Last week Virgin Media announced the launch of its long awaited 50 meg broadband service. At the press conference, it was clear that Virgin Media are pushing the boundaries on broadband, and for the first time, taking the lead by setting a new standard far in excess of what is commonly available in the UK market. It is positioning itself both as a premium brand as well as a bundler of television and phone services. This unique combination coupled with its new 50 meg pricing is likely to be a threat to operators such as Sky Broadband who rely on the LLU network, although it was very interesting to see Be/O2 react quickly to the launch with its own announcement of a near 50 meg alternative.
The boundaries between the online and offline worlds is closing as we update our status on Twitter from our mobile phone or access our home network whilst away via our broadband connection. We have no doubt that Virgin's 50 meg service will perform very well technically, initially at least, but what can you actually do with 50 Mbps? I think the key here is to remember that it means that everyone in the household can stream video from the Internet, at the same time, without loss of quality; no longer will you have to shout and find out who's hogging the Internet; everything is that bit quicker to load. Also, gamers will find the service very useful, as will those working from home. Virgin showed us we "have an appetite for data consumption" based on the fact their bandwidth utilisation goes up by 70% per year, and is expected to reach 100% per year within a couple of years, so this product is certainly welcome.
Thinking back eight years, in the dawn of the millennium, I was waiting for my cable operator (whatever they were called back then) to provide me with this new technology called broadband; but they did not. In the end, ADSL was available in my area first, and thus how ADSLguide (as we were called back then) started. Virgin Media has had the unique strength of a more modern network in the ground for some time, and it took them many years to realise how to use it, culminating in their 50 meg product which no large scale operator can easily economically match at this point in time, although Be/O2's bonded DSL service has some potential.
Whilst we've been quick to criticise Virgin for their 'fibre optic broadband' advertising (and 50 meg doesn't change that), they have now actually delivered a service based on fibre-to-the-cabinet (FTTC) whilst BT is just talking about it and trialling it. It doesn't however solve the need for fibre roll-out, but it does make the business case very different. The only risk now to Virgin is whether the state of the economy will result in fewer orders than they would have had a year ago.
Putting all this aside, as Virgin rightly point out, users don't care about how the broadband is delivered; all they care about is the service they receive. They are rather bullish about their service having put up the money to build the network, but they do have a right to be too. They clearly feel very passionate about this.
"You're either on Virgin Media or you're in the slow lane".
Neil Berkett (CEO), Virgin Media
The question now is, what will BT's response be? Virgin have already stated they have the technology to offer 100 Mbps broadband, today. That's a tough line to match.
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All this would be all well and good if VM were expanding their network.