Virgin and Sky - why does the customer lose out?

Why is it that when rival technology or media firms slug it out it's inevitably the customer that loses out?

The latest duo to go head-to-head at the expense of the paying punter are Sky and Virgin Media – the artist formerly known as NTL: Telewest.

In their wisdom these two have decided the nice cosy co-existing situation, where some people have satellite TV and some have cable and everyone gets along fairly well, is no longer reasonable.

This has descended into the business equivalent of playground name-calling in lengthy missives– with both Sky and Virgin attacking the other.

Essentially, these can be summarised as saying ‘we’re great, they’re not’, ‘I didn’t start it, he did’ and ‘it wasn’t me, it was him’.

The argument – rooted in the Virgin rebranding of NTL:Telewest being seen as a direct attack on Sky’s position of dominance – has delivered its first meaningful moment.

And how has this moment taken shape? More choice, cheaper programming and a revolutionising of the service, with each company fighting to give customers more? Nope, a row over charging for basic Sky channels seemingly destined to leave cable customers without popular programmes.

As of Thursday it looks very unlikely cable viewers will get Sky One, Sky Sports News or Sky News. None of which on paper are groundbreakingly brilliant, but in practice this means no Simpsons, no Lost, no 24, no Soccer Saturday and no more pointless debates such as 'are we overreacting about snow?'

At this point I should register a vested interest – I have cable. Now, as This is Money’s broadband, phones and technology man it fell to me to write the story when the news broke. That means I had to write a balanced article, putting both sides equally, explaining how it would impact customers and taking into account readers’ views we were presented with. And I think I did that.

However, what I actually wanted to say was:

‘What the hell are you doing you morons? What kind of stupid battle for supremacy leaves customers worse off? Do you honestly think that I, or any other customer, cares for one minute about your ridiculous finger-pointing in statements and whole page adverts in newspapers? Of course we don’t. We care about being able to watch certain TV series and being able to flop down in front of new Simpsons episodes or Soccer Saturday occasionally. Now sort it out, you clueless goons.’

Now that made me feel better, whether it gets my TV sorted is another matter?

- Simon Lambert, This is Money

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Comments

[chris Seager]

Quite frankly, its mainly crap on Sky. News 24 is usually much better than Sky news, and for sport, you have to pay extra anyway, so go to the pub and enjoy it more. Well done Virgin for standing up to a bully like Sky.

[David]

I was looking for new broadband and was thinking of going to sky, after giving NTL the boot for bad service.
When sky started stitching richard branson up i said to myself, no way now will i entertain any of them at the moment.I think Branson will strike out and start broadcasting from his own setup and will not worry about sky.Sky does not own a satelite, it only rents transponders and what is stopping virgin doing the same.

I don not need any of them anyway, because i set my own satelite up and can pick up enough satelite channels to last me lifetime from 15 satelites, hotbird, astra 1,2,3, nilesat, eutel etc.
So their we have it and all it cost me was purchase of equipment and no monthly on going rental.

So Murdoch and Branson can slug it out till kingdom come, but my money is on Branson, as sky are too greedy and have monopoly.

[Bernie Boy]

As a previous and very happy "blueblunder" customer I agree with Ian - I really don't care about the "cool" market image invoked by Virgin media. And the missing Sky channels? I don't think this is is a major setback for mankind as the programme quality on Sky One,like many of the cable channels, leaves something to be desired - except for missing the occassional Simpsons.
However, for those who enjoy Sky One they are the ones being penalised whilst Sky and Virgin keep throwing their toys out of the pram.

[Ivan McDowell]

As a loyal Telewest customer I first had a feeling of doom when we where informed of a takeover by rival NTL just a few months ago and next thing we were part of the Virgin Empire and its COOL image was thrust upon us. Why for heavens sake can't they just leave well enough alone . I just want to enjoy my next episode of Battlestar Galactic with no strings attached.

[Simon - This is Money]

Thanks for your comments.

From what we are hearing at This is Money, the fact that Virgin's website has crashed and the potential supercomplaint, it seems there are a lot of angry people out there in TV-land.

We will be asking Virgin if people can either have some money back, or leave their contracts.

As Steve says, this is a result of competition, but I'm not sure it will benefit customers in the long term. Also, if I cast my mind back to A-level economics, I don't think this is true competition. I reckon instead it is a duopoly, where the companies deliver an illusion of choice but fail to compete on price - as illustrated by the spat not producing a substantial cost saving but a disadvantage to customers.

There are major barriers to entry to this market at the moment but the internet is in the process of dragging these down.

By behaving in such a childish fashion, Virgin and Sky have weakened both their positions and just wound up their customers.

Expect illegal downloads of Lost, 24 and Simpsons episodes to get a serious boost in days to come.

Simon

[Lionel Welch]

Once again, as with transport and other public utilities, the consumer is the victim of global capitalism. I suspect that many people caught in this trap will say "A plague on both your houses" and switch to terrestrial freeview packages.

[Ian Shaw]

Hi

I agree completely with Simon Lambert and I will take it a step further.
I am attempting to get a refund from Virginmedia for the loss of service and I am considering a boycott on advertisers who use BSkyB programs that I can still get, in my case PremPlus.

it might not achieve anything but at least I will feel better with this shameful situation.

Regards

Ian

[Steve]

Isn't this what happens in a free market? Surely the battle between the two behemoths will lead to cheaper prices for the consumer in the end?