Branson's fourplay costs Virgin Media dear

Although it's still the largest MVNO in the UK with 4.7 million customers, Virgin lost a total of 61,300 customers in Q1 2007. Part of the reason could be Virgin's new concentration on acquiring contract customers instead of its traditional base - prepaid customers.

Significantly part of the fourplay offering is to sign customers up to Virgin Mobile on contract for £10 per month.

Virgin Media's TV services aren't doing much better either. The company expects to see a net loss of customers due to the fiasco over the loss of Bskyb customers.

At the height of this debacle, Virgin Media's call centre was receiving over 120,000 calls per week from customers complaining about the loss.

Hence Virgin Media got itself into a vicious circle whereby new customers couldn't sign up for its fourplay offering because existing customers were jamming its call centre.

At one point in time the call centre was playing a message which told callers they were valued but they were probably going to have to wait for 20 minutes to speak to an agent.

Against this background BT has decided it wants to break into the pay TV market with its BT Vision offering. What BT is offering is the V-box which is a Freeview receiver coupled with a digital programme recorder.

Given that the price for such devices is dropping rapidly, BT's installation and set up fee of £90 is looking less and less attractive. Especially since you have to install BT's own broadband network in order to download videos across the Net.

Given that the competition not only includes Virgin Media but also the Carphone Warehouse and Bskyb, BT's goal of hundreds of thousands customer within 12 months is looking very challenging indeed. µ

L'INQ
Virgin Media