moneysupermarket.com comments on the launch of Virgin Media

Commenting on the launch of Virgin Media, Jason Lloyd, head of broadband, moneysupermarket.com said:

“The launch of Virgin Media represents an exciting and significant change within the broadband industry this year. The merging of four brands into one is always likely to cause initial teething problems from a service perspective, but I think Virgin is one of the very few brands capable of pulling it off.”

Pricing and Innovation

“It’s the cable side of Virgin Media where there has been most product innovation. This is the first brand to give users the freedom to ’build your own’ bundle from broadband, TV, phone and mobile phone components. What makes the cable product range so compelling for consumers is it’s very easy to understand how the pricing works. The four for £40 product in particular can deliver hugely significant cost savings of well over £370 a year to consumers if they applied for comparable unbundled services.

“A further big selling point of the cable range is that there are no monthly line rental fees – a real bugbear for many consumers – and this alone could save over £130 a year for most consumers.

“Perhaps the only drawback is you have to pay Virgin Media a £25 installation fee for cable products. A further consideration worth mentioning is once you’ve made that change to the cable network, if you ever want to go back to BT, you’ll have to fork up £120.

“On the non-cable side of Virgin Media’s products if you want wireless you have to pay £40 for a wireless modem kit, which is interesting since the fastest-selling broadband deals offer a wireless modem free of charge. Although the non-cable deals are price competitive, they’re not that different from what is already out there.”

Unlimited Downloads

“Looking at its new product range it’s clear Virgin Media is going for the unlimited download market, and sees this as an ideal area to grab market share from competitors. Certainly this has proved to be a successful tactic for brands such as Tiscali and AOL. It will be interesting to see how offering unlimited downloads across all products will play out in the market.

“Virgin Media is also the latest major ISP brand to announce an Acceptable Use Policy. This is where a provider places restrictions on how much data or how fast you can download data through your broadband connection. This in itself is a significant shift in the broadband industry, but a necessary one. When you have a situation where five per cent of all broadband users use 43 per cent of all bandwidth, you have to put measures in place to restrict overuse.”

Customer Service

“One point to consider here is how will the broadband side of the business work with what was Virgin Mobile? I sense within the company that the broadband side of the business is merged, albeit uncomfortably, but there doesn’t appear to be any process in place to bring Virgin Mobile into line with the rest of Virgin Media yet. From a customer service perspective this means customers could still be talking to various parts of the business to resolve issues, which could get confusing.

“ntl:Telewest has a legacy of existing triple play customers on uncompetitive deals. One of the biggest challenges for Virgin Media will be how it migrates its 3.2 million existing customers across to the new brand and what sort of products and pricing it will offer to them as they move across.

“This is why I think the greatest challenge for the new brand is getting the Customer Service right. As a merger of three broadband providers, the problem is how you bring the service of three providers together into one new brand. If you look at our exclusive customer review scores for the former providers you will see there is a lot of disparity between the brands.

“I hope that consumers get service near to Telewest service levels which were some of the best in the broadband industry as opposed to NTL. It seems likely they will get somewhere in the middle.”

Competitors

“Perhaps the biggest question is how will Sky react to the Virgin Media launch? In a sense it has already reacted by rolling out a new range of bundled products under the ‘See, Surf, Speak’ brand, plus it can already claim to cover more telephone exchanges than Virgin Media covers with its cable network.

“Arguably the biggest punch Sky landed was the strategic acquisition of ITV shares. Until Virgin Media becomes a content business as well as a platform business it will always be at a competitive disadvantage to Sky and they both know that.

“This battle can only benefit consumers in the short term, but in the medium term it will reduce consumer choice. The sooner the likes of BT Vision, Tiscali and the mobile networks enter the fray with their product offerings the better it will be for consumers.”