Virgin Media UK Shelves Budget Broadband ISP Project Prosecco

Newspaper reports appear to suggest that cable operator Virgin Media has quietly scrapped their tentative Project Prosecco plan, which back in 2016 (here) indicated that they were aiming to setup a new sub-brand called ‘Ruby‘ that would offer cheaper broadband packages.

Many of the largest network operators already have their own low-cost sub-brands. For example, BT has Plusnet and Sky Broadband has NOW TV (NOW Broadband). Meanwhile Virgin Media has long held an aspiration to adopt a similar approach. “There are a lot of people down in the more economic sector. But we think there is room for everyone in this market,” said Tom Mockridge in 2016 (CEO of Virgin Media).

According to The Telegraph, the cable operator had already reached a fairly advanced stage of development with their plan to launch ‘Ruby‘ (this brand was registered in March 2017 at the Intellectual Property Office), before finally pulling the plug toward the end of last year.

Sources told the newspaper that VM was “almost ready to go” before they got cold feet, which was partly due to some aggressive price cutting by new-entrant Vodafone and existing players, such as Sky Broadband. Vodafone in particular has made FTTC based “fibre broadband” packages almost worryingly cheap as they attempt to claw customers away from rivals. Past a certain point the risk and potential for brand confusion simply became too great for Virgin.

The decision, which Virgin has declined to comment on, will at least be good news for other budget conscious ISPs. On the other hand TalkTalk is also said to be feeling the pressure from Vodafone’s aggressive pricing strategy, which has attracted concern from Exane BNP Paribas and caused some investors to leave.

TalkTalk has quite a big debt to pay off and so what it doesn’t need right now is more instability. On the other hand Vodafone needs to grow some scale into their fixed line customer base (not least to help support their FTTH rollout) and a weak TalkTalk could turn the ISP into an attractive acquisition target.