Virgin Media Inc. (formerly known as ntl:Telewest, after a merger of NTL Incorporated with Telewest Global, Inc.), became in 2006 the first "quadruple-play" media company in the United Kingdom, bringing together a service consisting of television, Internet, mobile phone and fixed-line telephone services. Virgin Media represents a prime example of telecommunication convergence. As the only major cable company in the United Kingdom, it competes in the market with one other major pay-TV operator, satellite-based BSkyB, and with Freeview, the free-to-air terrestrial service. While US-headquartered, Virgin Media only operates in the United Kingdom, with headquarters in Hook, Hampshire and it's financial base being in Bradford. On 1 July 2007 it emerged that the private equity investment firm The Carlyle Group had initiated discussions to acquire Virgin Media Inc. but recent movements in the global credit-market have put potential acquisition opportunities on hold.
Telewest originated in Croydon in 1984 under the name "Croydon Cable". In 1988 United Cable of Denver, US, acquired Croydon Cable. Franchises extended the company scope in Edinburgh and the south-west and south-east of England. In 1989 United Cable merged with United Artists Cable International. In 1991 United Artists merged with their largest shareholder TCI (now Liberty Media), to form the largest cable operator in the US. TCI and US West announced a joint venture, and in 1992 the joint venture company became Telewest Communications. In 1995 Telewest merged with SBC Communications, adding franchises in the Midlands and North West serving 1.3 million homes.
In 1998 Telewest announced a merger with General Cable, and acquired an outstanding interest in Birmingham Cable, adding a further 1.7 million franchise homes in Yorkshire, west London and Birmingham. Telewest purchased the remaining 50% stake in Cable London from NTL in 1999, adding 0.4 million franchise homes in north London. In April 2000 Telewest merged with Flextech, and in November extended its cable network with the acquisition of Eurobell, taking the total number of homes passed to 4.9 million. The company later became known as "Telewest Broadband" in a re-brand during 2001.
In subsequent years Telewest experienced many financial problems due to huge debts incurred as a result of constructing its cable network and of acquiring other cable companies and assets. In 2004 Telewest re-structured itself by swapping its unsecured debt for 98.5% of its shares. The London FTSE then de-listed the consolidated shares. Major Telewest shareholders included Huff and Liberty Media (run by cable tycoon John Malone). Afterwards the company emerged from financial restructuring and completed a merger with NTL in 2006.
Telewest also provided the broadband service 'Blueyonder', using the same cable system as its television service.
Barclay Knapp and George Blumenthal, the founders of the cellular network company Cellular Communications, Inc. (sold to Airtouch in 1996), established International CableTel in 1993. They founded CableTel in order to take advantage of the deregulation of the UK cable market. Initially, Cabletel acquired local cable-franchises covering Guildford, Northern Ireland and parts of Central Scotland and South Wales. In 1996 CableTel acquired National Transcommunications Limited (NTL), the privatised UK Independent Broadcasting Authority transmission-network. In 1998 CableTel adopted "NTL" as its new name.
The company spent heavily on expanding its network and on acquisitions — including the consumer cable division of Cable and Wireless, bought for $10bn, and partly paid for with a $5.5bn investment from France Telecom. NTL also began to expand outside the UK in 2000, buying into markets on continental Europe and in Ireland.
A collapse of the telecommunications markets from mid-2000 dealt a serious blow to the company. This, combined with NTL's rapid acquisition of local cable-operators, led to severe problems of integration. NTL, struggling to cope with rapid expansion and suffering from significant customer-service problems, then had to contend with the setting up in November 2002 of one of the UK's first consumer lobby-groups, nthellworld, with following shortly after.
