Virgin Media shows off its new bundle of joy

UK multiplay operator Virgin Media has attempted to raise the stakes in the consumer and SME markets with some new products.

The consumer initiative involves bundling together everything Virgin Media offers and charging one price for it all. Not especially innovative in itself, but it seems to be the size of the bundle that Virgin thinks will be a differentiator. The ultimate manifestation of this latest effort is the VVIP bundle, that offers the fastest broadband Virgin does as well as an unlimited data mobile tariff.

“We’re combining the UK’s fastest widely available broadband speeds with a superfast 4G mobile network that’s faster on average than Vodafone, 02, Three and Sky, and a  top-notch TV line-up to give Virgin Media customers greater choice, flexibility and an unrivalled connected entertainment experience,” said Virgin Media’s Chief Operating Officer, Lutz Schüler.

VVIP comes in at £99 per month, but that’s only for the first year, after which it goes up to £139 per month. That deal is only available to new customers, which feels like an own-goal. It’s understood that customer acquisition is a priority but why not extend the same deal to your existing ones too? They probably could get it if they threatened to leave, but that’s a hassle and makes them feel exploited. This ‘new customer only’ tactic seems self-defeating and petty.

“A major overhaul in its bundles represent a renewed drive to kick-start the UK multiplay market,” said Telecoms and Media Analyst Paolo Pescatore. “This feels like multiplay v2.0 as most offers still rely on cross-selling additional services. The premium all singing and dancing bundle is very punchy compared to rivals in terms of value. This will put pressure on BT and Sky to integrate more services into a convergent bundle. More so given the huge focus on retention and reducing churn.”

On top of that Virgin has created a feature called ‘boost your bundle’, which seems similar in concept to super-sizing a fast food order except in this case you get things like mobile SIMs and increased broadband speeds instead of more chips and Coke. “With our boosted bundles, we’re offering the best of all worlds: a superfast 4G mobile network; even bigger broadband with ultrafast speeds – quicker than those included in our standard packages – and the option to spread the cost of the latest and greatest mobile handsets,” said Schüler.

Virgin Media's new bundles

Lastly Virgin is also trying to disrupt the SME broadband market with the launch of Voom 500, which claims to be the UK’s fastest of its kind with speeds of ‘up to’ (hasn’t that been banned?) 500 Mbps. “With a free upgrade to Voom 500 on offer for existing Voom customers when they take selected mobile or Cloud Voice services, our customers can stop worrying about their broadband and focus on using it,” said Rob Orr, Executive Director of Commercial Marketing at Virgin Media Business. Otherwise it will set you back £62 per month.

Virgin Media rumoured to be considering Openreach competitor

Virgin Media is sitting firmly in the middle of the rumour mill, with reports suggesting the team is considering opening-up its network as a wholesale connectivity competitor to Openreach.

For the majority of ISPs in the UK, there is very little option aside from working with Openreach. This position lead to a prolonged battle between Openreach parent company BT and the UK Government in an effort to separate the wholesale business from the group, and while the dust has settled, most feel the outcome is rather unsatisfactory. However, according to The Telegraph, Virgin Media is considering creating competition in this segment.

Should the move turn out to be true, it would be welcomed by many of the ISPs around the country. That said, Virgin Media and its parent company Liberty Media are keeping coy on the situation.

“We have the best broadband network in the UK and everyone knows it,” a spokesperson said. “We’re not surprised by this speculation but have no comment.”

While it is a slightly playful comment which will bring a smile to some faces, the firm has stopped short of out-rightly denying the report. This might lead some to believe there is an element of truth to the reports, others will simply suggest this is PR 101.

Although Openreach is still in an incredibly dominant position when it comes to the wholesale business, pockets of competition are emerging. CityFibre is leading the charge here, using an injection of funds from Goldman Sachs to built on its fibre footprint across the UK. CityFibre now has fibre infrastructure projects across 51 towns and cities, providing active and dark fibre services, most notably to Vodafone which is building its presence as an ISP.

