Virgin Media 50Meg price cut boosted customer numbers
Virgin Media has completed the roll-out of its 50Mbps product across its cable network, and in its third quarter results is pleased with the numbers of customers signing up to it faster broadband products. The 20Meg and 50Meg products account for some 503,500 customers, which is a 40% increase on twelve months ago, the majority are on the 20Meg service, with just 20,000 subscribing to the fastest 50Meg service. The recent price cut on the XXL service has boosted the numbers signing up to that product and over 40% of those signing up to this service are new to broadband on the Virgin Media network.
While the low numbers for the 50Meg product look poor compared to the millions of broadband customers Virgin Media has, remember that the 20Mbps service is also sharing this infrastructure, which should help with the paying back of the millions that Virgin Media invested in the DOCSIS 3.0 network. With the current promotion of the 50Meg product which is £18 a month for three months and £28 a month there after (that is assuming you take a Virgin Media phone line), it compares favourably to their big name competition which is BT Total Broadband Option 3 at £18.59 for three months and £24.46 thereafter look expensive and slow. Although the advertising for BT gives a headline of up to 20Mbps speed this is only available in areas where BT has ADSL2+ available via WBC and connection speeds are limited by line length, additionally BT Option 3 is subject to traffic management.
Virgin Media is also continuing with its upgrade of customers on its 2Mbps package to a 10Mbps package, which should ensure the firm comes out top in any national broadband speed comparisons. Also after years of an otherwise static cable network coverage, the firm is increasing its footprint, the results show an increase of 55,000 homes now within the firms footprint.
The price sensitivity in the UK broadband market may be as big a barrier to the roll-out of next generation products as anything else, hence why the XXL product is not selling in the 100,000's yet. The average broadband user is very vocal in complaining about poor quality streaming video and slow speeds, but all too often is not willing to pay the price for a service that would support reliable streaming. The situation is not unlike that of RyanAir where people complain, but it is so cheap that they continue to use the service, because it can be the cheapest way of getting from A to B.
When broadband first appeared in 2000 there was such a latent demand that the £50 a month for just 0.5Meg meant a big rush to sign up, the key for firms now is to generate that same amount of excitement and demand for their new faster networks.