Michael Cullen asks Paul Farrell about being left to his own devices at Virgin
Paul Farrell may have caught some people in marketing by surprise when he joined Liberty Global’s Virgin Media as vice president – commercial from Davy last July. Given his earlier job roles, at WorldCom/Verizon and 02, there is little reason to be surprised. On his LinkedIn profile, Farrell describes himself as “a passionate and committed commercial marketer”.
As O2’s marketing director, his job was all about developing strategies designed to sign up new mobile customers. Today, the tech market has moved on massively. At Virgin, the task is about getting people connected and bundling or signing up customers in clusters. Quad play is seen as the industry’s ‘Holy Grail’, but Farrell says there is a lot more to it than that.
Six in ten of Virgin Media’s mobile base are quad play customers, many of which signed up to UPC’s TV, broadband and home phone services. When Virgin added mobile, they joined the quad ranks. Virgin currently charges €40 a month for the first five months, then €60 a month and €110 monthly from a half year onwards – with separate billing for cable services.
Eir is the only provider which offers a single bundle with one bill, typically priced at €100 a month for six months and €135 thereafter. Sky does not have quad play as they are not as yet offering a mobile service in Ireland, but that could change if they decide to do as they did in the UK where they struck a deal with Telefonica, O2’s owner, piggybacking off its network.
Laughing matters: Although Virgin Media owns TV3, it did not stop Farrell from sponsoring comedy on RTÉ, with deals for RTÉ 2fm’s Breakfast Republic and Republic of Telly, Big Bang Theory and The Rubberbandits on RTÉ 2. The deal was brokered by OMD with creative by Irish International. Pictured with Farrell are Bernard O’Shea, Keith Walsh and Jennifer Zamparelli.
While TV, broadband and mobile come first, Virgin’s tracking shows 70 per cent of domestic customers still actively use the home phone. Virgin and Eir have invested in a ground cable network, with Virgin spending up to €1 billion over the past 15 years. Virgin is targeting 200,000 new homes in four years to the end of 2019, starting with 43,000 homes in 2016.
This year, the target is 60,000 new homes in places like Enniscorthy, Dundalk, Drogheda, Tullamore, Kildare, Tramore, Ennis, Galway, Castlebar and Sligo. Commuter areas close to Dublin like Ratoath and Ashbourne were also part of the plan. Farrell says 70 per cent of the new customers are expansions into areas where they currently have little or no footprint.
“The real demand from consumers now is broadband,” Farrell insists. “If you consider, the average home there’s about ten devices connecting to wi-fi broadband. The appetite for bandwidth is growing exponentially. Virgin offers the fastest speeds, 300MB – the fastest in Ireland – and we have the highest usage pro rata across our peers in the Liberty group.”
Speeds now available to customers in Ireland are seen as ‘cutting edge’ compared to what is available in the UK and even the US. But Irish consumers do not always see the full picture. Farrell says there is a lot of game-playing and ‘spin’ from Sky and Vodafone in what they say about offering fibre and high speed, but, in reality, they piggyback on Eir’s network.
He believes the country’s mobile market is saturated. “If you look at what Vodafone are doing – and it’s funny, having come from mobile I had chances to go back in and it never appealed to me – and where mobile was a year ago and went back 12 years ago, the messages were the same – best coverage, free text, free voice… not a whole lot has happened.”
Vodafone are going after broadband and TV. When you look at the penetration, competition and operators in mobile, the market is fraught. Between buying 02 from Telefonica and their marketing, Farrell reckons they spent about €2 billion. Yet, they have not grown significantly and Vodafone have held share, with others, like Tesco and An Post, chipping away.
The issue of who offers the best coverage has moved on, from 3G to 4G. Vodafone would argue they have the best 4G coverage, with Three not far off. They both talk about 94 per cent coverage. But things have moved on. Millennials and younger are conditioned to seek out wi-fi and connections beyond the mobile network. They use WhatsApp, which is free.
“To be brutally honest, the mobile operators failed to build a pricing model that justifies the investment of the business,” Farrell says. “So all you can eat data, all you can broadband… If you take the M50 as an analogy, over the last three years, usage on our broadband has doubled annually. That’s the equivalent of adding two new lanes to the M50 every year.”
It would require a big rise in tolls. Or, Farrell offers another analogy. If you were to use three times the amount of electricity, your Electric Ireland or Bord Gáis bill would increase by a similar or lesser rate. In data across mobile and voice, all the bundling has limited growth. To make up the shortfall, mobile operators are converging and moving into broadband and TV.
Farrell cites Sky as an interesting example. They had built a strong product and viewer experience, but based on premium content. Netflix and Amazon Prime have stolen the Emperor’s clothes to some extent, funding content in a different way. Sky Movies may no longer be as strong an entertainment proposition in homes with up to ten devices on the go.
Some households with business customers are prepared to pay quite a large amount above their normal broadband for a dedicated IP address, a higher end modem and backend sport. They see themselves as home users but they work for companies like MasterCard, Google and Bank of Ireland. They need to be on conference calls and be connected 24/7.
Virgin Media is launching three new stores in January, to add to their current three retail outlets. The new stores are on St Stephen’s Green in Dublin, in Galway and Waterford. A further four new stores are due to open by the end of March, early April. The network of ten stores will probably be it for 2017, giving the brand a reasonable high street presence.
Virgin customers can now watch shows seamlessly on TV using their Netflix subscription on the Horizon service, at no extra cost to the sub. The Netflix app is available on channels 999 and 300. Non-Netflix subscribers can sign up to the Virgin service using the app, allowing them to watch content on any device anytime, once there is broadband.