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DOCSIS

Virgin Media Readies 50 Mbit/s Service

Although it hasn't exactly been a well-guarded secret, Virgin Media Inc. (Nasdaq: VMED) CEO Neil Berkett confirmed this morning that the U.K.'s largest cable operator will launch its Docsis 3.0-based, 50 Mbit/s wideband service next week.

Berkett, speaking at the UBS Global Media and Communications Conference in New York, said Virgin Media will introduce the 50 Mbit/s (downstream) tier to about half its homes by next week and will offer it across the board by June.

"DSL in the U.K. environment is a substantially inferior product," he boasted, claiming that only 10 percent of homes with access to ADSL2+ technology can get up to 24 Mbit/s.

Today, Virgin Media's high-end cable modem tier offers 20 Mbit/s downstream. Virgin has not yet released pricing on the wideband offering, but Berkett said "it will be premium priced" -- appropriate for a service he's calling "the Ferrari in the fleet."

Although Virgin is starting wideband off by bonding only downstream Docsis channels, Berkett suggested that the MSO could start to bond upstream channels sometime next year.

As for future downstream speeds, he said Virgin is well positioned to maintain its lead over DSL, envisioning that the MSO could push speeds into the lofty heights of 200 Mbit/s.

The wideband deployment falls in line with a strategy at Virgin to concentrate its spending on broadband, video-on-demand (VoD), and mobile services, rather than lavishing attention on the premium linear television arena, which, in Berkett's view, continues to be skewed in Sky 's favor.

He's also confident that customers won't downgrade or turn off Internet services in the midst of a tough economy. For its fiscal third quarter, Virgin Media reported that uptake for its 20 Mbit/s tier had increased by 78 percent year-over-year, with 10 percent of its 3.6 million cable modem subscribers taking the MSO's so-called "XL" tier.

"Broadband is not a discretionary spend," he said. "The strength of [our] broadband position is very, very important in the home." Premium TV, on the other hand, could encounter "some spin-down."

Although he didn't want to appear overconfident, Berkett said he doesn't expect the economy to hurt the factors expected to drive Virgin Media's future growth.

Berkett was also bullish about VoD, which tallied 50 million on-demand views in October. He credited a lot of that momentum to the British Broadcasting Corp. (BBC) 's iPlayer catchup TV service, available to Virgin Media subscribers through set-top boxes and the MSO's cable VoD system. (See Virgin Media Weighs CDN Options and Virgin Media Touts iPlayer.)

BBC's iPlayer "has changed the way people look at video-on-demand and consumption of video over the Internet," he said. "iPlayer is the significant on-demand event of 2008."

— Jeff Baumgartner, Site Editor, Cable Digital News

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