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Virgin Media customers opt for higher speeds

More than 50 percent of Virgin Media's new customers sign up for 30Mbps or more service, and more than 25 percent of all its subscribers are on 20Mbps, the company said as it reported billion-pound quarterly revenue
Written by David Meyer, Contributor

More than half of Virgin Media's new subscribers go for the ISP's 'super-fast' broadband products, the company has said.

Virgin Media logo

Virgin Media has reported that more and more subscribrs are signing up for its super-fast broadband products, as it gave its third-quarter results. Image credit: Virgin Media

Announcing a 2.2-percent year-on-year rise in third-quarter revenue to £1bn, Virgin Media said on Thursday that 54 percent of its new customers in the quarter chose services promising 30Mbps or faster. It said "well over half-a-million" broadband subscribers now get these speeds. In addition, more than a million Virgin customers, or 26 percent of the company's customer base, are now on 20Mbps or more.

Overall, Virgin Media made a loss of £73.7m for the quarter, whereas it had made a profit of £41.8m in the corresponding quarter of 2010. It said the decline was mainly due to foreign currency losses, reduced income tax benefit and other financial factors.

"Our results show that we're successfully serving what is a rapidly emerging market for better quality services. The demand for superior connectivity is accelerating as more people, regardless of their circumstances, recognise the best digital technology is worth paying more for," Virgin Media's chief executive Neil Berkett said in a statement.

Broadband speeds

Berkett noted that 187,000 customers are on Virgin's 50Mbps or 100Mbps products, twice as many as a year ago. "We remain on track for rolling out 100Mbps, the country's fastest widely available broadband service, right across our network by mid-2012 with over eight million homes already able to access this super-fast speed," he added.

The demand for superior connectivity is accelerating as more people, regardless of their circumstances, recognise the best digital technology is worth paying more for.
– Neil Berkett, Virgin Media

Virgin Media's 100Mbps service costs £45 a month outside of packages and other offers. It is the fastest broadband package available for residential connections right now, though rival BT has promised to launch its own 110Mbps service in six towns by the end of October. In addition, Virgin Media has begun testing a 1.5Gbps service at Silicon Roundabout in London.

The Virgin Media chief highlighted recent guidance from the Committee of Advertising Practice (CAP), which said ISPs need to stop advertising broadband speeds that cannot be attained by at least 10 percent of subscribers. Virgin claims its cable service has much less contention than DSL, making it easier to deliver advertised speeds. Contention happens when a provider sells more total bandwidth to its customers than it can provide, relying on consumer under-use to provide a good service overall.

"Virgin Media is committed to leading the industry and only advertises speeds that at least 90 percent of our customers actually receive," Berkett said. "By contrast, DSL competitors will have to change the way they advertise their broadband services, and we think this will further differentiate our services and highlight the quality of our broadband to consumers."

The company's results showed more people signing up for Virgin's TiVo service, which had 222,000 customers as of Wednesday. According to Virgin, the TV-on-demand service saw 127,000 net adds during the quarter.

Virgin Mobile saw a slight revenue drop of 1.6 percent, or £141.2m, which the company blamed on mandated cuts to mobile termination rates — the amount operator A can charge operator B to have B's customers call A's customers. However, on the positive side, Virgin's mobile contract customer base grew by 23 percent year-on-year, reaching 1.4 million people.

The wholesaling of Virgin's fibre backhaul products appears to be going well, as shown by its £100m deal with MBNL.

Virgin Media Business managing director Mark Heraghty said the company's cloud service launch had "received a great reception from the analyst community and we're already seeing a positive response from customers", but he did not give further details.

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