IPTV promise meets reality

Rather than cheap prices and fancy features, first major IPTV deployments will offer fees, service similar to cable.

The first major deployment of an Internet-based TV service by a phone company will soon be under way, but the promise of new interactive features and lower prices for consumers could be a long time coming.

AT&T, the largest phone company in the United States, is preparing to launch what will be the biggest deployment of IPTV to date. As the company moves from a small controlled release of the service in San Antonio to widespread deployment in 20 cities by the end of the year, all eyes will be on Ma Bell and Microsoft, which developed the software enabling the new service.

Both companies say they are confident that the technology is ready for prime time. But they plan to move slowly and cautiously as they deploy service.

"We expect demand to be very strong," said Christopher Rice, executive vice president at AT&T. "But we need to be careful how we manage this demand. We learned a lot of lessons from the early days of DSL. We don't want demand to outstrip capacity."

IPTV promises to change the way people watch TV. They'll be able to interact with television shows, choose multiple camera angles while watching sporting events, search and view movies and TV programs from an almost limitless library of digital content, share pictures and home videos, access more high-definition content, and even shop from their TVs. And with the telephone company entering as a new competitor against cable, prices on TV service are expected to fall.

But cutting-edge features and deep discounts in pricing could be a long time coming, because, at least initially, AT&T's service will look a lot like what cable providers already offer. And unlike its current DSL strategy, which has slashed prices down to $12.99 for 3Mbps downloads, AT&T, which hasn't yet published pricing for its new TV service, said it isn't planning huge discounts out of the gate.

"We plan to be competitive with the market on pricing," Rice said. "Just like with our other products, people will get discounts the more services they buy from us. But we have no plans to be a low-cost provider."

AT&T's service, called U-verse, will not look much different from what is already being offered by cable providers. Like cable, U-verse will offer a digital video recorder, video on demand, and at least one channel of high-definition content.

It's a new market for carriers with brand new technology ... It's hard to get cookie cutter about these early deployments.
--Christine Heckart, general manager of marketing, Microsoft TV
Meeting customer expectations
Still, users who have been testing the service in San Antonio say AT&T's service is an improvement over what they can get from cable. Alan Weinkrantz, who has a blog describing his experiences using the AT&T service, said he especially likes the IPTV interface and the fast channel changing. He's also impressed with the breadth of on-demand titles that are already available in the video library.

He plans to become a regular, paying customer when the service is available commercially in San Antonio. But he said the price has to be right and AT&T must prove that high-definition programming works. Currently, AT&T is not offering any high-definition channels as part of the trial.

"I'm very intrigued by what IP can offer in the future," he said. "The interface is very simple to use. So, if I only had to pay $5 more and HD worked, I'd be willing to pay for it."

Christine Heckart, general manager of marketing for Microsoft TV, said consumers just want basic TV features right now. She said that adding more interactive applications too soon could overwhelm customers.

"This year we just need to get solid deployments with competitive offerings," she said. "It's a new market for carriers with brand new technology. The rollout will be very high-touch. It's hard to get cookie cutter about these early deployments, and there will be unforeseen issues that need to be worked out."

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