The idea of emerging competition does seem to be spurring the sluggish Openreach into action, as the team has announced one million homes now fall into its fibre footprint. Openreach, and BT as the guiding hand, has often been criticised for lack of foresight when it comes to connectivity. For years, the team pursued fortunes via G.Fast while the industry was demanding fibre, with this inaction perhaps creating the fuel for the emerging competition.

While CityFibre still has the tag of a plucky outside bet, Virgin Media would certainly provide more food for thought. With 14.4 million homes passed throughout the UK, roughly 50% of households, it is a genuine alternative for ISPs who have nationwide ambitions.

We suspect such conversations are taking place behind closed doors in the Virgin Media offices. The UK infrastructure wholesale market is certainly primed for a shake-up, and Virgin Media has the footprint to capitalise.

Virgin Media gives some smarts to wifi

Virgin Media has unveiled a new, ‘intelligent’, router which it claims will bring faster speeds to more areas of the home.

With the telco world becoming increasingly utilitised, and advertising authorities rightly cracking down on the ‘creative’ marketing claims, new ideas will certainly be needed to capture the attention of the increasingly demanding consumers. And in fairness to Virgin Media, this is not a bad attempt.

“Delivering ultrafast broadband to help make Britain faster is what we do best at Virgin Media but making sure this translates into reliable in-home connectivity is just as important,” said Richard Sinclair, Executive Director of Connectivity at Virgin Media

“Intelligent WiFi will allow our customers to make the most of their broadband while also helping to easily overcome any connectivity conundrums around the home. With families using more devices than ever before, it’s vital they can all be online whenever needed. Whether it’s streaming UHD movies on Netflix, playing the latest games online or video conferencing, Intelligent WiFi has your back.”

Starting with the intelligence side of the router, should the software work the way it’s supposed to, this could prove to be a very interesting addition. Firstly, Channel Optimisation allows the router to choose the least congested channel to decrease the likelihood of traffic jams. Secondly, a Band Steering feature allows devices to switch between 2.4GHz or 5GHz frequency to optimise performance. Finally, Airtime Fairness suggests bandwidth will be allocated between devices depending on the demands of that device.

The term ‘intelligence’ is thrown around relatively flimsily nowadays, though should the performance of these features be at the desired level, this could prove to be a very useful product.

 

And while the ‘intelligence’ aspects are more likely to enthuse those consumers who are more geekily orientated, a new app to manage the wifi experience is answers a lot of the simple bugbears and first-world problems of connectivity.

One example is sharing wifi passwords. It might not seem like a revolutionary idea but being able to log into the app and simply send the wifi password to a friend or guest will save customers from the inevitable digging around behind the TV. This is not necessarily a feature which will win customers for Virgin Media, but enough of these little quirky features will improve the customer experience and loyalty.

Another area which the app addresses is ubiquitous connectivity. Being connectivity everywhere and all-the-time is a necessity nowadays, though consumers are becoming increasingly cash conscious. Through the app, Virgin Media customers can now connect to any Virgin Media wifi hotspots, of which there are 3.5 million around the UK.

Most importantly for Virgin Media, this take the brand outside of the customers home, and allows the company to support customers through the entire day. This is Virgin Media adding value into the customer’s lives, going beyond the assumed perimeters of a home broadband provider.

“UK consumers have an insatiable appetite for data across a wide range of devices that will continue to grow over time,” said Paolo Pescatore of PP Foresight. “As well faster download speeds, consumers want a better and reliable connection in all parts of their home. This is starting to be a highly sought after service among users.”

BT has been playing in this market for some time, which offers Virgin Media a blueprint for success. Patchy performance and an irritating log-in process perhaps gave the BT wifi play a bad name, though progress has been made across the public wifi space in recent years. Hopefully Virgin Media will have learned these lessons.

With connectivity increasingly heading towards the dreaded limitations of utility, it is becoming increasingly important for telcos to prove they can add value to other aspects of the customers life. This is certainly an interesting play from Virgin Media and should the features work, Virgin Media goes some way in proving it is more than just a utility.

What’s the point of Virgin Media’s latest broadband speed claim?

Virgin Media has claimed it can now deliver 8 Gbps broadband, but you have to ask whether there is any point aside from satisfying executive’s egos as the ‘faster than you’ mentality undermines the industry.

