Tiscali accuses BT of defamation

BT insists that it has done nothing wrong

Tiscali has begun legal proceedings against BT after the telco sent letters to its customers hoping to persuade them to swap to BT's broadband service.

The letter drew attention to rumours about the future of Tiscali's broadband service.

In a statement the firm said it had issued proceedings against BT "for defamation and malicious falsehood".

The row illustrates the highly competitive nature of the UK broadband market as rivals vie for new customers.

BT has denied doing anything wrong.

"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," said a spokesman.

"We believe this is a legitimate and reasonable business practice - comparative marketing is an important aspect of a competitive market," he added.

Pressures

Some privacy experts have questioned how BT got hold of customer details but BT insisted that it used "reputable external sources".

For Ian Fogg, an analyst with Jupiter Research, the row is illustrative of just how competitive the broadband market in the UK has become.

"Most people have broadband and so BT is having to be smarter to acquire new customers," he said.

As usage increases so will the pressures on ISPs thinks Arash Amel, an analyst with research group Screen Digest.

"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," he said.

He believes only firms with other businesses, such as Sky and CarphoneWarehouse, can survive long-term.

There has been an increasing number of rumours about the future of Tiscali, with some suggesting the firm is about to be bought by mobile firm Vodafone.