Virgin Media 2011 Annual Report Download - page 18

Residential customers may also access digital television content by means of internet protocol television, or
IPTV. BT Vision, a combined DTT and VOD service offered by BT over a DSL broadband connection, is
available throughout the U.K. BSkyB also offers live streamed TV and VOD services over a broadband
connection, through its Sky Anytime+ and Sky Go services. In addition, Netflix, Lovefilm, Google Apple and
others have launched IPTV products.
The U.K. government will terminate ATV transmission on October 24, 2012. Consumers wishing to receive
television services will have to convert to DTV, currently available via cable, digital satellite, DTT or DSL.
When ATV transmission is terminated, the DTT signal and network may be strengthened. This will enable DTT
to be made available to customers that cannot currently receive a signal. It may also provide additional capacity
to allow the Freeview channel line-up to be expanded to include new channels.
The communications industry is constantly evolving and there are a number of new and emerging
technologies which can be used to provide video services that are likely to compete with our DTV and VOD
services. These include the DSL services mentioned above and next generation long term evolution, or LTE,
services. We expect continued advances in communications technology and in content, such as 3D TV.
Fixed Line Telephony
We compete primarily with BT in providing telephony services to residential customers in the U.K. BT
occupies an established market position as the former state provider. We also compete with other
telecommunications companies that provide telephony services directly, through LLU, or indirectly. These
include TalkTalk and BSkyB, and mobile telephone operators such as O2, Everything Everywhere, Vodafone
and 3 UK.
We compete with mobile telephone networks that offer consumers an alternative to fixed line telephone
services. Mobile telephone services also contribute to the competitive price pressure on fixed line telephone
services. See also “Risk Factors—Risks Relating to our Business and Industry—Our fixed line telephony
business is in decline and not likely to improve”.
In addition, we face competition from companies offering VoIP services using the customer’s existing
broadband connection. These services are offered by independent providers, such as Vonage, magicJack and
Skype, as well as those affiliated with established competitors such as BT and Everything Everywhere. These
services generally offer free calls between users of the same service, but charge for calls made to fixed line or
mobile numbers either on a flat monthly rate for unlimited calls (typically restricted to geographic areas) or based
on usage. We also face competition from the growth in online communication through social networking sites
such as Facebook and Twitter which has contributed to declining use of telephony services.
Mobile Services
In the mobile telephony market, we face direct competition from mobile network operators, or MNOs, such
as O2, Everything Everywhere, Vodafone and 3 UK, and other Mobile Virtual Network Operators, or MVNOs,
such as Tesco Mobile, Lebara, TalkTalk and ASDA. We also compete with fixed line telephone operators and
VoIP providers. The proposed auction of the 2.6GHz and 800MHz spectrum at the end of 2012 may introduce
new competitors into the market or strengthen the position of existing competitors.
We also face competition from companies offering VoiP services and from the growth in on-line
communication, as described in “Fixed Line Telephony” above.
Business Segment
The U.K. business telecommunications market is characterized by strong competition and ongoing
consolidation. Competition in the U.K. business telecommunications market continues to be value driven, with
the key components being quality, reliability and price.
17