Devalued and struggling with debts of around $18bn, NTL sought Chapter-11 bankruptcy-protection in May 2002 in order to organise a refinancing deal. The company did not emerge from protection until January 2003, having converted around $11 billion of debt into shares. Technically, this amounted to the largest debt default in US corporate history. The company reduced its debt to $6.4bn. A re-organisation split NTL itself into NTL Inc. (covering the UK and Irish markets) and NTL Europe Inc. (for the French, Swiss and German parts of the corporation). New executives replaced the NTL president, CEO and co-founder Barclay Knapp, as well as Stephen A. Carter, the MD and COO.
After exiting from Chapter-11 protection, NTL produced an operating profit. In 2004 it announced plans to split its broadcasting division off from the main company. In December 2004 NTL sold its broadcast-unit to a consortium led by Macquarie Communications Infrastructure Group (MCG) for £1.27 billion. (Macquarie renamed the division Arqiva in May 2005.) This sale allowed NTL to focus on its "core businesses" of providing communications packages and cable-services.
By 2005 NTL's UK network consisted of a 7,800 km fibre backbone with the potential to reach 8.4 million residential homes and around 610,000 businesses. In January of that year, NTL started rolling out Video On Demand. With content selected by NTL, this service covered genres including music videos, children's programming and adult entertainment. This provided an extension to the basic "pay per view" services the company offered for film and sport content. The new service allowed customers to rewind, fast-forward and pause content.
Despite NTL Ireland turning a profit, in May 2005, NTL sold its Dublin, Galway and Waterford cable-business — which it had acquired in 1999 for €825 million from the Irish government-owned entities Telecom Éireann (60% of shares) and RTE (40% of shares) — to UGC Europe for €325 million; this after having spent in excess of €100 million on network infrastructure. Thus NTL made a gross loss of €500 million (more than 50%) over what it had paid. As of May 2007 Liberty continues to use the NTL brand in Ireland, under license.
By July 2005, NTL had cut its debt to £1.445 billion, with an operating cash flow of £178 million. The company had 3.2 million customers buying at least one service from it, with the 1.4 million subscribers to broadband services making NTL the market leader in this field.
The roll-out of broadband services in the ex-Cable and Wireless franchises started in mid-2001. Initially, NTL provided ex-Cable and Wireless subscribers with broadband through the set-top box also used for digital television services, adopting the rationale that subscribers could self-install. Accordingly, NTL supplied a "Self Install Kit" consisting of connecting cable, adapters and an install-CD. Following demonstrated problems, NTL gradually introduced cable-modems and phased out the self-install approach to set-top box broadband .
Although the set-top boxes had the capability of supporting of higher speeds (up to 4 Mbit/s), NTL did not make speeds higher than 1 Mbit/s available via set-top boxes, due to degradation of the digital television (DTV) service.
NTL eventually replaced the Pace set-top boxes with Samsung models which used a dual-processor architecture, overcoming the shortcomings of the Pace, and which could give much better downstream performance. The Samsung set-top box had its own limitations, with initially only a 10 Mbit/s single duplex connection on the customer side of the device. However, with the advent of higher "Tiers of Service" of 10, then 20 Mbit/s downstream, plus the reducing cost of NTL's cable modems, NTL came to supply all subscribers with cable modems.
A historical view of NTL cable modems appears at the Chetnet site.
Virgin.net operated as an Internet service provider (ISP) in the UK from November 1996 onwards. Once a joint venture between NTL and the Virgin Group, the ISP became wholly owned by NTL in 2004. It sold a range of ADSL broadband packages through BT landlines to those living outside areas served by NTL's cable-television network. Virgin.net broadband customers could receive up to 8 Mbit/s downstream and 400 kbit/s upstream, with usage-allowances depending on which package the user took. Virgin.net also offered bundled phone-services via Carrier Preselect (CPS) to broadband subscribers. The service offered various usage-allowances depending on which package a user took. Virgin.net also offered subscription-based and subscription-free dial-up Internet access. Prior to acquiring Virgin.net, NTL offered a similar package called NTL Freedom.
