Virgin Media O2 has long been one of the strongest players in the U.K. mobile market. In February this year, the operator began service on O2 Satellite, its direct-to-device enabled by SpaceX’s Starlink. It is a bold move and potentially signals a new era of satellite connectivity in the U.K. Virgin Media O2. The company has over 46 million mobile connections across its network. This includes wholesale and MVNO partners. Direct consumer mobile contract connections are around 12.5 million.
Via Satellite spoke to Virgin Media O2 Commercial Director Chris Bournes about how the mobile giant sees satellite, why the time was right to launch O2 Satellite, and why it could become a key differentiator for the company.
VIA SATELLITE: Given the size of Virgin Media O2, what is the importance of launching O2 Satellite, and why do you think it is highly significant for the company?
Bournes: O2 Satellite is part of our Mobile Transformation Plan, which will see Virgin Media O2 invest around 700 million pounds ($941.3 million) into our mobile network this year alone. We don’t view O2 Satellite in isolation, we view it as part of an overall strategy to make sure that we are keeping the U.K. connected. It is hugely important for us both for technical reasons, ensuring our network can technically support our customers in more places, but also in building customer trust and making sure our customers have a great, reliable service.
VIA SATELLITE: Do you think it is something that O2 customers will embrace?
Bournes: O2 Satellite is not just around the technical delivery of a new service for our customers; it’s also about how Virgin Media O2 is positioning itself from an innovation standpoint. It shows that we are willing to make the cutting-edge investments, willing to do things differently, willing to be the first in the shoot, if you will, to try things that traditional operators wouldn’t have done historically. Globally we were the fifth to launch, but we were the first in Western Europe to launch the service, so we’re very proud of that.
We are very proud of the innovation that’s driving behind it. We say internally that we are getting our mojo back, and we really believe that. O2 was the first company to go exclusive with the iPhone back in 2007 and since that moment in time we have launched lots of new and creative things, but this is the most innovative one, certainly. As O2 Satellite becomes available on more devices, more customers will be able to access it and see the benefits. Connectivity is essential to everyday life – and our customers are using it more than ever – so it’s inevitable that satellite data services will increasingly become part of the U.K.’s future telco offering.
VIA SATELLITE: You talked about VMO2 getting its ‘mojo’ back. Does that imply you had lost your mojo?
Bournes: No, I would not say that we did not have our mojo before. We are investing in the network because we know that it is important. Connectivity is table stakes, and it’s not something that our customers take for granted, nor do we.
We have had a great network for a long time, and we have won multiple awards for it that we’re very proud of, but we are doing more than that. We have acquired more spectrum following the Vodafone/3 deal, we are making the investment in the mobile network this year to make it better for our customers, we have launched O2 Satellite to be able to cover areas that the terrestrial network would not be able to. It is not about getting it back so much as accentuating what we have always done, which is provide the best service that we can for our customers.
VIA SATELLITE: O2 Satellite is available as a 3 pound ($4) per-month add-on and will be included at no extra cost for all Ultimate Plan customers. What level of take-up are you hoping to gain? How many customers do you have on the premium plan?
Bournes: From a take-up perspective, we already have multiple tens of thousands of customers on the service, and that is only going to grow. O2 Satellite has been a phased rollout across devices – first Samsung, then iPhone, then Pixel – and we included it within O2’s Ultimate Plan tariff. As availability across handsets grows, we expect to see the take up spike pretty dramatically, but we are happy with where it is today. Our focus right now is ‘are customers who want or need it able to get it’ and ‘will they get a quality service’? And both of those questions, the answer is yes.
VIA SATELLITE: How many customers do you hope to be using O2 Satellite in a year?
Bournes: It is tough to put a specific number on because people using the service depends on when people are traveling to the areas that it’s enabled in. It’s more around how many people want the service because they might have a need for it at a certain point in time, it’s about making it resonate with those people.
Enabling O2 Satellite isn’t about wanting ‘x’ amount of people on the service. Topographically, the U.K. is a very difficult country to operate a terrestrial network in, and so we want to be able to cover gaps, and that is what the service is doing. So, if people want or need the service, it is available and we’re proud of it, but our goal has always been simple: keep customers connected.
VIA SATELLITE: What is the business model behind the service? Do you expect O2 Satellite to turn a profit for the company?
Bournes: We do not look at this as an individual P&L. O2 Satellite is a complementary service, and it is still very early days. We may look at the net ads and the trading aspect of it in future, but that isn’t why we launched. It was about bringing something new to market, seeing how take up works, seeing where geographically customers use it, where they don’t use it, how we can make it better.
From a price perspective, we are offering O2 Satellite at a pretty accessible price point, particularly if you compare it to telcos around the world. We really wanted to get the experience out there. For customers on our most premium plan, it’s added at no extra cost, because we want to differentiate with them and offer them more value. The service isn’t designed to be a net profit generator on its own, we consider it a complementary service to a wider network story, and that story is one of reinvigoration and bringing a quality service to our customers.
VIA SATELLITE: Do you think this is the start of satellite going more mainstream in the U.K.? This is one of the first-of-its-kind services to launch in Europe. Why were you so keen to be one of the early adopters here?
Bournes: Firstly, I just thought it was cool. When we first started talking to Starlink, it was an obvious differentiator. If we are looking at it, then the folks sitting over at Vodafone and BT are probably looking at it, so let’s be first in the shoot. Beyond that, it solves a genuine customer need. There are some areas that are incredibly difficult to cover with traditional coverage, and we wanted a way to be able to close that gap and provide a great service for our customers. That is what we sought out to do, and that’s what we have done by launching the service. We believe satellite-to-mobile services will become an increasingly important part of the connectivity mix over the coming years.
