Virgin Media results and RFOG areas appear faster than coax ones
The financial results are all dropping and while we are a little late with the Virgin Media set due to an appointment on Valentines Day at Buckingham Palace, it is still worth running up the flag pole as we have some extra information to share.
The Liberty Global results cover the full range of countries that the media group operates in, but we will concentrate on Virgin Media in the UK when looking at the results to the end of December 2019.
The trend for shrinking numbers of cable TV customers continues, and while cable broadband made a net gain in the number of Internet customers it was minimal in the quarter with 900 added. The number of Internet subscriptions stands at 5,649,200 compared a rise of 48,900 in the last 12 months.
To only add 900 customers in a quarter when they made the service available to another 154,000 customers in the quarter (505,000 in 12 months) is worrying but the results suggest that this not due to a lack of popularity of broadband but increased price competition from competitors. This competition is also taking the form of full fibre now, since the majority of premises from the Openreach Fibre First roll-out can also get Virgin Media and similar for the G.fast service roll-out. In 2020 we are already seeing FTTP pricing drop and as competitors build rates increase we are likely to see legacy areas make further losses of cable customers.
The Project Lightning roll-out has now apparently grown to 2.1 million premises passed since it started and our tracking of this has some 519,000 premises marked as passed by the RFOG variant (i.e. counts as FTTP). The roll-out places Virgin Media as the second largest FTTP operator in the UK both in terms of footprint size and pace of build.
Our speed test results indicate that 4.2% of the speedtests we saw in Q4 2019 were from that 519,000 premises that have RFOG and the median download speed was higher for these people. The higher download speed in these new Virgin Media areas is probably nothing to do with the FTTP nature of the service, it is much more likely to be due to the lack of legacy customers on long term price deals e.g. paying very little for an old 30 Mbps service. Another factor is if you've had package speeds in the 50 to 70 Mbps region available to you before then assuming the price is right we expect a lot of people to buy into the mid price point which is usually the 200 Mbps service. A final wildcard might be that older customers are using a Virgin Media router that is not so good at delivering high speeds over Wi-Fi and as the RFOG customers are getting the latest all singing and dancing hub.
What is interesting is that for a while the RFOG areas were mirroing speeds in the old network areas, but at the start of 2019 the download speeds started to diverge. What caused this we cannot say for sure but probably a mixture of changes in marketing messaging and actual consumer choice.
The upload speeds are mirroring each other and the big jump in Q4 2019 is down to the upgrades to existing services Virgin Media has underway, these same upgrades are why we also don't have the full product line up in our monthly speed test results.
2020 is going to be a race now to get customers into their first contract on a technology that offers fixed speeds with potential for 200 Mbps and faster, be that coax or full fibre no matter which broadband provider we are talking about and then make clever use of the end of contract notifications to ensure customers remain locked into new minimum terms as their initial contract ends. Very likely that the smaller providers and those medium sized providers that do not embrace full fibre will quickly wither.