Virgin Media: Branson means business

OvumVirgin Group, the diversified media and services group led by Sir Richard Branson, has today rebranded and relaunched its enterprise telecoms services division ntl:Telewest Business as Virgin Media Business (VMB). Good progress with network development leaves VMB well positioned to expand its offer out to smaller corporates.
The Virgin group has taken a long time to decide to bring its business services under the Virgin Media brand. During a period of admittedly static growth, the company says it has been investing in its managed services platform and customer services capability.
In the last 12 years, VMB has quietly built up a significant network provisioning and integration offer, with network management services on top – especially in security and remote performance monitoring. It has a roadmap to high bandwidth network services (e.g. an 8–10Gbps fiber channel interface) and a continuing emphasis on security compliance (ISO27000), but the timeline is hazier for value-added services in applications management, data centre operations and hosting.
However, this need not be a disadvantage at this stage because – as VMB is finding when it offers multiple classes of service in VPNs (for example) – mid-market enterprise users want to be armed with it even if they are not ready to use it.
Taking that “opt now, use later” position is working for the current local government and the medium-sized to large enterprise customer that already has a high bandwidth requirement for at least one part of its data traffic, but is not fully multimedia or multiservice in applications networking. Their first requirement is for a technology refresh and upgrade, and some are using that opportunity to move onto VMB’s switched Ethernet platform.
For the moment, emphasis remains in network consolidation and interoperability. DOCSIS 3.0 is on the roadmap this year and will provide a hybrid fibre coaxial (HFC) interface into VPNs. This will reinforce the network integration capability that allows VMB to bring councils and utilities with scattered offices and remote sites together on a single platform, often combining private line, Ethernet, wireless and ISDN. Outside its cable franchise footprint, VMB will have an ADSL2+ resale offer later this year.
No. 2 in enterprise
A strong investment in customer support makes VMB a good proposition for enterprise users who want an alternative to BT and Cable & Wireless, as well as emphasis on dedicated account management. VMB is offering some competitive lead times for Ethernet point-to-point for example, but just as important are the assurances on delivering to quoted times.
VMB is aiming for the no. 2 position in UK business services (it claims to be there already in the local government sector). Virgin sees growth coming from three directions: the broader corporate market, wholesale and SMEs. It makes sense to look for growth in its managed services portfolio in the wider, larger enterprise market by extending its offer to UK corporates beyond its core strengths in local government and utilities. Many of these public sector customers were acquired during its negotiations to build out its cable infrastructure and have proved to be loyal.
Virgin is also looking for growth in the SME segment. It currently has over 55,000 SME customers in the UK, but its “sweet spot” is the mid-sized company, which is offered a mix of VPNs, broadband access, managed internet access, point-to-point services and voice.
There is certainly scope to offer more focused services to smaller SMEs, which typically require simply priced, managed and hosted offers built around bundles of services. Indeed, Virgin might have the resources to be successful here. It has local presence and owns an extensive access network; in fact the company claims to pass three-quarters of UK businesses, providing it with an opportunity to differentiate and price its offers in a way that many competitors cannot.
Mobile will surely need to be part of the SME offer and this is an area where Virgin will have to beef up its business skills. While Virgin has an existing MVNO relationship with T-Mobile UK, it currently only offers consumer mobile services and has not been especially innovative here.
However, the benefits of bringing the ntl:Telewest Business closer into the bigger Virgin Media family are that it will now have access to the group’s formidable marketing capability as well as closer management focus. This will surely be the key to its success.