Virgin Abandoning IPTV Plans

Virgin Media is abandoning its planned IPTV service announced in April 2007 following the departure of CEO Steve Burch.Virgin's IPTV offering was to provide nationwide coverage for Virgin Media services for those outside the reach of its cable network, and was set to launch in 2008. The company is leaving the possibility open that it will revive this effort in 2009.

Virgin Media reported a gain of 13 thousand customers in 3Q07, following a loss of more than 70,000 customers in 2Q07.

Virgin Media has had to pull in its horns to defend its base business in the face of significant financial losses. In the long term it will face increasing competition as BT's BT Vision and other TelcoTV services in the UK build momentum.

Virgin Media Responding to BT Vision

Virgin Media, the UK cable provider, announced that it will provide a free set-top Freeview digital terrestrial set-top box to its customers in areas where it does not provide cable service. Customers that subscribe to its 8 Mbps broadband service and Talk Anytime phone bundle at 19.99 UK pounds per month will get the set-top box for free. Customers in these non-cable areas taking only a broadband will pay 40 UK pounds for the set-top box. The company plans to offer more advanced TV services in 2008.

This is a clear response to BT Vision IPTV service. Virgin is trying to retain its broadband customers from moving to BT Vision in the face of BT's offer of a free Freeview set-top box. Virgin is also using this offer to move people to its voice/data bundle.

BT Vision will start providing a rich set of on demand services starting before spring ends. This will make it difficult for Virgin to compete until its own on demand services come up to speed. On the other hand, BT cannot afford a slow rollout. Virgin (and others) will be breathing down its neck.