Tiscali Explores Satellite Options

By | January 30, 2002 | Feature

Tiscali, Europe’s largest alternative Internet service provider (ISP), has launched a three-month trial of a two-way satellite service in the United Kingdom as it looks for ways to derive greater revenues from broadband services. A commercial service could be launched as early as this spring.

Steve Horley, ISP and business development director of Tiscali UK, told Interspace: “We know there is demand for broadband services out there and if you are outside a cable franchise or more than five kilometers from a DSL [digital subscriber line] exchange, then you won’t be able to get broadband services any other way. The trial is really a ‘toe in the water’ to gage the level of demand for the product and to test the technical aspects of the product.”

Tiscali has a presence in 15 major markets and is also conducting trials of a broadband satellite service in Italy and Germany. It is offering the product at a GBP59.99 ($85) per month subscription fee. Participants who take part in the trial will pay an installation fee of GBP230 ($325), and a further GBP650 ($917) satellite equipment fee at the end of the trial if they decide to carry on with the subscription services. The prices are some of the lowest in terms of broadband satellite in the UK.

Aramiska announced in December that its satellite-broadband packages service started from GBP99 ($140) a month, although these are more aimed at the small and medium enterprise (SME) market rather than the individual user. Aramiska’s packages include multiple users rather than just individual connections. The Btopenworld service starts at GBP70 ($99) per month rental for a single PC connection. It also includes equipment and installation costs of GBP899 ($1,270). SMEs who wish to connect up to four PCs are faced with an increased set-up fee as well as a monthly charge of GBP139.99 ($198) with equipment and installation costs of GBP1,049 ($1,480).

Horley said: “We are pricing reasonably competitive, certainly compared to the [Btopenworld] offer and I think those two will be our starting advantages. We wouldn’t put a product in the market if we were not comfortable with the price point and the margins we were getting from it.”

One of the main objectives of the trial is to see how large the market for broadband satellite services are. Even if the trial is successful, it is likely to remain a niche product and a small part of Tiscali’s overall broadband portfolio.

“We think there are two distinct markets for the product, one of which is the [small business/home office market] and the other is the private individual who is prepared to pay the premium price that is currently sitting on broadband satellite. Quite how large those markets are and the levels of price elasticity are, we don’t know yet. It is question of trial by error,” commented Horley.

The challenge now will be whether the technology offers Tiscali a viable broadband option. It is already taking registrations and customers could be using the service within a couple of weeks. Horley said, “For someone like us with a presence in 15 European countries, it is a sensible distribution mechanism. We are excited, but it is a trial at this stage and the technology and demand has to prove itself.”

–Mark Holmes

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