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Summary

Virgin Media’s plan to extend its network in the UK will help Virgin Media Business (VMB) with its current drive into the SoHo and SME business markets. It will also help with the quality of its bid-response efforts for large enterprises with national network requirements, and reinforce its competitive position against BT and Vodafone.

Reaching the high street

Virgin Media’s announcement of a £3bn investment to extend its broadband network to an additional 4 million premises in UK cities feels like it has been driven by the provider’s owner, Liberty Global. Building out the US system of hybrid fiber-coax cable might not be what a business services provider would be looking to do first in this market, but Ovum understands that some of the spend over the next five years will include advancing the core network based on MPLS and Ethernet territorially. The VMB network has been notable for taking Ethernet onto business parks; the new endpoints mean it will be able to take higher bandwidth Internet access services and VPN to minor business sites and even into the high street, where previously it had been dependent on DSL tails.

In sourcing engagements Ovum has worked on over the past three years, VMB has impressed with its network reach and service support for national retail and utilities companies with data network, datacenter, and contact center requirements. However, sometimes it has to sacrifice SLA performance at off-net sites in order to keep price competitiveness uniform across third-party links. Typically, this is for a small number of sites – 5% or fewer. Where these can be migrated back to its Gigabit Ethernet environment, VMB will be able to show substantial cost benefits to the enterprise buyer. It could also gain a compelling SLA position in the UK enterprise services sector.

Appendix

Author

David Molony, Principal Analyst, Enterprise

david.molony@ovum.com

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