Virgin Media looks set to concentrate on its cable network
It was only in November 2007 just nine months after the big sexy launch of Virgin Media that it announced a downsizing of its ambitions. If the quote over at FT.com is accurate it seems that the Virgin Media ADSL product ranges are set to be downsized even further.
"Our strategy, offnet, is actually not that important."Neil Berkett, acting chief executive
It looks as if any new investment is going to be in the cable broadband arena, where the Virgin Media board has agreed the investment needed to carry out the work to allow the 50Mbps broadband products to be launched. The new 50Mbps product will require new cable modems, as well as upgrades to the network the modems connect to. No launch pricing has been announced, but it seems Virgin Media are confident of getting hundreds of thousands to sign up within a few years.
The scale of investment needed is not known but when the fourth quarter results are announced on February 28th it may become clearer. The complaints about congestion on the existing Virgin Media cable services in parts of the country suggest a fair bit of new capacity needs to be created.
For Virgin Media ADSL customers to be told they are not that important is a blow. Generally, their ADSL service has failed to impress, suffering from congestion and slow speeds at peak times, always being the second fiddle to the headline grabbing cable broadband speeds. With the amount of acquisitions in the UK broadband market at present we would not be surprised to hear that another provider has purchased the ADSL side of the business. However, it could be Virgin are counting on the deal to use Cable & Wireless as a wholesale provider to allow them to improve the off-net side of the business, and get TV services to more users with minimal investment.
The pricing of the 50Mbps product and the level of demand for it will be interesting to watch. In some ways it will provide an indicator as to whether UK consumers really want to pay more for faster speeds or are concentrating on getting a connection for as cheap as possible.