Cable broadband making more money than cable telly
Easier piping stuff than providing it, says Virgin Media
Virgin Media makes the bulk of its money from its cable customers in the UK according to the company's quarterly filing with the US Securities and Exchange Commission (SEC).
And a mild increase in revenues from its cable broadband business fuelled the last quarter for the telecom and media company. For the three months ended 30 September 2011, Virgin Media's broadband revenue increased to £685m ($1.09bn), compared to £662.6m ($1.05bn) in the same period last year. Virgin Media put the healthy income in the cable sector down to "selective" price increases, discounts to newbies and successful sales of new products to existing customers.
Money from Virgin Media's fibre-optic cable services made up 68.5 per cent of its total revenue for the quarter.
Overall, the company's quarterly earnings were up compared to last year. It made a revenue of £1bn in this quarter ending the 30 September, an increase of 2.2 per cent on the £978.4m revenue it made in the same period in 2010.
But the rise in cable broadband was offset by lower profits from mobile customers and from its TV division. "In our consumer segment, cable customers account for the majority of our revenue," VM said in the report, going on to specify that "cable broadband internet is more profitable than our television services".
Revenue from cable television makes up a significant chunk of Virgin's income, but customer uptake there has declined slightly since last year, falling to 3,762,100 from the 3,766,700 average customers Virgin had in the same quarter last year.
In contrast, cable broadband subscribers have shifted up to 4,072,900 from 3,969,800 in the same period in 2010.
Revenues from cable telephone services have fallen slightly too.
Customers who subscribe to multiple Virgin Media services bring in more profit for the company than those who simply use a single service. In mobile, contract customers brought in much better returns than the pay-as-you-go ones.
Rumours today that Virgin TV will drop the American channel Current TV from its offering to UK customers next year are possibly a sign that Virgin Media is more willing to invest in the areas that bring in bigger bucks.
Though VM didn't confirm or deny that the channel was closing, only telling us that "Current TV is contracted to be on our service until early 2012", and "we constantly review our channel line-up to ensure we are providing our customers with content they want to watch and enjoy".
Otherwise the media company has made some savings by implementing cuts packages from 2008, including ditching properties and bringing rental costs down and making some cuts to staff.
Virgin Media's sales to business customers were up slightly from last year, but 84.4 per cent of its profits are still from the consumer sector. ®
They advertise, for example, a 10Mb connection with "unlimited downloads" in bold letters. There is a little "1" postfixed to this claim though. And if you bother to follow this to the tiny notes in pale grey at the bottom, it says "Acceptable use policy applies. Traffic Management operates from 4pm to 9pm and 10am to 3pm to ensure a consistent user experience."
If you follow these links, it says "we moderate the speeds of the very small proportion of customers who are downloading and/or uploading an unusually high amount". Sounds fair enough - they're chasing the bandwidth hogs who are downloading day and night - right? Wrong!
Click on the Traffic Management Policy and attempt to decipher the tables. You find that your 10Mb connection - at the times your are likely to use it - is limited to 1.5GB. In other words, you can have 10Mb (if it works) for about 20 minutes.
I only discovered this after weeks of irritation that the connection was so slow - often piddling along at 1Mb or less - and finally called Virgin to find out if there was a fault. We had attempted to watch a single film purchased online (which weighed in at 1.8GB) and the connection had slowed to a crawl (~0.7Mb). I was told my connection was capped because I had downloaded more than 1GB. Which makes Virgin's service completely useless.
They advertise the ability to watch films, online TV, etc, and pitch a reasonable price for the service, but then when you try to actually use the services they advertise they call you hog and demand more money to upgrade to the *truly* unlimited service (at a much higher price, of course). Bottom line - if your looking for a good provider, read their conditions scrupulously - especially where the word "unlimited" is used - and don't even consider Virgin. I can why they're making so much money on broadband.
Dishonest and impractical
@AC: "Why don't you just set your film to download after 9pm and then watch it the next day? Or if it is streamed then time it to start watching at 8pm so that the rest of the film is downloaded after the 9pm cut-off. At least Virgin publish their download limits"
Two problems with this:
1) Virgin publish the constraints on your connection only because they are legally obliged to. But they do it in the most underhanded fashion I have *ever* seen, buried under piles of small, pale-grey text and several links deep. All other ISPs say up front that they either have a cap or they are *truly* unlimited. The word 'unlimited' should retain its common meaning, which is "not limited or restricted". Virgin - like many companies - is lying when they use that term.
2) Downloading material overnight is at least possible for many devices that can store resources offline, but the tech world is moving steadily online. What use is a Kindle Fire for example? It doesn't store much internally, so what would you do if you had one of these limited Virgin accounts? Only watch films in the small hours of the morning? All cloud concepts only work if you have a strong link to the Internet - choke your connection, and your device usage is likewise choked.
If we don't have the infrastructure to support the kind of use that is being advertised, it needs to be upfront. We would be better off going back to buying physical media. I could have watched a DVD of the same film with far less trouble and expense than I encountered online.
(I'm the AC from above)
I have no complaints with the quality of my service. And I already know that Be would not even be able to match the 10Mbps that I get from Virgin. So pointless me swapping.
It is all about CHOICE. So the guy up there complaining should move to Be or someone else if Virgin does not fit his needs. For me it is the best option available.