Tiscali / HomeChoice and Zen
The Broadband market consolidates further with the acquisition of HomeChoice by Tiscali UK, however I see the deal as more adding Video options to the Tiscali product set rather than a standard Be or Easynet LLU capability type acquisition.
Homechoice has been around for about 15 years and has developed its’ own IPTV/Video on Demand system. It is interesting that Tiscali are entering into the world of designing proprietary equipment after years of selling out-of-the-box-routers. This is not as unusual as first might appear: FastWeb in Italy and Illiad/Free in France also sell there own designed CPE equipment. The first problem I can see for Tiscali is that the Homechoice box has an in-built ADSL modem, has two SCART connections (for TV & VCR) and two Ethernet connections: so the typical way of building a home network is slightly changed (ie only need to connect a WiFi router to the STB rather the typical USB modem or a straight-forward WiFI ADSL Router) However, the good thing for Tiscali is that the Homechoice Video on Demand channels with its’ self-design approach for Kids Channel, Music Channel, Film Channel and Entertainment channel seemingly exptremely popular with the subscribers. I don’t believe the uptake of premium subscription TV is very popular with only 4,400 subscribers to the Sky TV channels (according to BSkyB 2006 Accounts) or 10% of HomeChoice’s 45k subscribers.
Although it is a big risk for Tiscali to be involved with designing complex electronics and really complex computer software middleware, something that the much larger BSkyB (OpenTV, NDS) and BT (Microsoft) have avoided, it also presents an opportunity to differentiate. I am wary about saying it is a great strategy because BSkyB and BT both allegedly looked at buying HomeChoice and before deciding against. It certainly differentiates Tiscali in the wholesale market compared to the Cable&Wireless WholeNoSaling of the old Bulldog Network.
It will be interesting to see how the various video options actually play out over the next 12 months with Sky, BT, ntl and now Tiscali offerings. Tiscali might need the differentiation to overcome being an also run in a crowded marketplace, however the penetration of Homechoice amongst it’s 2.6m potential households running at around 1.7% doesn’t bode well for Tiscali.
Most intriguingly is the way the deal has been structured with a share swap at the Tiscali UK level rather than the Tiscali Group level. This may be giving Tiscali more options if any future break-up of the group occurs.
On a brighter note, Zen Internet has picked up the pace in its’ LLU efforts – it is now up to a grand total of 3 exchanges with another one planned for this week. Although, people may laugh, I think Zen is showing the way forward for ISPs who wish to remain independent - via. differentiation through technical excellence and predominately through serving the SME sector. Did anyone ever hear the story of the hare and the tortoise?
Homechoice has been around for about 15 years and has developed its’ own IPTV/Video on Demand system. It is interesting that Tiscali are entering into the world of designing proprietary equipment after years of selling out-of-the-box-routers. This is not as unusual as first might appear: FastWeb in Italy and Illiad/Free in France also sell there own designed CPE equipment. The first problem I can see for Tiscali is that the Homechoice box has an in-built ADSL modem, has two SCART connections (for TV & VCR) and two Ethernet connections: so the typical way of building a home network is slightly changed (ie only need to connect a WiFi router to the STB rather the typical USB modem or a straight-forward WiFI ADSL Router) However, the good thing for Tiscali is that the Homechoice Video on Demand channels with its’ self-design approach for Kids Channel, Music Channel, Film Channel and Entertainment channel seemingly exptremely popular with the subscribers. I don’t believe the uptake of premium subscription TV is very popular with only 4,400 subscribers to the Sky TV channels (according to BSkyB 2006 Accounts) or 10% of HomeChoice’s 45k subscribers.
Although it is a big risk for Tiscali to be involved with designing complex electronics and really complex computer software middleware, something that the much larger BSkyB (OpenTV, NDS) and BT (Microsoft) have avoided, it also presents an opportunity to differentiate. I am wary about saying it is a great strategy because BSkyB and BT both allegedly looked at buying HomeChoice and before deciding against. It certainly differentiates Tiscali in the wholesale market compared to the Cable&Wireless WholeNoSaling of the old Bulldog Network.
It will be interesting to see how the various video options actually play out over the next 12 months with Sky, BT, ntl and now Tiscali offerings. Tiscali might need the differentiation to overcome being an also run in a crowded marketplace, however the penetration of Homechoice amongst it’s 2.6m potential households running at around 1.7% doesn’t bode well for Tiscali.
Most intriguingly is the way the deal has been structured with a share swap at the Tiscali UK level rather than the Tiscali Group level. This may be giving Tiscali more options if any future break-up of the group occurs.
On a brighter note, Zen Internet has picked up the pace in its’ LLU efforts – it is now up to a grand total of 3 exchanges with another one planned for this week. Although, people may laugh, I think Zen is showing the way forward for ISPs who wish to remain independent - via. differentiation through technical excellence and predominately through serving the SME sector. Did anyone ever hear the story of the hare and the tortoise?
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