Virgin Media 2012 Annual Report Download - page 12

11
Marketing, Sales and Customer Service
Our consumer marketing strategy focuses primarily on bundled offerings of digital products and services across our
“quad-play” portfolio to existing and prospective customers. We are focusing on those customers and prospective
customers who reside in premises at which our cable services are already available, most of whom are not yet mobile
telephone customers. Our bundling strategy provides our customers with discounts and additional value added services
when they buy our services. We also provide the convenience of a single bill for “triple-play” (TV, broadband and fixed
line telephony) packages and additional value to these customers when they take our mobile services. We believe
that customers who subscribe to multiple services from us are less likely to churn. We also actively pursue opportunities
to cross-sell complementary services across our product range and up-sell higher value services to our existing
customers.
We offer our consumer products and services through a broad range of retail channels, including via inbound and
outbound telesales, customer care centers and online. We also engage in direct face-to-face marketing initiatives
through a dedicated national sales force of approximately 350 representatives, as well as comprehensive national and
regional mass media advertising initiatives. We now have a significant national retail store base with approximately
79 retail stores and over 65 kiosk type retail outlets which offer a complete range of our consumer products and
services. Our stores not only provide sales services but also showcase our products, allowing demonstrations and
customer interaction, and help resolve customer queries.
We offer our prepay mobile telephony products through over 4,000 third party sales outlets in the U.K., including over
1,000 specialist outlets of our distribution partners, such as Carphone Warehouse and Phones 4U. In addition, we
offer SIM-only products and mobile airtime vouchers through independent retailers across the U.K.
We believe that effective customer service contributes to customer satisfaction, which in turn results in reduced churn
and acquisition of new customers. As of December 31, 2012, we employed approximately 2,200 staff in our cable and
non-cable call centers, which includes the in-sourcing of one of our U.K. call centers in April 2012 that resulted in an
additional 700 staff, and approximately 500 staff for our mobile telephony call centers, in the U.K. We also use
outsourced call centers in the U.K., the Philippines, India and South Africa.
Consumer Segment Competition
We face intense competition from a variety of entertainment and communications service providers, which offer
comparable broadband internet, television, fixed line telephony and mobile telephony services. In addition,
technological advances and product innovations have increased, and are likely to continue to increase the number of
alternatives available to our customers from other providers and intensify the competitive environment. See “Risk
Factors-We operate in highly competitive markets.”
We believe that we have a competitive advantage in the U.K. residential market due to the superior technical capabilities
of our cable network over the network of BT which many of our competitors rely on to provide their services.
We also face intense competition in the mobile telephony market, which is primarily driven by increased pricing pressure
from both established and new service providers, evolving customer needs and technological developments.
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.
Our primary competitors are BT, British Sky Broadcasting Group plc, or BSkyB, TalkTalk Telecom Group plc, or TalkTalk,
Vodafone, EE 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 having reached around 13 million homes by
the end of 2012. During 2012, 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 Spring 2012, more than 18 months ahead of their original schedule and within
the guided spend of £2.5bn. BT is rolling out fiber primarily using Fiber-To-The-Cabinet, or FTTC, technology. From
June 2013 BT Openreach will launch its Fiber-to-the-Premises, or FTTP, On-Demand product, allowing operators to
offer FTTP with speeds of up to 330Mb in areas already enabled to FTTC.
Companies such as BSkyB, TalkTalk, EE 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
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