The parties completed the merger on March 3, 2006, making the merged company the UK's largest cable-provider, with more than 90% of the market. Once merged, the combined company renamed itself to NTL Incorporated, with ex-NTL shareholders controlling 75% of the stock and ex-Telewest shareholders 25%. Nine of the eleven directors of the new board came from NTL and two from Telewest.
Virgin Mobile's independent directors rejected the original bid of £817 million ($1.4 billion), taking the view that NTL Incorporated's bid "undervalued the business". Sir Richard Branson reportedly expressed confidence that a re-structured deal could go ahead, and in January 2006 NTL Incorporated increased its offer to £961 m (372p per share). On 4 April 2006, NTL Incorporated announced a £962.4 m recommended offer for Virgin Mobile. According to reports, Branson accepted a mix of shares and cash, making him a 10.7% shareholder of the combined company.
The takeover completed on 4 July 2006, setting up the UK's first 'quadruple play' media company, bringing together television, Internet broadband, mobile phone and fixed-line phone services. The deal included a 30-year exclusive branding agreement that saw NTL adopt the "Virgin" name after it completed its merger with Telewest. As a result, on 8 November 2006 NTL:Telewest announced it would change its name to "Virgin Media Inc".
NTL Group's services — previously marketed under the NTL, Telewest and Virgin.net brands — merged with Virgin Mobile under the "Virgin Media" brand on February 8, 2007, referred to by Virgin as V Day.
A channel agreement for Virgin Media to keep non-premium Sky channels ended at midnight on 1 March, 2007. Virgin Media and Sky failed to reach agreement on the issue, and Sky reacted by posting a letter to the public in major UK newspapers on 28 February 2007.
Despite Sky's letter, Virgin Media blamed Sky for tyrannizing them and inciting consumers to switch. The companies failed to resolve their differences, and subsequently after midnight on 1 March 2007, Virgin Media replaced the Sky One, Sky Two, Sky Travel, Sky Travel Extra, Sky Sports News and Sky News channel content with a standard message. Sky attributed part of the rate-rise to the fact that the new deal would also include Sky Three, Sky Arts and undisclosed high definition and video on demand content. Sky said the deal would cost only 3p per customer per day (roughly £35,000,000 per year), but Virgin said that a minimum payment-guarantee included in the contract meant that the actual amount due would exceed twice the current payment. On 9 May 2008 it was reported that the companies had held talks to resolve the dispute.
Virgin Central, an on-demand service, has recently gained the rights to begin showing episodes of the television show Lost (already shown on Sky One), and other shows including Alias and The OC. This service extends the on-demand service previously known as Teleport TV. Teleport TV now renamed as TV Choice, remains available, offering recently-broadcast shows and other shows and series.
3.2 million of them are Digital Cable. The other 200,000 are Analogue Cable.
Current download speeds offered to cable users include 2 Mbit/s, 4 Mbit/s and 20 Mbit/s, having upload speeds of 256 kbit/s, 384 kbit/s, and 768 kbit/s respectively. Non-cable (ADSL) users have options of up-to 1 Mbit/s and up-to 8 Mbit/s. As with all ADSL services, actual speed available varies depending on distance from the telephone exchange.
Virgin Media also offers dial-up Internet services. Virgin Phone subscribers have two options; pay-as-you-go at 3p/minute, or a fixed monthly fee of £14.99 for unlimited usage. Subscribers with a BT telephone line have only the option of pay-as-you-go, costing from 1p/minute. Those with a Virgin Media phone package receive a discount on the normal broadband subscription, paying £4.50 per month.
Virgin Media recently announced that from February 2008 all customers currently on their 4Mb price plan will automatically be upgraded for free to 10Mb. This process will take place region by region and will take until the end of summer.
