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Virgin Media pins hopes on the broadband donkey

No-brainer

The smart choice: opportunity from uncertainty

Virgin Media went on a PR offensive this weekend. Now that the global credit crunch has put the kibosh on a lusted-after sellout to private equity, boss Neil Berkett was deployed to tell several newspapers about his plan to steady the listing cable firm.

Kiwi Berkett has been installed at the top of the firm as successor to Steve Burch, who quit in August having been out-swung by Sky in the TV rights handbag fight. Little surprise, then, that Berkett's hopes for the firm centre around cable broadband.

He told the Guardian: "Despite our technical advantage we are still not really standing out from the crowd. I really do want to refocus our energies onto the broadband platform."

And right he is. Virgin's fibre-optics give it a huge technical advantage over everyone else. Perhaps an even bigger advantage: it's got them all to itself.

The commoditisation of ADSL is nearly complete thanks to "free" broadband and consolidation cutting the number of serious players to just five. "There is a rebalancing to be done," Berkett said, presumably at least in part referring to the wafer-thin margins being endured by ADSL ISPs.

The Virgin strategy of trumpeting of faster, more reliable service while BT and the rest are just starting to talk about upgrading the copper network seems like a no-brainer. It would be cruel to suggest that's lucky for Virgin Media.

The firm will have to be careful, when crowing about the magic of cable, not to alienate existing broadband customers who complain loudly about its throttling policies. It has tried once already to market against the fair use policies and technical limitations of ADSL with a high profile ad-campaign, which rang a little hollow.

Virgin's next-gen 50Mbit/s service is currently in pilot in Kent (details here).

On the TV side, Berkett said he wants to go after Freeview households who are ready to dip their toe into multichannel pay-TV, but don't want Sky Sports. We hope he knows they're the same "mid-tier" homes his friends at Sky will be targeting with their Picnic service. ®

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