To be clear, Virgin Media is not the only telco that destabilises customer confidence and makes claims which are often twisted and contorted by their spin doctors, resulting in the miseducation trends of recent years, but they are the ones doing it today.

In Cambridgeshire, one of the UK’s technology hubs, Virgin Media is trialling what it describes as the ‘UK’s fastest home broadband’ service, with speeds exceeding 8 Gbps. This might sound fantastic and serves as an excellent means to distract onlookers from shortcomings elsewhere in the Virgin Media business, but why?

Why do customers need an 8 Gbps broadband connection? What services and applications could possibly be satisfied by such lightening speeds? In the future there might well be demand for such services, but right now there are arguably other things Virgin Media should be concentrating on.

This is the current issue with the telco industry on the whole, and why the telcos will struggle over the next couple of years; the obsession with ‘bigger, meaner, faster’ is unhealthy and is limiting the ambitions of the telcos themselves.

All of this comes back to the relationship with the customer. Every telco is obsessed with being the fastest around, as it is commonly believed this is what the customer wants, and therefore all messaging is geared around this ambition. Advertisements are flooded with imagery and claims which are unrealistic and more often than not, un-needed.

Instead of focusing on a single test which claims PR plaudits for hitting 8 Gbps in a very specific area of the UK, why not concentrate on delivering a more satisfactory service across the board? You correspondent used to be a Virgin Media customer and can assure you promised speeds were never met. The telco industry’s obsession with wowing the world with headline figures is compounding the misery of mistrust.

If Virgin Media wants to succeed in the broadband world and be more than a quirky challenger with a famous brand ambassador, it should aim to create a wonderful experience for all customers, not chase shallow headlines. This is of course a wonderful example of what is possible in the world of tomorrow, but customers are getting screwed today.

Customers don’t care what the maximum speed of a service is, as long as it is more than what is required for a good experience. If a household requires 50 Mbps to make everything work, does it really matter whether the top speed is 55 Mbps or 5 Gbps. All this obsession does is lure the majority of customers into a false promise of performance and create problems for the future.

Looking at the bigger picture, the telcos with a mobile offering are going to have to move away from this obsession with speed before too long. As it stands, customers who have a stable 4G connection can pretty much do anything they want. There are very few (if any) consumer applications which exceed the capabilities of 4G. And if there are, we suspect there are other factors involved.

This leads us onto one of the biggest questions telcos will face at Mobile World Congress in a couple of weeks’ time; how will they sell 5G to the consumer?

There are of course plenty of reasons to be excited by 5G, but as a consumer why would I be bothered? The applications which will require 100 Mbps or more are not widely available on smartphones, while few connect laptops to the internet outside of wifi. We strongly suspect telcos will market 5G on the grounds of ‘faster is better’, but most will look at the premium and likely decide they have fast enough.

Virgin Media’s 8 Gbps broadband trial is perfectly representative of the industry we work in today. While there is always a need for progress, there are more cogs spinning in the machine than just the speed one.

The unhealthy obsession with ‘bigger, meaner, faster’ is falsely reinforcing the belief that telcos are going a good job, both across the mobile and broadband segments. At some point, someone is going to have to sit down and realise there is more to the world of telecommunications than speed.

EE and Virgin Media fined for ripping off customers when they leave early

UK telecoms regulator Ofcom has fined EE and Virgin Media millions of pounds for excessive early-exit charges.

Churn (loss of customers) is a constant worry for communications service providers and the best way to reduce it is to provide such a good communications service that subscribers don’t want to leave. Another way is to make it so odious and costly to leave that most people just can’t be bothered with the hassle and it seems EE and VM went a bit too far with the latter strategy.

Ofcom says it’s OK for CSPs to attach conditions to the early exit from contracts, but that those must be ‘clear, comprehensive and easily accessible’. Furthermore Ofcom stipulates “Communications providers shall ensure that conditions or procedure for contract termination do not act as disincentives for end-users against changing their communications provider”. It thinks thinks that’s what happened with EE and VM, which is why it has fined them £6.3 million and £7 million, respectively.