VIA SATELLITE: A lot of wireless players are teaming up with satellite players – AT&T/AST SpaceMobile, Verizon/Skylo/AST SpaceMobile. How influenced have you been with what is going on in the U.S. and other markets?
Bournes: I wouldn’t say that we have been influenced by what is going on with other markets, but we obviously keep a close eye on it. If we think about all the operators, it is pretty clear SpaceX is a clear market leader in the space. Starlink has the largest constellation of D2D LEO satellites, and we are hopeful that other players come online, because we think it is a great service, we think it is necessary, and we like competition, but for now, the game in town is Starlink. We are very happy that we were able to close that deal with them and deliver the service. We will keep an eye on other markets and other players, but for now we are focused on what we have to offer today, and how it evolves over time.
VIA SATELLITE: What are the main technical challenges to be able to offer such a service?
Bournes: Being the first operator to launch in the U.K. means we have taken on all of the inevitable teething challenges. From a regulatory perspective, as an example, Ofcom had to sign off on spectrum licenses. We have been in and out of conversations with government from the very start. There is a lot of groundwork that needs to be done, and we’ve had to do that. We have had to work with each of the OEMs at a device level to ensure device compatibility.
The service itself is going to continue to evolve and develop, so there is what we know the service today to be, but inevitably there will be what we know the service to be in 24 months’ time, and that will come with a ton of opportunity, but also with a lot of challenges. It is part of the process, but I think we are in a pretty good position to take on the next phase of that, given we have spent the last year working as a full enterprise to make sure that we launched it the right way.
VIA SATELLITE: What will the service look like in 24 months time?
Bournes: When we first started this conversation with Starlink, we were expecting the ability to send a text message, and some basic data capabilities, but by the time we got the service live it had evolved so people were video calling on it. In that short period of time, the evolution of the technical delivery has been pretty amazing, and I am really excited to see where it goes in 24 months. There are some bits that we have heard from Starlink, but time will tell. I expect it to get better, objectively, but that is about as much as we can let on to right now.
VIA SATELLITE: How important is O2 Satellite from a public safety perspective? Is that the real benefit of this service, more an emergency service?
Bournes: O2 Satellite is undoubtedly going to be there in the moments that matter for people. On the one hand it will make sure your Google Maps doesn’t go out or make sure you can send a text to your loved one when you are out hiking telling them you are okay, and on the other, it will provide additional reassurances that you can keep connected in areas without traditional cellular service.
If we think about what the natural examples of that are right now, it’s when people are participating in outdoor activities, so hiking or climbing in remote locations, checking the route that they are going, checking the weather, but what happens if they trip and fall and need to make a phone call and say, “I’ve hurt myself” or send a text.
The service, right now, to be clear, doesn’t support emergency services, but it acts as an additional safety layer, assisting people by providing access to information that can keep them on track, guide them, keep them in touch with loved ones when they need to, and obviously our hope is that as the technology evolves, it is going to bring more of these benefits to life, particularly in the way of emergency services. It will be an evolution. Where we were a year ago was to the ability to send a text message, where we are today is the ability to use data in a richer way than previously, and in 24 months time, we do not know what the future will hold, but we certainly know that it will be evolved from where it is today, and we are really excited about.
VIA SATELLITE: Would Virgin Media O2 look to invest more into satellite-based capabilities? What role do you see satellite playing in reducing the digital divide in the U.K.?
Bournes: We are really happy with the capability that we are offering today, and really, really proud to have been first both in the U.K. and in Europe, but we are just getting started. We hope that the future developments are going to be even more exciting. We have already started to see this, since launch we’ve had more handset support going live, so we are not standing still. We could have just done this with a limited number of SKUs or used some type of upgrade program, but we didn’t do that. We want to make the service is as widely accessible as possible, so we have done it both from a technological standpoint, but also from a pricing standpoint, where we have made the barrier to entry, really low.
SpaceX itself has already set out what its future generations of satellites can do, and we are really excited to be partnering with them to see how that evolves further over time, but I want to make one thing clear here, which is a satellite is not a replacement for terrestrial mobile networks, it is a complementary service. It provides a great solution in connecting our customers where traditional coverage is difficult, and we believe that satellite D2D services will become increasingly important, and that’s the reason why we jumped on it so quickly, but it is not a replacement.
For terrestrial service today, O2 already offers somewhere around 99 percent of U.K. population coverage, so there is very few people living in areas without a signal, but when you contextualize that satellite becomes less about ending a societal issue, thinking about like the digital divide and more around enhancing the services that we already have and provide to our customers, which is really, how do we make mobile connectivity more seamless.
VIA SATELLITE: Finally, what are your hopes and expectations for O2 Satellite?
Bournes: For me personally, hearing from both our customers and our employees the brilliant little use cases that we were not expecting when we started has been great. I will give you one example. One of my team members lives in an area where it’s historically difficult to get a great service in their home, and in situations where they need an SMS verification code, there’s one part of their house where they never got those. Now they get them. It is absolutely brilliant because it is not life changing, it is not dramatic, it is not something anyone ever thought about when we first started this, but it is an everyday example of O2 coming through.
I am really excited to see these unknown benefits come to the forefront, and how they change people’s lives, in either very small, seamless ways, or really, really big ways that no one could have thought about before. The role of satellite to devices in the U.K. is moving forward very, very clearly, and I am proud that we are at the forefront of it.
