Tiscali eyes half a million users with IPTV revamp

By Marc Jones

LONDON (Reuters) - Internet firm Tiscali is hoping to attract half a million users with its revamped TV-over-broadband offering over the next two years and is in talks to show Irish pay-TV firm Setanta’s sports content.

Italy-based Tiscali, which has around 1.4 million high-speed Internet customers in the UK, is hoping to get a third of those to take the soon-to-be-relaunched service after buying into the technology via its acquisition of loss-making TV-over-Internet provider HomeChoice back in August.

Over the next year it plans to extend the 65 broadcast and 25 on-demand channels currently offered to former HomeChoice subscribers to its customers in major cities.

"The ultimate aim this year and next year is to be delivering IPTV to 35 percent of our broadband customers," communications director Jody Haskayne told Reuters on Wednesday.

"It’s (roll out) going to be progressive throughout the year. We will extend it to a wider base by the end of the first quarter, and then we will have a reasonable coverage by the end of the year," added Neal McCleave, managing director of media services for Tiscali.

McCleave said the firm was also talks with Setanta to allow it to show the Irish pay-TV firm’s sports content.

"A tie-up (with Setanta) is a potential ... If we can get the right deal .....continued below

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Competition is heating up in the UK broadband sector, with companies like BT, NTL and BSkyB vying for dominance and battling to hang on to existing customers.

At the same time, broadcasters such as the BBC, ITV, Channel4 and BSkyB already do, or have plans to, make their programmes available for download on their Web sites for free or a small fee, while Hollywood studios are also putting their films up on download sites such as Apple’s iTunes.

IPTV TURNOFF

Despite the recent explosion in downloading and the rise of user-generated digital content on social networking sites such YouTube and MySpace, IPTV is still to prove it worth, and some analysts have warned that ill-thought out investments in IPTV could be a costly folly for telecoms firms.

"Poor revenue potential undermines this hype -- and the big question remains: Will operators be able to make money from their push into IPTV? At the moment, the answer is no," Forrester analyst Lars Godell said in a report.

"Many telcos seem to think that there’s a pot of gold waiting in the (broadcast) content space. Sadly, they forget that Europeans spend less money on content than communication," he added.

Tiscali has a 10 percent market share in the UK, behind BT, NTL:Telewest and Carphone Warehouse. Last year the UK unit made up 44 percent of Tiscali’s revenues and nearly half its earnings before interest, tax, depreciation and amortisation last year.

Tiscali currently charges 37.99 pounds a month for its top bundle, which includes broadband, a landline and IPTV.

McCleave would not reveal the firm’s new pricing plans but said they would be "competitive" and offer a mix of price packages and still charge additional fees for downloading prime content such as films.