Virgin Media urges Sky to raise broadband prices
She said: I find it completely paradoxical and ironic that this is the sector where were promoting and advertising the notion of free broadband access.
Its creating an impression in our consumers minds, in businesses and government that broadband should be free.
Broadband is an essential foundation to growing the economy in the UK. It requires investment and sustained commitment. Upgrades are not easy and they are not cheap.
Virgin Medias owner, the European cable group Liberty Global, is aiming to invest in the network with more speed upgrades and limited expansion to cover new areas. But its strategy of making broadband the selling point of the network rather than pay-TV has come under pressure as BT and Sky have competed fiercely to attract subscribers.
Virgin Media is expanding its network in East London
Gavin Patterson, BTs chief executive, has accused Sky of literally buying customers with its free broadband offer. BT charges 8 per month for its cheapest broadband package. Sky went to war over broadband pricing in retaliation for BTs decision to give BT Sport away to broadband subscribers, however.
Virgin Medias call for broadband prices to increase risks provoking the regulator, Ofcom, which touts the intense rivalry in the broadband market and reduction in prices in recent years as one its major successes. According to Ofcom figures, the average price of a broadband package was cut by nearly half between 2004 and 2012, partly as a result of regulatory intervention such as forcing BT to allow rivals to control its lines into homes and businesses.
While broadband is free or cheap, all providers have effectively raised the price of an internet connection by raising line rental rates. BT, Sky, TalkTalk and Virgin Media increased line rental by more than inflation at the end of last year and by as much as 6.5pc.
TalkTalk has examined the possibility of ditching line rental to introduce a simpler single prices for broadband and phone services that would make such "stealth" price rises more visible. It concluded that because of the way price comparison websites and other marketing channels work the move would hurt sales.
Virgin Media now uses faster broadband as its main selling point
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Virgin Media urges Sky to raise broadband prices