Virgin Takes Fight to Its DSL Rivals

U.K. cable operator Virgin Media Inc. (Nasdaq: VMED) is celebrating the near completion of its Docsis 3.0 deployment with a triple-whammy of announcements: It's chopping prices for its new 50-Mbit/s wideband service; offering a free Virgin-branded netbook computer to customers who take certain bundles; and kicking off tests of faster upstream capabilities. (See Virgin Wraps Wideband Rollout.)

Starting Sept. 1, Virgin will reduce the cost of its 50-Mbit/s (downstream) service to £28 (US$46.03) per month, when bundled with a phone line, or £38 per month ($62.48) when purchased as a standalone service. Currently, the "naked" version of the service costs £50 ($82.21) per month, and the bundled offering is £35 ($57.54).

Virgin's wideband pricing, even before the cuts, compares favorably with Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s in the U.S. There, the nation's largest MSO recently cut the price of its "Extreme 50" Docsis 3.0 offering to $99.95 per month (when bundled with its video or voice service), or $116.95 per month as a standalone. (See Comcast Trims Wideband Pricing.)

Virgin is now testing out a 200-Mbit/s service with 100 "early adopters" in Ashford, Kent, but hasn't indicated how much such a service will sell for if and when it's commercially deployed.

Virgin is also trying to add and retain subscribers by offering an MSO-branded "Freedom" netbook that's been "optimized" for the 50 Mbit/s service. The operator is giving the mini-laptop away for no added cost (Virgin says the device is worth about £300, or $491) to new and existing customers who sign up for certain fixed-line and mobile broadband service bundles and agree to a 24-month service contract.

Virgin's new pricing and overall marketing tilt targets broadband competitors BT Group plc (NYSE: BT; London: BTA) and Carphone Warehouse Group plc (London: CPW), and comes into play only about seven months after the MSO debuted its Docsis 3.0-fueled "Broadband XXL" tier. The MSO says the wideband service is now available to about 12 million U.K. households (roughly half of them). (See Virgin Media Readies 50 Mbit/s Service .)

Virgin has more than 3.73 million broadband subs. Carphone has north of 4 million DSL customers, aided by its recent purchase of Tiscali SpA (Milan: TIS)'s U.K. business. BT is ahead of the pack with more than 4.8 million broadband customers. (See Tiscali Takes Next Step to Survival.)

Unlike North American MSOs such as Comcast and Cogeco Communications (Toronto: CCA), Virgin does not put a consumption cap on monthly usage. The 50 Mbit/s service is also offered free of "traffic management" techniques Virgin uses for its other cable modem tiers. Those techniques, spelled out in the company's acceptable use policy, are active between the hours of 4 p.m. and 9 p.m., and from 10 a.m. to 3 p.m. (See Cogeco Fits Wideband With 150GB Cap and Comcast Draws the Line at 250GB.)

Dilated upstream
Virgin is also looking to straighten out a shortcoming that has been lamented on the Light Reading message board -- its relatively weak upstream speeds.

A Virgin spokesman confirmed the wideband service currently caps upstream speeds at 1.5 Mbit/s. However, a pilot underway in Virgin's North East and Midlands service areas is delivering upstream speeds up to 10 Mbit/s.

The spokesman also said it's too early to say when Virgin might offer faster upstream speeds in additional areas. The same goes for eventually offering a bonded upstream path.

Channel bonding "is obviously part of the advantages of D3 [Docsis 3.0] and, just as we are with downstream and 200 Mbit/s, we'd certainly be looking at the best way to deliver even higher upstream" (where bonded upstream would play a part), the official said in an email response to questions.

For now, there's little to be said of bonded Docsis upstream channels in production networks, as most activity is still occurring in controlled lab settings. However, Japan Cablenet Ltd., the second largest MSO in Japan, is bonding channels in both directions with its recently launched "Speed Star 160" tier using Arris Group Inc. (Nasdaq: ARRS)'s C4 cable modem termination system (CMTS) and WBM760C wideband modems. (See Japan Cablenet Swims Upstream .)

Virgin is using CMTSs from Motorola Inc. (NYSE: MOT), which happens to be working on a new blade that packs in 48 dedicated upstream ports. That product, the RX48, won't be out until sometime in 2010. (See Virgin Picks Moto CMTS for Wideband and Moto Downloads Docsis Plans .)

— Jeff Baumgartner, Site Editor, Cable Digital News

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