From 31 March Virgin Media will be giving a free Netgear wireless router to all new cable customers taking size L or XL broadband or existing size M and L cable broadband customers upgrading to size L or XL. A non-refundable, one time service charge of £40 will apply to all new cable broadband customers taking the size M broadband service and existing size L and XL customers taking the wireless router without upgrading their broadband service. The Wireless router remains the property of Virgin Media at all times. For a further £20 a USB adapter or a PCMCIA laptop card can be added. All equipment includes a 2 year service warranty dependent on the customer remaining a Virgin Media broadband customer for the duration of that period. They also offer Newsgroup access free to all broadband customers.
Virgin Media announced in June that it was removing its 25p per minute 0906 technical support line and making all calls either free, for Virgin Media telephone users or local rate 0845 for those without Virgin's telephone service.
The cable broadband services do not have a specific bandwidth cap; however, on 3 May 2007 Virgin introduced "Subscriber Traffic Management" (STM). In particular, between the hours of 10am and 9pm the service provider may throttle down bandwidth for customers "downloading an unusually large amount at these times" (in line with one's package: 500 MB for the 2 Mb/sec package, 1000 MB for the 4 Mb/sec package and 3 GB for the 10/20 Mb/sec package) such that the speed of one's connection will decrease. According to Virgin Media, this scheme aims to regulate bandwidth-usage and to ensure that all customers get a fair share of the service provided. The scheme has been criticised as being overly punitive. Once the download limit is exceeded, the bandwidth throttle remains in place for 5 hours. The actual speed decrease depends on the package subscribed to, and ranges from 50% to 75%.
A user on the 2Mb package will currently be throttled to 1Mb/s (50%) after downloading 500MB between the 4pm and 9pm "peak" window .
Virgin Media broadband, based on DOCSIS, runs over coaxial cable television connections in those areas with Cable TV and ADSL lines in areas that do not. Unlike ADSL connections, DOCSIS-based cable broadband remains largely unaffected by line attenuation, and provides long lease-time dynamic (not static) IP addresses to subscribers (based on the MAC address of the client device). Controversially, Virgin Media have introduced Bandwidth Throttling on DOCSIS-based cable broadband connections in some areas. Previously, these connections were all managed by NTL:telewest prior to the Virgin Media merger and were not subject to bandwidth throttling. This has caused great upset among many old NTL:telewest customers in the regions that it affects.
In its fourth quarter results in 2006, Virgin Media announced plans to launch a 50 Mbit/s service in the summer of 2008.
Virgin Media reportedly started conducting trials of a 100 Mbit/s broadband service on its cable network in April 2006.
Virgin Media removed the use of all transparent proxy servers in Spring 2007.
Virgin's digital cable television uses Nagravision 1 for encryption.
Currently 55% of UK households have access to Virgin's network, while anyone in the UK with a line-of-sight view of the Astra & Eurobird satellites has the ability to receive Sky's service. In areas it services, Virgin Television ranks as the number one provider of pay TV. Virgin plans to expand availability in the rest of the UK using DSL technology. It plans to do this both by signing a contract with another telecoms company and by installing its own equipment in BT exchanges.
As of Virgin Media functions as a single company; however, it continues to rely on three existing infrastructures: the Langley-based NTL, Bromley-based Cable and Wireless and Knowsley-based Telewest platforms.
In areas where analogue transmission will be turned off but no digital replacement introduced customers will be offered Virgin's off-network services including a Virgin-branded digital terrestrial television set-top box, with the company looking at developing a television-over-DSL service for areas outside its cable network in 2009. Analogue subscribers in areas where digital cable services are already available will be offered transfers to new packages.
The firm has signalled it wants to use the capacity to provide faster broadband internet.
Virgin have announced that they are looking for trialists to test a 'Next Generation Television' service in Kent during 2008, starting with Ashford.
Also the five terrestrial tv channels are carried FTA on Virgin's analogue cable tv network along with BBC News, CNBC Europe (Ex-Telewest)/Bloomberg UK (Ex-Telewest) time shared with E4, Disney Cinemagic (Ex-Telewest) & Hallmark Channel (Ex-Telewest). However to view these feeds you need to have a tv that is capable of tuning frequencies used for cable tv.
