Tiscali UK FOR SALE

Tiscali UK effectively put itself “up-for-sale” this week. My ex-colleague Michael Philpott at Ovum reckons that Carphone Warehouse is the most likely buyer. If so Carphone would become the largest broadband supplier in the UK – overtaking both BT and Virgin. A likely price tag of £500-£600m is suggested. Carphone, BT and BSkyB are also eyeing Tiscali UK according to the Financial Times today.

Like almost every other part of the IT market right now, “size really does matter” and therefore consolidation is the order of the day. Only a few years ago there were literally hundreds of small niche broadband suppliers. Tiscali UK itself includes other broadband brands like Pipex, Nildram, Freedom2Surf and Bulldog. In a few years time perhaps there will be just two or three UK broadband suppliers.

The trouble is that broadband is a bit like electricity, gas or water. Other than price and service, you really can’t tell them apart.

I’m often asked about my broadband recommendations. I only have experience of one provider – Tiscali. We signed up when our exchange was broadband enabled in 2002. It’s such a small exchange that nobody has so far attempted unbundling. Also we live a long way from the exchange so some of the higher speeds are unavailable irrespective of the ISP you use. Having said that, our Tiscali broadband has worked consistently. It needs resetting occasionally but that is more a BT line problem. At £14.99 pm for an unlimited package, its pretty good value too. It’s very difficult to envisage why I would consider the considerable hassle of changing ISP – an attitude that seems to be identical to most of my friends.

And ‘that’s the rub’. In a saturated and mature UK broadband market, any growth by individual supplier will come from poaching customers from your competitors. What better way of poaching them than buying the ISP? And Tiscali UK is the biggest prize left