Virgin Media O2 officially launches with vow to shake up the market

Having cleared all its regulatory hurdles, the UK’s new converged telco is full of ambition, but going toe-to-toe with BT will be very expensive.

“With the fastest broadband and most reliable mobile network in the UK today, Virgin Media O2 is the complete package,” said Lutz Schüler, CEO of VMO2, at its official launch. It’s reasonable to infer from that an acknowledgement that it has neither the most reliable broadband nor the fastest mobile network. That would appear to identify the key areas for investment if VMO2 wants to have a compelling offering.

“We are ready to shake up the market and be the competitor the country needs at a time when choice has never been more important,” said Schüler. “Through investment and innovation in cutting-edge infrastructure and future technology, we will connect more people to the things they love, support communities across the country, help businesses to grow, and power the UK economy. With no limit to our ambition, we’re here to upgrade the UK – and our mission starts today.”

The company said it will spend at least £10 billion over the next five years, which will presumably be mostly on fibre rollout. While it may indeed be faster, on average, than Openreach at those premises it does serve, VMO2 will probably always be playing catch-up when it comes to fibre coverage. Meanwhile it urgently needs to do something about the relatively poor customer service delivered by its broadband arm.

There’s the now standard whittering from UK telcos about how good it is for the country, although it’s perhaps telling that no politician was included among the canned quotes. There are no product announcements, which is fair enough as it takes a while to sort out the plumbing for a truly converged product and BT/EE still hasn’t got that nailed. Instead VMO2 is leaning heavily on the philanthropy angle and seeking marketing capital via charitable donations.

“As one of our first acts as a new business we’ve created a fund dedicated to supercharging hundreds of community-based charities that are already doing incredible things.” said Schüler. “Our broadband and mobile networks already connect millions of people across the country, but as a business we’re committed to doing more to bring people together, accelerate positive social and environmental change and promote a sense of community belonging as we push ahead with our mission to upgrade the UK.“

How philanthropic VMO2’s customers consider the organization to be remains unclear, but its only path to success lies in the boring-but-expensive work of delivering quality communications services. Until VMO2 starts consistently topping BT/EE when it comes to performance and customer satisfaction it will be forced to compete primarily on price, which in turn will place a strain on its investment ambitions, so there’s plenty of work to do. Having said that, it’s great to have another converged operator in the UK to ensure a healthy level of competition and we wish VMO2 good luck.

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