Virgin Media: at last some sense…
Neil Berkett, a candidate for the CEO post at Virgin Media, is actually making a lot of sense in interviews with the Times and Guardian.
I also agree with his idea of upselling cable TV into Freeview homes:
I cannot emphasise how much I agree with the strategy of focussing on improving broadband and upgrading Freeview customers, but I would also move forward on another initiative and withdraw from another.
I would start to extend the cable footprint again. It is ridiculous that mega new developments such as Ebbsfleet will only have BT Openreach facilities and not be served by cable. Similarly on smaller developments up and down the country within existing cable franchises only BT Openreach facilities are being built. If necessary Virgin Media should lobby the government at the national level to ensure that cable connectivity is part of the UK planning laws within existing franchises. Not only would this strategy increase the footprint to be sold, but also have a huge positive psychological impact on the workforce after years of stagnation and being on the back foot.
I would also give up on the off-net strategy – it is never going to be a significant profit centre and only serves to confuse the customer. Cable should be selling itself to customers as a premium technology and getting round the legacy baggage from the analogue and digital conversion days. I would sell the offnet base to an existing player and also negotiate a commission for leads generated from offnet cable movers.
This would be the basis of my quad play strategy: cement and extend broadband advantage; sell TV to Freeview upgraders; start to expand the cable coverage again; and terminate the offnet strategy.
Of course with Virgin Media there is the continual problem of funding for any new investments. If I didn’t have the balance sheet capacity available to invest in the cable network, I would seriously consider selling the prepaid mobile base to get a quick injection of cash. This to me would be far more preferable than selling the B2B or content sides of the group.
"Despite our technical advantage we are still not really standing out from the crowd," admitted Mr Berkett. "I really do want to re-focus our energies onto the broadband platform."If I was being a pendant, I say the advantage is really a theoretical technical advantage and encourage him to turn a theoretical advantage into a real one. This means investment in areas where the broadband cable network is currently overloaded, completing the conversion of old analogue TV customers into digital ones and thereby freeing up capacity to allow investment in supa-fast DOCSIS 3.0 technology.
I also agree with his idea of upselling cable TV into Freeview homes:
"Think of Freeview as a nursery and you have millions of kindergarten kids who once they have got the taste for multi-channel TV may upgrade an element of the service."There are around 9.1m Freeview households in the UK and it will only take a small percentage of these to be converted to basic Cable TV to provide plenty of revenue upside and more importantly plenty of households to upsell additional broadband and telephony services. All investment in TV content should be aimed at differentiating the base cable TV product from Freeview and thereby increasing the gap in value and entertainment in the eyes of Freeview customers.
I cannot emphasise how much I agree with the strategy of focussing on improving broadband and upgrading Freeview customers, but I would also move forward on another initiative and withdraw from another.
I would start to extend the cable footprint again. It is ridiculous that mega new developments such as Ebbsfleet will only have BT Openreach facilities and not be served by cable. Similarly on smaller developments up and down the country within existing cable franchises only BT Openreach facilities are being built. If necessary Virgin Media should lobby the government at the national level to ensure that cable connectivity is part of the UK planning laws within existing franchises. Not only would this strategy increase the footprint to be sold, but also have a huge positive psychological impact on the workforce after years of stagnation and being on the back foot.
I would also give up on the off-net strategy – it is never going to be a significant profit centre and only serves to confuse the customer. Cable should be selling itself to customers as a premium technology and getting round the legacy baggage from the analogue and digital conversion days. I would sell the offnet base to an existing player and also negotiate a commission for leads generated from offnet cable movers.
This would be the basis of my quad play strategy: cement and extend broadband advantage; sell TV to Freeview upgraders; start to expand the cable coverage again; and terminate the offnet strategy.
Of course with Virgin Media there is the continual problem of funding for any new investments. If I didn’t have the balance sheet capacity available to invest in the cable network, I would seriously consider selling the prepaid mobile base to get a quick injection of cash. This to me would be far more preferable than selling the B2B or content sides of the group.
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