“EE and Virgin Media broke our rules by overcharging people who ended their contracts early,” said Ofcom’s spectacularly-named Director of Investigations and Enforcement, Gaucho Rasmussen. “Those people were left out of pocket, and the charges amounted to millions of pounds. That is unacceptable. These fines send a clear message to all phone and broadband firms that they must play by the rules, in the interests of their customers.”

VM doesn’t see it in quite the same way and is appealing the ruling. “We profoundly disagree with Ofcom’s ruling,” said Tom Mockridge, CEO of Virgin Media. “This decision and fine is not justified, proportionate or reasonable. A small percentage of customers were charged an incorrect amount when they ended one or more of their services early and for that we are very sorry.

“As soon as we became aware of the mistake we apologised and took swift action to put it right by paying refunds, with interest, to everyone affected. For those few people we could not locate, we have made an equivalent donation to charity.  We also reviewed our internal processes and systems, and improved our customer communications to make sure that this does not happen again.

“We wholeheartedly reject the claim by Ofcom that our ETC levels dissuaded customers from switching. This unreasonable decision and excessive fine does not reflect the swift actions we took, the strong evidence we have presented, or our consistent, open and transparent cooperation with the regulator.  We will be appealing Ofcom’s decision.”

EE hadn’t sent us a statement at time of writing, nor had it issued a press release. Read into that what you will but the fact that Ofcom reduced its fine by 30% in return for it not kicking up a fuss would seem to be significant.

Mockridge’s moan can be interpreted in a few ways. Taken at face value it’s easy to feel some sympathy. If indeed it was a small, innocent mistake that VM moved to correct as soon as it was aware of it, then the fine does seem excessive. If, however, VM knew what it was doing and thinks it should be able to get away with it just by saying sorry after it was caught, then it doesn’t.

At the very least the relative fines seem disproportionate. EE over-billed 400,000 of its customers for a total of £13.5 million in early exit charges over a six year period, while VM only rinsed 82,000 of its punters for £2.8 million in less than a year. Surely the scale of EE’s breach was far greater and it looks like it’s being too generously rewarded by Ofcom for its capitulation.

UK shines for Liberty Global in Q3

The UK market proved to a be a success over the last three months for Liberty Global, though the same could not be said for the Belgium and Swiss operations.

Total revenues for the quarter stood at $2.9 billion, a 1.3% increase, with the UK business posting 3.6% growth. While this might sound positive, this is compared to 10.8% for the nine months of 2018 proving there is appetite in the UK for a full-fibre diet. Unfortunately, the success could not be replicated elsewhere, with the Belgium business dropping year-on-year revenues by 1.5% and the bottom falling out of the Swiss bucket with a 8.1% decrease.

“The Swiss market remains challenging but we have a number of initiatives that we believe will improve performance,” said CEO Mike Fries. “Our turnaround plan is underpinned by revamped video products, a refreshed MySports programming line-up, the launch of 1 Gig broadband speeds and a new and improved MVNO offering.

“The continued operating and financial momentum at Virgin Media helped fuel our Q3 results. With respect to our U.K. subscriber growth, we generated over 100,000 net additions, which represents a record third quarter performance. This achievement was supported by strong volume growth in both our Project Lightning and legacy footprints.”

Looking specifically at the UK business, cable revenues declined by 0.7% year-on-year to $2 billion, while mobile revenue increased 2.4% to $416 million and enterprise revenues were up 6.1% year-over-year to $491 million. Operating income decreased 4.8% year-over-year to $592 million, though with promising growth on the top-line, and an additional 109,000 subscribers to account for, overall you could say a good three month’s work.

With Liberty Global still on course to dispose of its businesses in Germany and Central Europe to Vodafone, the team might be able to turn more attention to the troublesome Belgians and Swiss.

Virgin Media legal win sets precedent in battle over disproportionate access charges

Virgin Media and Durham County Council have agreed an out of court settlement which will see the telco pay a nominal £1 sum to access land owned by the local authority to lay new ultrafast broadband cables.

The case is the first test of the updated Electronic Communications Code, which was amended in 2017, legislation designed to simplify the process of rolling out future-proof communications infrastructure. Gaining access to existing infrastructure for upgrades is an issue which has plagued the industry for years, with telcos claiming land owners charge disproportionate fees, as well as taking the opportunity to increase rent due to a change in the inventory of the assets.

