Tiscali is taking legal advice with a view to suing BT after the telco wrote to customers of Tiscali casting doubts on its future.
BT sent letters to Tiscali customers, along with users of its associated ISPs including Pipex and Nildram, carrying the headline 'Tiscali chief plots sell-off'.
The move is widely seen as an attempt to sow doubts in the minds of Tiscali customers following the ISP's announcement in January that it intends to sell its broadband operations.
"We can understand why you're wondering what might happen to your Tiscali broadband service," said Gillian Lewis, customer services director for BT Total Broadband, in the letter.
"And because no one really knows the answer just yet, it could be a good time to look for an alternative broadband service."
In an obvious attempt to mop up customers, the letter goes on to explain how customers can obtain their own MAC address and urges them to jump ship to BT.
"Changing your provider to BT could be the right move if you're worried about the future of your broadband service. Because BT Total Broadband is the most complete and is here to stay," said Lewis.
Questions have also been raised as to how BT obtained Tiscali customer details in the first place.
While BT would have access to such details through its wholesale arm, the division is supposed to run as a completely independent entity from other BT services.
A copy of the letter is available at ISP Review.
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