Virgin Media 2011 Annual Report Download - page 25

emergence of new technologies, such as white space technologies (which uses portions of the old analog TV
spectrum), or the availability to our competitors of 4G spectrum and technology, may result in our core offerings
becoming less competitive or render our existing products and services obsolete. We may not be able to develop
new products and services, or keep up with trends in the technology market, at the same rate as our competitors
(or at all). The pace of change may be such that we fail to seize opportunities to become market disrupters or to
adequately respond to market disrupters. Any of these could lead to a decrease in our revenue, increased costs,
increased customer churn or a reduction in the rate of customer acquisition. This could have an adverse effect on
our business, financial condition, results of operations and cash flows. See also “Business—Competition”.
The cost of implementing emerging and new technologies could be significant, and our ability to fund that
implementation may depend on our ability to obtain additional financing. Similarly, the deployment of new
technologies in the spectrum frequencies in which we operate could have a material adverse effect on the existing
services offered by us, with a consequential material adverse effect on our businesses either through greater
competition or through interference with our customer premises equipment, or CPE.
Our fixed line telephony revenue is declining and unlikely to improve.
Fixed line telephony usage is in decline across the industry, with the rate of decline in lines used by
businesses being nearly twice as high as that in the residential fixed telephony market. There is a risk that
business and residential customers will migrate from using fixed line telephony to using other forms of telephony
such as VoIP, or mobile telephony. There is no assurance that our fixed line customers will migrate to our mobile
phones and they may eventually shift to other providers of mobile telephony services. Such a migration could
have a material effect on our results of operations, revenue and financial condition.
Adverse economic developments could reduce customer spending for our TV, broadband, and telephony
services and increase churn, either of which could therefore have a material adverse effect on our revenue.
A substantial portion of our revenue is derived from residential subscribers who could be impacted by
adverse economic developments in the U.K. Accordingly unfavorable economic developments such as a double
dip recession in the U.K. could negatively affect the affordability of and demand for many of our products and
services. Customers could elect to use fewer higher margin products and services or could turn to lower cost
products and services offered by other companies. For example, there may be increased reliance on Skype and
other free internet-based telephony solutions in lieu of our fixed and mobile telephony services, and there may be
an increased reliance on video streaming over the internet such as through Netflix, LOVEFILM, BBC iPlayer
and ITV Player instead of relying on our TV products and services. Such a consumer shift could in turn adversely
impact our ability to increase, or in certain cases, maintain our revenue levels.
A failure in our network and information systems could significantly disturb our operations, which could have
a material adverse effect on those operations, our business, our results of operations and financial condition.
Certain network and information systems are critical to our business activities. Network and information
systems may be affected by cyber security incidents which can result from deliberate attacks or system failures.
These may include, but are not limited to computer hackings, computer viruses, worms or other destructive or
disruptive software, or other malicious activities. Our network and information systems may also be the object of
power outages, fire, natural disasters, terrorist attacks, war or other similar events. Theft of metals is particularly
acute in the U.K. due to high prices for scrap metal, and our network is not immune to such thefts. Such events
could result in a degradation of or disruption to, our cable and non-cable services, could prevent us from billing
and collecting revenue due to us or could damage our equipment and data or could result in situations which
damage our reputation. Disruption to services could result in excessive call volumes to call centers which may
not be able to cope with such volume, which could have an adverse effect on our reputation and brand. Our plans
for recovery and resilience to such challenges may not be sufficient.
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