Tiscali buys Homechoice as broadband war intensifies

The internet service provider Tiscali has bought broadband minnow and video-on-demand company Video Networks.

Video Networks runs the Homechoice service that offers consumers a so-called 'triple-play' package of landline telephone, internet access and TV service.

Homechoice is noteworthy because it has made the first serious effort to provide TV channels via the customer's ADSL broadband connection. Programmes are watched on a TV rather than a PC, with the ADSL signal split from the phone socket into a set-top box.

However, Homechoice has struggled to attract customers and is limited to two areas because of the high investment costs required to place its equipment in BT telephone exchanges. It needs to do this because extra bandwidth is required to deliver the large volumes of data that make up TV content.

The purchase gives Tiscali the opportunity to set up it's own triple-play package, which it said would happen before Christmas.

The Tiscali deal is the latest in a line of mergers and acquisitions that is expected to continue for at least the next year, as companies from inside and outside of the broadband market battle for subscriptions.

The ISP Easynet was last year snapped up by satellite Company BSkyB, while mobile phone retailer the Carphone Warehouse launched its triple-play package of mobile subscription, landline phone and internet access, TalkTalk, last month.

The TalkTalk deal offers broadband as free, although in reality it only available to those who subscribe to a specified premium mobile tariff. Mobile network provider Orange countered with a similar offer shortly after, while Sky announced that it would provide broadband to cutomers who subscribed to its premium sports or movie packages within weeks of the Orange bid.