Virgin Media 2012 Annual Report Download - page 13

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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.
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 has been
launched by YouView, a joint venture which includes Arqiva, BBC, BT, Channel 4, Channel 5, ITV and TalkTalk. The
full consumer launch of YouView occurred in the third quarter of 2012 with consumers able to purchase a box from
retailers or get a free subsidized box as part of a bundled package (TV, Broadband and Calls) with providers BT and
TalkTalk.
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+”. A new range of Internet
connected DVRs under the brand "Freetime" offering access to popular catch-up TV services were launched in
September 2012.
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 terminated ATV transmission on October 24, 2012. As a result, the DTT signal and network has
been strengthened enabling DTT to be made available to customers that cannot currently receive a signal. In the future
this may also provide additional capacity to allow the Freeview channel line-up to be expanded to include new channels.
Consumers wishing to receive television services now have to convert to DTV.
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 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, EE, 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”.
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