Tiscali have begun legal proceedings against BT, after it was revealed this week that the UK’s leading internet service provider had mailed letters, containing “defamation and malicious falsehood” to Tiscali customers.
The letters, sent in the wake of the announcement earlier this year that Tiscali - currently the fourth biggest ISP in the UK - was searching for a buyer, cast doubts on the company’s future and advised customers to switch to a provider with a more stable long-term prospects, i.e. BT.
“We can understand why you’re wondering what might happen to your Tiscali broadband service,” the letters said. “And because no one really knows the answer just yet, it could be a good time to look for an alternative broadband service.”
BT have defended their actions saying that sending the letters to Tiscali customers was legitimate business practice: “Following media reports suggesting that Tiscali was up for sale we recently approached a number of Tiscali customers, and pointed out the benefits of our service. We believe this is a legitimate and reasonable business practice - comparative marketing is an important aspect of a competitive market.” Many are suspicious as to how BT obtained Tiscali’s customer information in the first place but BT insisted that it used “reputable external sources.”
The move by BT is just another example of the cut-throat nature of the consolidating UK comms market as ISPs try desperately to attract new customers and the top dogs try to stay on top. Arash Amel, an analyst with research group Screen Digest believes that as competition becomes tougher, only ISPs backed by big businesses such as Sky and Virgin Media can hope to survive in the long-term: “The standalone ISP business model is looking increasingly shaky… For every gigabyte of data customers use the bigger the costs for ISPs and their small profits start to disappear.”
Indeed; Tiscali last year bought Pipex, who had previously purchased Bulldog and Toucan - this swelled Tiscali’s total broadband consumer base to around 1.9 million. Vodafone, the world’s biggest mobile phone network, was once touted as a possible buyer for Tiscali’s broadband services, which would have meant for further market consolidation, but negotiations reportedly dissolved at the last minute.
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