NTL poised to survive ISP shakedown with Virgin buy

NEWS NTL's £100m purchase of Virgin Net's internet infrastructure and customer base leaves the company poised to survive the UK ISP (internet service provider) shakedown, according to analysts, which will leave only a handful of players in the market. News broke late last Friday that Virgin Net had sold everything except its portal business to NTL, promoting the cable and telecoms firm to third place in the UK ISP league. NTL previously owned 49 per cent of Virgin.net. Nick Jones, analyst at Jupiter Communications, said the move puts NTL in the perfect position to survive the consolidation currently hitting the ISP industry. Different pricing structures and business strategies have created a competitive and fragmented ISP market in the UK but consolidation should streamline the sector over the next few years, with only about five significant players surviving, he added. NTL also has the added advantage of a digital TV platform. According to Jones this will be a crucial factor in determining the losers and winners as the ISP market develops. "This will fundamentally alter the consumer internet marketplace. European PC-based internet strategies must broaden into multiplatform strategies to reach customers anytime, anywhere," he said. Tony Lock, senior analyst with Bloor research, said streamlining its business with a company like Virgin Net could help NTL avoid the stumbling blocks encountered by other small ISPs. "It makes sense or ultimately they cease to exist. Virgin is the right part of the partnership to look after the portal and NTL had experience with a huge customer database. It wouldn't work the other way around," he said. He added that the unbundling of local loop networks will increase competition among ISPs offering unmetered access, and a sustainable association with a strong player like Virgin will be an important factor in survival. As part of the deal, NTL will take on 500,000 Virgin subscribers, bringing its customer base to over one million. The Virgin.net portal will be merged into the Virgin.com operation.