Virgin launches 50Mb/s service – first real test of NGA demand

Virgin Media has launched the first 50Mb broadband service in the UK, bringing the much-heralded world of Next Generation Access nearer. At around nine times the average headline broadband speed in the UK and over twice the previous highest 24Mb/s service, the launch of the 50Mb service offers the first chance to assess whether there really is demand for such ultra-high speed services. Clearly wedded to a “build it and they will come” strategy, Virgin Media are trusting that the early demand for their 10Mb/s and 20Mb/s services will translate into profitable demand for the even faster service.

But even Virgin seem to be struggling to imagine what customers will use such high speed services for. They suggest that shared accommodation of students would find it useful, that video-rich entertainment and social networking websites will require it or homes needing multiple HDTV channels. But surely that’s not enough to support such an expensive solution. And in a recession is £51/month (over £600 a year) really going to sell (when there are already early signs of people downgrading service), especially when you still have to pay for movie and sport content on top ?

The 50Mb is based on an upgraded network with current 10Mb and 20Mb users being moved onto the new "DOCSIS3" network, freeing up capacity for increased traffic on the existing DOCSIS 1.0 network. Quite what that means for the cost equation is debatable, but with luck it may be possible to regard this as an incremental spend and justify a business case on that basis.

Roll-out to the 12.6 million homes covered by Virgin Media's fibre optic network is expected to be complete during the Summer of 2009. So at the very least Virgin Media have put down a marker which may spur others to respond.