With the out of court settlement creating more favourable terms for Virgin Media, the hope is precedent will be set throughout the industry, removing an administrative barrier to deployment which has proved expensive.

“This agreement with Durham sets a much needed precedent which will speed up broadband rollout and encourage investment,” said Tom Mockridge, CEO of Virgin Media. “We hope that other local authorities and landowners now follow Durham’s example.

“Most importantly, this is fantastic news for the residents and businesses of Durham as we can now continue the good work we started with Durham Country Council and bring a real broadband boost to local communities across the county.”

“Following the reforms it was important that, as a local authority, we were able to test and understand the implications of the new code,” said Durham County Council’s Head of Planning and Assets, Stuart Timmiss. “Working closely with Virgin Media and our legal team we are happy to be able to move forward in ensuring our businesses and communities can benefit from superfast broadband.”

The case first emerged back in June, with Virgin Media hoping to expand its fibre network to 16,000 properties by the end of 2019 as part of Project Lightening, though with the council charging what the telco described as a ‘hefty’ per-metre levy progress slowed. Other telcos in the UK will likely look at this development with excitement, and hope other administrative hurdles can now be addressed.

EE is another telco which is currently taking the legal route to address one of these hurdles. Tom Bennett and Howard Jones highlighted to us a couple of months ago, EE is challenging a currently unnamed entity in the courts over rent re-negotiations land owners are forcing on telcos when inventories change in existing assets ahead of necessary upgrades. Land owners, or more commonly the agents, are using the opportunity to increase rent knowing the telcos have little choice in the matter.

“The benefits of bringing 4G and high speed broadband to an area are in improved connectivity and the innovation opportunities they can bring to businesses, local authorities and the wider community – not in any landowner opportunistically charging more money in rent,” said an EE spokesperson.

“This settlement is a positive step forward for enforcing operators’ new Code rights.”

Vodafone UK General Counsel and External Affairs Director Helen Lamprell is another who has found issue with the legislative and regulatory landscape of the UK, stating it is the most difficult region she has had to work in.

“The regulatory environment in the UK is not conducive to infrastructure investment,” said Lamprell, during a briefing in June. “The right balance has not been found yet.”

Vodafone’s issues are not only focused on access charges and ransom rent, but also the height of masts. As it stands, the tallest cellular masts in the UK are less than half the height of the same structures in Germany, a critical component when attempting to increase coverage; for every ten metres you go up, the coverage roughly doubles. Vodafone is not suggesting it wants to pepper the landscape with these monstrous structures, but by increasing the height of the masts the less sites you actually need.

While certain aspects of the UK’s legislative environment seem contradictory to government ambitions to increase connectivity quality and coverage, the success of the Virgin Media legal team demonstrates the updated Electronic Communications Code is doing its job. Perhaps the other hurdles can now be addressed.

The Virgin Media TV debacle is a lesson in how to do convergence badly

Virgin Media seemingly tried to usher through some profitability in its negotiations with UKTV over programming, but the cost-cutting quest could have some wide-ranging repercussions.

It is certainly a delicate tight-rope to walk. The much-hyped convergence business model is one which is supposed to attract new revenues, though how much investment should be committed to making the alternative offerings attractive to the customer? Any additional streams to a telcos business model need to be striking and engaging to the user, but over-spending could complete negate any benefits, as BT’s former CEO Gavin Patterson found out.

A very public disagreement between Virgin Media and UKTV seems to be based around the telco trying to strike this balance. In attempting to only secure the free channels for its TV platform, Virgin Media essentially ended any agreement between the two to secure UKTV programming. And the impact has been notable.

UKTV claims to have received more than 50k Twitter mentions on the topic, many of them condemning Virgin Media’s decision to degrade the content experience, while there were several comments on a story we wrote on the saga, with readers suggesting this would be the end of their relationship with the telco. Research from Kantar TNS also suggests there will be a negative impact.

