Phone companies hear call of the TV

Supercomm 2005 offers a look at an array of new products intended to help spruce up planned TV services.

CHICAGO--The future of the telephone industry may be in television.

At Supercomm 2005, a huge telephone trade show taking place here through Thursday, executives from local phone giants Verizon Communications, Qwest Communications International, SBC Communications and BellSouth will get a look at an array of new products intended to help them spruce up planned TV services.

Ranging from breakthroughs in network-traffic management that use faster DSL (digital subscriber line) technology to new additions to software from Microsoft that blends television with the Internet Protocol, the new services should help the Bells sell more interactive TV services.

VoIP software has allowed a diverse group of new competitors to get into the local and long-distance phone business.

While there certainly are other pressing industry concerns?-namely hackers setting their sights on Internet phone calls and the re-emergence of WiMax, a troubled but promising long-range wireless technology--nothing seems as important to the Baby Bells and the rest of the phone industry as tuning into TV services.

With good reason. Voice over Internet Protocol (VoIP) software, which turns any Internet connection into a home phone line, has allowed a diverse group of new competitors such as Sony Electronics and America Online to get into the local and long-distance phone business.

An estimated 3 million to 5 million homes now subscribe to VoIP services globally. U.S. cable operators have benefited the most from VoIP, and are now winning tens of thousands of new phone customers a week with an inexpensive, triple-play bundle of broadband, TV programming plus local and long distance phone services. Traditional phone services can be three times as expensive as VoIP.

That has put pressure on the Bells to improve their own video capabilities in order to turn the tables on their new competitors. "In today's rapidly converging communications market, carriers must offer video along with their other services," said John Abel, senior vice president of the United States Telecommunications Association (USTA), an influential telephone industry lobbying group.

Adding TV service to a telecommunications network is huge, and equipment makers and software developers are rushing to make the IPTV dream a reality.

Today, most phone companies rely on partnerships with satellite TV companies to provide the video portion of their own triple-play offerings. Most believe they need to do more. SBC is spending roughly $4 billion over the next two years to upgrade its network to support IPTV. It plans to use the existing copper lines that already go into homes and businesses. And Verizon is spending billions to go directly into homes and businesses with its fiber network, which it plans to eventually use for interactive IPTV.

Adding TV service to a telecommunications network is huge, and equipment makers and software developers are rushing to introduce new products to help the phone companies make the IPTV dream a reality.

When it comes to IPTV software, Microsoft is way ahead of the pack with its IPTV software suite, which provides everything a carrier needs to get an IPTV network up and running. Telephone companies in the United States, such as SBC and BellSouth, along with carriers overseas such as Swisscom have been working with the company to develop IPTV for their networks. Though a recent report by The Register intimated that problems with Microsoft's software has caused delays in the roll out of new services. Microsoft, which plans to show off its technology at the show, says these claims are unfounded.

"We are right on schedule to deliver our software by this fall," said Ed Graczyk, director of marketing communications for Microsoft. "Delivering video over IP

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