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Technology / Data Centre

Q&A with Mark Heraghty, MD of Virgin Media Business

Q. How much of a negative impact did the ntl:Telewest Business brand have on business?
A. We’ll see, because having made the change we’ll hopefully get the benefit rather than the pain. Someone said that the ntl:Telewest brand had all of the charm of Telewest together with the service legacy of ntl and that is something we had to cope with. You could see an SMB not being turned on by that brand.

Q. But it’s not just about the brand, you still have to deliver.
A. Indeed, and it’s important not to focus too much on the brand. The brand is the most visible thing we’ve done [since the merger] but it’s not the most important. That’s been to significantly increase the investment we’ve made in the networks. We need to make sure that we have the same carrier grade, industrial strength network that you would expect to have when selling to a very large government department or large enterprise.

With the increased emphasis on growing business I made it a condition of committing to a growth plan that we also had to invest in some of the basic infrastructure, such as power.

Q. Does having the Virgin Media network already in place throughout the UK mean that you don’t have to invest heavily in that area?
A. We still make a reasonable investment but most of the spend in our division is what we call success-based capital – it’s the money you spend connecting up the customer once you’ve won the contract. That’s much easier than the speculative way of cabling up somewhere and then hoping you get a customer.
The UK cable industry spent 10 years cabling up large parts of the country and not necessarily connecting up enough customers. Bar far and away the most expensive thing you can do is dig up the streets. The cost of the fibre and equipment is relatively modest compared to that.

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Q. Are we likely to see Virgin Media Business expanding beyond its traditional stronghold?
A. One of the areas where we need to up our game, especially if we’re going to target larger businesses, is to remain relevant to our customers and to take account of their needs and not simply focus on what we can do. So we will be working in partnerships on capabilities that are loosely referred to as cloud or virtualisation. We’ll be partnering with large companies to ensure we don’t get trapped in the network connectivity space.

Q. So you’ll be moving beyond networks to become a more general business IT provider?
A. We already do a lot more than most people realise – we do a lot of LAN business for example. What we want to be able to do is everything from the desktop to the application. Not necessarily by ourselves but to have that end to end capability so we can go to the larger businesses and manage them all the way from the desktop to the hosting centre and to the cloud.

Q. When are we likely to see these new products?
A. We’ve gone out to tender for a partner for the cloud computing/co-location/hosting capabilities and aim to launch this summer. Most of our revenue comes from data services so it’s natural for us to extend into this area; everything that happens in the cloud is good for us because it means more data traffic on our network. We also have the ability to be commercially disruptive, which others don’t for two reasons: often they don’t have the local access network so they don’t have the gross margins we do, and the other reason is that we have nothing to lose by going into a company and doing everything from the desktop to the hosting centre and charging them X amount per seat. Our competitors just can’t do that with their whole installed based, they just can’t afford it.

Q. What can you bring to this well-established market that other companies there cannot?
A. It’s a combination of value for money, brilliant customer service and being a challenger, someone that can disrupt the market. The model I’d love to emulate is Virgin Atlantic. When flying across the Atlantic you now consider Virgin as one of the options alongside BA. We want business telecoms users to come to the same conclusion, like they have in the consumer space.

Q. Will the rebranded firm be gunning for larger contract wins?
A. Most of the customers we have in our corporate sector are medium sized, with contracts up to about £1m and we have a few around £5m a year. But we don’t have any, outside of the wholesale sector, spending tens of millions a year. We want to brake into large distributed retailers, retail finance, manufacturing, businesses that are data dependent and are attracted by cloud computing.
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