 2014. BT is delivering a range of services using a mixture of fiber-to-the-premises or
fiber-to-the-cabinet technology.
Companies such as BSkyB, TalkTalk and O2 are deploying their own network access equipment in BT
exchanges via a process known as local loop unbundling, or LLU. This 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 asymmetric digital subscriber line, or ADSL2+, connections.
In addition to the increasing competition and pricing pressure in the broadband market arising from LLU we
may be subject to increased competition in the provision of broadband services from mobile broadband and
technological developments (such as long term evolution, or LTE, and 3G mobile technology) and other wireless
technologies, such as wireless fidelity, or Wi-Fi, and Worldwide Interoperability for Microwave Access, or
Wi-Max. In addition, BT has recently announced its intention to expand and accelerate fiber to the home
deployments which will allow its retail arm, and its wholesale customers, to offer higher speed broadband
services.
Cable Television
Our digital television services compete primarily with those of BSkyB, which is the only pay satellite
television platform in the U.K. and has a high market share of the U.K. pay television market. BSkyB owns the
U.K. rights to both standard definition, or SD, HD and 3D, as the case may be, versions of various sports and
movie programming content, which it has used to create some of the most popular premium pay television
channels in the U.K. BSkyB is both our principal competitor in the pay television market, and an important
supplier of basic and premium television content to us.
Residential customers may also receive digital terrestrial television, or DTT, which is delivered to customer
homes through a conventional television aerial and a separately purchased set-top box or an integrated digital
television set. The free-to-air DTT service in the U.K. is branded Freeview. This service is provided by a
consortium of operators, including the BBC.
BBC and ITV also offer a free-to-air digital satellite alternative to the Freeview DTT service, known as
Freesat. Freesat offers approximately 120 subscription-free TV channels, including selected HD channels such as
BBC 1 HD, BBC HD, ITV HD and Channel 4 HD. Freesat also offers a range of DVRs under the brand
“Freesat+”.
Content owners, online aggregators and television channel owners are increasingly using broadband as a
new digital distribution channel direct to consumers. A new free-to-air internet-connected TV service to U.K.
homes is being launched by YouView, a joint venture which includes Arqiva, BBC, BT, Channel 4, Channel 5,
ITV and TalkTalk. In 2011 it was confirmed that YouView would have a product in trial by the end of 2011, with
a full consumer launch planned in 2012.
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