The set-top box is roughly the same size as a video tape (19cm X 9cm). The box also comes with a remote control and remote control extender, which means the box can be hidden out of sight, whilst still being able to use the remote. Over 40 digital channels including Virgin 1 and over 25 digital radio stations are available with an 8 day programme guide, access to interactive content via the Red Button and full customer service support is available online and over the phone.
The set-top-box will be free to any Virgin Media non-cable customer taking the up the Bundle One subscription package. For non-cable customers taking a broadband service on its own, a one-off charge of £40 will apply, non-cable customers may purchase up to five additional set-top-boxes.
The next phase of this service is a combined IPTV and digital terrestrial television service similar to BT Vision and Tiscali TV. Virgin Media have signed an agreement with Cable & Wireless to become the unbundled local loop (LLU) network provider, providing access to 4 million homes outside of the Virgin Media cable franchise network and would include linear pay broadcast channels and video on demand. This was originally scheduled to be released during 2008 but it has been delayed until at least 2009 and scaled back as Virgin Media concentrate on improving its cable broadband proposition instead of focusing on competing with Sky in the premium television market.
Virgin TV brands its High-definition Television (HDTV) and Digital Video Recorder (PVR) service as V+. Virgin Media (when branded as Telewest) became the first UK broadcaster to offer HDTV, launching its service several months earlier than that of its chief competitor, Sky Digital. The service uses a PVR set-top-box, with three tuners and a 160 GB hard disk for up to 80 hours' recording. The presence of three tuners means that V+ can record two channels at the same time while viewers watch a third. This contrasts with most other PVR systems such as Sky+, which supports only two tuners.
The company currently brands its VOD service as "On Demand". In contrast to the Sky Anytime system from Sky Digital, Virgin Media offers a "true" VOD system. The service allows customers to stream programmes as and when they want to watch them from servers at the customer's local head-end. As the broadcaster automatically stores content on Virgin Media servers, this removes the need to pre-record many programmes. Users can search through a large library of programmes (called "TV Choice") from content-providers including the BBC, Channel 4, HBO, the Cartoon Network, Disney Channel, Discovery Channel, National Geographic, CBS Paramount, Buena Vista, Alliance Atlantis, Warner Brothers, Viacom (MTV, Paramount, Nickelodeon), Current TV, Teachers' TV , BabyTV and Virgin Media Television; and watch them when they want to. Subscribers to Virgin Media's premier television package, Size: XL, have the content included in their subscription, while other customers can pay £5 per month for unlimited access, or can utilise pay-per-view. In addition, Virgin Media offers a "Catch-up" service, which includes a free 7-day "watch-again" feature for selected television programmes broadcast by the BBC, Channel 4 and selected Virgin Media Television channels. The service also offers over 500 films (service-branded "FilmFlex"), and more than 1000 music-videos. As of 12 July 2007 the music videos became free for all XL customers: see http://diginews.name/digital/virgin-media-free-music-on-demand/
Additionally, it was revealed that one-third of BBC television programmed viewed on its iPlayer service are accessed through Virgin Media's On Demand service and that 50% of all Virgin Media customers "regularly" use On Demand services.
Virgin Media Television, the content subsidiary of Virgin Media (formerly called Flextech), has a number of wholly-owned channels (including Bravo, LIVING, Trouble and Challenge). Additionally, Virgin Media Television has a 50% share in UKTV (with BBC Worldwide), and owns Sit-Up Ltd, which operates the Screenshop, bid tv, price-drop tv and speed auction tv channels.
In June 2007 Virgin announced plans to launch a new television channel on Freeview and cable, replacing Ftn on Freeview. The new channel, "Virgin1", launched on 1 October 2007 and broadcasts a mix of British and American programming.
