Project Lightning Progress as Virgin Media Top 5.03 Million Broadband Users

Virgin Media (Liberty Global) has today published their Q2 2017 (calendar) results and reported a total UK broadband customer base of 5,028,300 (up by +30,900 in Q2 vs +80,700 in Q1), although their £3bn Project Lightning network expansion is still rebooting itself after recent troubles.

The operator got in trouble earlier this year after they were found to have been overstating the roll-out progress of their ultrafast broadband and TV network by 142,000 premises (here), which triggered a shake-up of their top-level Executive Committee (here). The business has also suffered various complaints about the quality of their street works (example) and reports of further job losses (here).

On top of that they’ve also had to contend with a couple of recent SuperHub router security scares (here and here), delays to their IPv6 roll-out (here) and a probe by Ofcom into their early contract cancellation charges (here). Suffice to say that Virgin Media will be glad to see the back of the second quarter.

In terms of growth, Virgin had a slower Q2 than usual with net additions of just +30,900 during the quarter, which is down from +42,700 at the same time last year and that’s surprising given their network expansion work. On the other hand their Q2 results are normally get hit by the seasonal movement of students (i.e. cancelling contracts as they return home for the summer break), which is why they’re so much lower than in Q1 2017.

Overall Project Lighting, which still aims to reach an additional 4 million premises (2 million of those will be via FTTP) by the end of 2019 and this should cover around 60-65% of the UK, delivered 127,000 new premises in Q2 (up from 102,000 in Q1).

The operator is clearly working to increase the scale of their delivery and in total some 796,000 of the 4 million premises target have been completed. The eagle eyed will recall that Virgin had originally projected to reach “up to” 800,000 extra premises during 2017, which was before the recent problems.

Mike Fries, CEO of Liberty Global, said:

“With respect to Project Lightning, we’ve made significant strides in solidifying the foundation of the program through the appointment of a dedicated new leadership team, as well as an overhaul of key processes and procedures.

During Q2, we built 127,000 new premises at Virgin Media, including a record monthly build performance in June, and our cumulative total now stands at nearly 800,000 premises since the project’s inception.

Meanwhile, on the European continent, the number of new build and upgraded homes in markets like Germany and CEE continue to broadly track our expectations. In these regions, we have added a cumulative total of 1.4 million newly marketable premises over the last 2 years.”

Elsewhere Virgin reported that demand for higher broadband speeds remained strong with 60% of their total broadband base subscribing to ultrafast speeds of at least 100Mbps at the end of Q2 (mostly because this was their entry-level speed until the 50Mbps option was reintroduced last month) and their UK mobile subscribers declined by -20,100 (total 2,995,600).

On the financial front the operator saw quarterly UK revenues of £1,137.5m (up from £1,119.0m at the same time last year) and their total capital expenditure for Q2 reached £170.4m (up from £145.6m last year). A price rise was announced last week too (here) and Virgin said today that this will be used to support “targeted service enhancements for the majority of impacted customers including speed increases, customer premises equipment upgrades and additional TV content.” Speaking of which..

Future Upgrades and Fixes

Finally, we wanted to touch on the long-running latency problem with Virgin Media’s Intel Puma 6 CPU equipped SuperHub 3.0 router from ARRIS and their future DOCSIS 3.1 upgrade plans. Since June we have repeatedly been told that trials of the firmware fix for the Hub 3.0 were due to start “soon” and sadly they’re still saying the same thing; if it’s any consolation then Virgin Media appear to be equally frustrated by the long wait.

As for DOCSIS 3.1, readers may recall that Liberty Global was hoping to begin their first customer field trials of the Gigabit capable broadband technology by “late 2017” and then complete their commercial roll-out by around 2018/19 (here). However Virgin Media tend to do their own thing and we’ve been told that there are no plans in the immediate term for a trial, although they couldn’t confirm any details either way.

We read the above as meaning that customer field trials of DOCSIS 3.1 in the UK may now slip into 2018 or later, which would align with leaks from other sources who inform ISPreview.co.uk that Virgin Media may next year launch a 500Mbps tier using their existing EuroDOCSIS network.

In this approach Virgin Madia can focus their investment on improving network capacity and coverage, while leaving the full DOCSIS 3.1 roll-out until later. After all G.fast based ISPs are likely to suffer more than Virgin from any move to adopt average speeds in advertising, thus their performance lead isn’t expected to be bested any time soon at a truly national scale.

UPDATE 8:50am

In related news we note that Virgin Media has quietly scrapped their 200Mbps GAMER package, which offered faster upload speeds and no traffic management. We’re not surprised by this as the service tier will have caused some confusion between their vanilla 200Mbps option and the seemingly faster 300Mbps tier.

Mind you if Virgin put more effort into stating their upload speeds and traffic policy on the package summary then consumers would perhaps find it easier to understand such differences.