BSkyB moves to acquire Easynet

If the deal is approved, it may speed the rollout of "triple play"

Satellite TV provider BSkyB has made an offer of £211m to acquire ISP Easynet. If the deal is approved, it may speed the rollout of "triple play" services for voice, video and data in the UK, but some firms that buy broadband services from Easynet face uncertainty about future support.

Some observers have speculated that Easynet's LLUStream offering might be allowed to "wither on the vine" if BskyB decides to focus on its main market of consumer and residential users rather than business customers.

Current Analysis analyst Sandra O'Boyle said, "The big question is what will happen to Easynet's business ISP operations across Europe and wholesale customers in the UK? I can't see Sky being that interested in business customers, but if you're unbundling exchanges for consumers, you could argue that selling to business customers at higher margins makes sense too." Although the Easynet board has unanimously recommended that shareholders accept the offer, an Easynet spokeswoman said, "The deal is not complete yet, it will take 60 days until any offer is accepted."

BSkyB chief executive James Murdoch said that BSkyB would remain fully committed to business customers. And if the deal is approved, Easynet's chief executive, David Rowe, will stay with the company.

BSkyB's push into the broadband arena comes as BT prepares to launch a triple-play offering next year. BT will use Microsoft's TV IPTV software to deliver the package, and last week announced that the set-top box for the service will be made by Philips. The head-on competition between BT and BSkyB will probably mean that a current BSkyB-BT marketing agreement will not survive.

BSkyB is trying to find further outlets for its entertainment offerings. The fact that Easynet already has its own kit in 232 BT exchanges, runs an 8Mbit/s service (four times quicker that of BT's current fastest offering), is t rialling 24Mbit/s service and also has a 4,500km national fibre network, seems to have proved irresistible to BSkyB.

"This move should ensure plenty of extra triple-play competition and make BT's move into TV difficult to say the least," said O'Boyle. "But the UK will finally get some of the amazing triple-play deals and broadband speeds available in France."
BSkyB recently raised £1bn in a bonds issue, and still has 80 percent of that cash for further acquisitions that may continue the trend for telecoms consolidation, following the merger of NTL and Telewest.