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Virgin on the go-slow with superfast

Find out why the £3 billion fibre broadband programme is stalling.

Angela Coffey

When Virgin Media announced plans to connect 4 million homes and businesses to average speeds of up to 300Mpbs by the end of 2020, Project Lightning became the biggest investment in the UK’s broadband digital infrastructure for a decade – much needed given that the UK population has ever-increasing broadband needs, with usage doubling. 

So confident in the £3 billion fibre broadband programme, the date was forward to the end of 2019, meaning more customers would be plugged into Virgin superfast broadband speeds far sooner than anticipated – which allows for multiple devices to stream, download, game or video chat without disruption – and expanding the coverage to 17 million properties.

 

"2019’s first-quarter reports showed revenues were down by £1.275 billion."

 

Of course, Virgin maintains its own fibre rich network, which sets them apart from most competitors who rely on the ADSL copper-based infrastructure provided by BT. But we can’t forget that Project Lightning hasn’t been without controversy. In 2017 it emerged the rollout had been severely overstated by 142,000 premises, which led to an internal investigation, suspension and, ultimately, staff changeover. 

2019’s first-quarter reports also showed revenues were down by 0.1 per cent to £1.275 billion. Despite gains in the B2B and broadband businesses, the drop boils down to a decrease in mobile earnings.

Now, fast-forwarding to this year, reports from the first quarter revealed just 102,000 Virgin Media customers had been connected to the superfast broadband, bringing the overall total to 1.7 million since 2015/16. Compare this to the 111,000 Q2 of 2018 – which even then raised eyebrows – it’s fair to say there’s less than lightning speed when it actually comes to connecting Virgin Media customers to the superfast fibre broadband. 

PROJECT LIGHTNING ROLLOUT RESULTS (2)

It’s far from doom and gloom for Virgin, though, with 59,000 RGU additions – a 32 per cent increase compared with last year, consisting of 46,000 telephony contracts and 37,000 broadband subscriptions.

B2B revenues made gains – 1.1 per cent year-on-year – powered by small office, home office – which added 15 per cent more subscribers compared to last year, though this was offset by a price decrease on voice revenues. 

However, cable customers’ ARPU was down slightly to £51.36 a month from £51.58 in the same quarter last year, while ARPU for mobile subscribers was up from £10.38 to £11.08.  

Mike Fries, CEO of Liberty Global, the parent company of Virgin Media, remains confident and said of the first three months' results: “Our Q1 performance was impacted by lower install and telephony usage revenue, the timing of certain PPV events and increased promotions in response to market dynamics. However, our competitive position remains strong and we continue to extend our reach with Project Lightning, where we are building 400,000-500,000 new premises every year.”

There’s also no dispute that the project is a complex engineering task. And in a positive move, it was announced that more progress was being made as Virgin began to use Openreach cable ducts, the tubes broadband cables run through underground, allowing even more homes to be reached. 

The first quarter also saw Virgin Media trial the fastest home broadband speeds, after it successfully tested a connection offering speeds of more than 8Gbps to homes in Papworth, Cambridgeshire. This consisted of download speeds more than 200 times faster the UK average.

However, Openreach looks to be biting at Virgin’s heels after it announced in March that Salisbury was selected to get an upgrade in internet speeds, as part of the 'Fibre First' project. This will mean homes and businesses in the city can connect to Gigabit-capable FTTP technology and, with a target of just over a year for the rollout, it promises to be one of the fastest network builds in the UK so far.

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