Tiscali sale signals end to pan-European dream

Carphone Warehouse agreed to acquire Tiscali’s UK operations last Friday, expecting to complete the transaction by June 2009. For Tiscali UK, this marks the end of a long period of uncertainty, during which the prospect of being sold to a procession suitors kept appearing and receding.

We also believe that it could be the end of one of the world’s pioneering IPTV services: back in 2006, Tiscali bought the regional player Homechoice, one of Europe’s first IPTV operators, believing its video infrastructure and expertise would enable Tiscali to roll out IPTV services throughout the UK, then Italy, making it into a major IPTV operator in Western Europe.

However, Tiscali ceased its Italian IPTV service at the end of 2008, within a year of launch, and the UK service never gained much traction in the market.

The UK is a tough market for IPTV due to the existence of Freeview, a popular free-to-air digital terrestrial TV offering, and two well-established and successful pay-TV operators, satellite operator BSkyB and the cable operator Virgin Media. Tiscali’s new owner, Carphone Warehouse, targets budget-conscious consumers, being the first to launch ‘free’ broadband in the UK in April 2006, so it is unlikely to invest heavily in the type of content that would be needed to have any chance of success through a differentiated IPTV service.

For Tiscali as a whole, today’s event marks the end of the pan-European dream. Starting off as a small Sardinian ISP back in 1998, the company rapidly grew into one of Europe’s largest ISPs. In its heyday, it had operations in 15 European countries, from Scandinavia in the North to Italy in the South, and from France in the West to the Czech Republic in the East, plus South Africa.

Indeed, in 2003, the company was awarded the title of the fastest-growing technology business in Europe by Deloitte European Technology. [See the press release at http://www.tiscali.com/our_news/news/2003/febf0bfa2b.html]. However, within one year, the company was obliged to embark on a massive disposal programme to improve profitability, having failed to reach sufficient scale within individual markets.

The Tiscali story highlights the fact that the broadband business is a national volume play, and that an ISP gains far greater economies of scale from having a substantial market share in one country, than from a multitude of sub-scale operations spread across many countries. Friday’s sale was the final blow to Tiscali’s international ambitions, mirroring the fate of many earlier empires that collapsed through being overstretched.

Suggested Articles

Wireless operators can provide 5G services with spectrum bands both above and below 6 GHz—but that doesn't mean that all countries will let them.

Here are the stories we’re tracking today.

The 5G Mobile Network Architecture research project will implement two 5G use cases in real-world test beds.