The present company formed in 2006 as a merger of the operations of Virgin Mobile and of the UK's primary cable television operator, NTL:Telewest. Virgin Media ranks currently as the UK's second-largest broadband Internet and fixed-line telephone company (after BT) and as the fifth-largest mobile phone group. It functions as the United Kingdom's second-largest pay TV provider (after BSkyB) and third-largest digital TV provider (after BSkyB and Freeview). Virgin Media dominates cable operations in the United Kingdom, controlling more than 90% of the market. In August 2007, Virgin Media's CEO Stephen Burch resigned following boardroom rows with chairman Jim Mooney and key investor Bill Huff.
Virgin Media launched to much fanfare in February 2007, with a public relations event and an expensive advertising campaign which covered major UK television-channels, newspapers and billboards. In an effort to increase awareness of the group and its services, Virgin Media's campaign used bright red colours to portray its brand-image. Recent television advertising featured actress Uma Thurman and comedienne Ruby Wax, and currently features actor Samuel L Jackson, whilst the print advertising features bold typography. Virgin Media also sponsor the Channel 4 reality TV show Big Brother.
In March 2007, 150 workers at Virgin Media's Teesside site received notices of redundancy that went into effect in July. The workers had the option to relocate to other sites, such as in Manchester (approximately away). Several moved to other departments at the Teesside site.
In July 2007 Virgin Media also axed its "Customer Experience Team" (responsible for training and coaching staff using call-monitoring and feedback processess) and have also announced the outsourcing of their business customer-services, despite poor feedback. In September 2007, 60 IBM contract workers at Virgin Media's Swansea site and 60 at its Albert Dock site became redundant.
More recently, approximately 200 "Face-to-Face" sales staff (who procure customers in shopping centres/events) have also received notices of redundancy.
On July 3rd 2008, staff in Swansea that support the DTV, telephone and Broadband frontline agents have been notified of a potential loss of jobs.
A uniquely thorough open letter on LeakedMemo.com, from an inside source has argued that Virgin Media's Installation and fault service is far below a reasonable standard expectable by the general public, and that Virgin Media are aware of this but choose to not address it because it is not profitable enough for them to do so. The letter blames a lack of quality and frustration experienced by customers as a by product of Virgin Media contracting other companies (eg Avonline PLC) to provide a source of morally questionable cheap-labour - not unlike that of western companies utilising Sweatshops. The letter states that its UK based installation technicians are grossly underpaid, are forced into completing unsafe and illegal tasks, are consistently given workloads which are unattainable, and forced to lie to customers leaving the workers demoralised. This is considered serious by Avonline's Managing Director Mark Wynn, who has commented on the letter, but has done so without disagreeing with the allegations. The open letter has received many more comments from other Virgin Media Workers, most agreeing with the original content. The letter is addressed to Sir Richard Branson, but is yet to receive a rebuttal.
According to Virgin Media, the comments in the article were taken out of context and misinterpreted . A statement released by the company states: "With Virgin Media rolling out a 50Mb service later this year, we are uniquely equipped to cope with the demand for new bandwidth-hungry services. We strongly support the principle that the internet should remain a space that is open to all and we have not called for content providers to pay for distribution. However we recognise that as more customers turn to the web for content, different providers will have different needs and priorities and in the long term, it's legitimate to question how this demand will be managed. We welcome an informed debate on this issue."
"It's mine - you can't have it. If you want to use it for something, then you have to negotiate with me." - Sir Tim Berners-Lee: 2008
Though Phorm initially claimed that Virgin Media had signed an exclusive contract and were committed to implementing Phorm's Webwise tracking system, Virgin Media have since distanced themselves from this and now state that they have only signed a preliminary contract with Phorm to better understand the tracking technology, and are under no obligation to implement it. Reports on the Guardian website in May 2008 suggest that Virgin Media may be further distancing themselves from the controversial system.