Although you have to bear in mind this research was commissioned by UKTV, it will be slightly biased, Kantar TNS reports 43% of the respondents are considering cancelling their Virgin Media subscription as a result of the lost channels. 64% felt UKTV channels were an important part of the Virgin Media TV package, with 41% claiming they watched the content more than once a week. 65% believe the replacement content is worse than what was being offered by UKTV.

Overall, this is a prime example of convergence done badly. Your correspondent can testify to the fact, as a former Virgin Media customer, the TV offering was nothing more than okay. Dave and Alibi are channels which do provide good content, and perhaps this is the issue with the Virgin Media platform on the whole. There simply isn’t the breadth of quality content which you can consume in comparison to other content platforms, such as Sky.

Convergence is a very good way to improve customer retention and also bring ARPU up, but when it is done badly the risk of damaging the overall brand and subscription numbers is high. With the accessibility and variety of content platforms on the market now, telcos can ill afford to produce a substandard offering. It risks more than reputational damage in that one vertical, the ripples can spread throughout the business.

That said, according to tech and telco analyst Paolo Pescatore, these spats are not uncommon:

“These carriage disputes occur more frequently than we realise. The content owner wants more money while the platform provider wants to pay less. Ultimately the consumers who pay for Virgin TV missing out. And this is not good for either party given how quickly this dispute has escalated and in public. Arguably, Virgin media has more to lose than UKTV.

“Undoubtedly we are going to see more of these issues. More so as content and media owners look to offer their own content on an exclusive basis through their own direct to consumer services, OTT.”

The negative consequences could be avoided by Virgin Media. If negotiations are reopened (UKTV confirmed lines are open, but the conversation is not happening at the time of writing) and the channels reinstated on the platform, it will probably be able to salvage the relationship with the customers. But should it decide it can get by without UKTV, there could be an impact on the spreadsheets.

Not all of the customers will follow through with threats to ditch Virgin Media, changing suppliers is made too much of a cumbersome and frustrating process by the telcos, but it will be interesting to see what the impact of badly done convergence is.

Virgin Media somehow manages to make TV platform a bit worse

The relationship between Virgin Media and UKTV came to an end this weekend, though mixed messages are flying all over the place as the PR machines crank into full flow.

UKTV’s programming on the Virgin Media TV platform officially came to a close on Saturday night (21 July) as the pair were not able to come to a commercial agreement which satisfied both parties. Virgin Media is pointing the finger at UKTV, stating it offered a fair price, while UKTV has contradicted this point stating the offer on the table was substantially less than previous deals. You have to take each side of the argument with a pinch of salt, but we think we have gotten to the bottom of it.

When negotiating with content platforms such as Virgin Media, UKTV offers all of its channels in a bundle. There isn’t option to pick and choose, though this seems a perfectly acceptable situation in other relationships such as with Sky. Included in the UKTV portfolio are a number of free channels which the customer can access online, or through Freeview. This is where the issue lies. Virgin Media wanted to get the free channels and not bother with the premium ones.

Despite the fact the channels are popular with subscribers, viewing figures have increased over the last 12 months on UKTV’s premium content, Virgin Media wanted to degrade the content experience on its TV platform, while maintaining prices. UKTV is cranking the PR machine with statements which claim it is not fair for the consumer, but you have to feel some sympathy for UKTV; that’s not the way it makes money. It is not a charity or an NPO, why should it sacrifice its own profits for Virgin Media’s greed?

Interestingly enough, despite the fact Virgin Media claims the new deal would “result in a net zero impact” for UKTV, we were told simply having the free-channels on the platform would actually cost the company as it would have to pay for Electronic Program Guide (EPG) positioning.

Unfortunately for the Virgin Media subscribers, they are the real losers here. Some might comment the Virgin Media TV platform is sub-standard in any case, though removing channels such as Dave and Alibi is hardly going to help the situation.

In terms of the feedback, UKTV has received more than 47,000 mentions on Twitter, a notable percentage of which were from Virgin Media subscribers describing disappointment at the loss. Some subscribers apparently being told by customer services the content will be switched back on in a couple of days, but the UKTV team has no idea what the basis of this claim is. The relationship disintegrated on Saturday, and while the team is open to discussion, the negotiation is not on-going.