Swisscom to test Microsoft's IPTV

Microsoft said Tuesday that Swisscom subsidiary Bluewin will test its new Internet-based TV technology to deliver video on telecommunications systems and into a fraction of its 200,000 broadband households.

Microsoft TV, a unit of the Redmond, Wash.-based software giant, began testing IPTV (Internet Protocol television) technology last month, with telcos Bell Canada and Delhi, India-based Reliance Infocom announced as its initial partners. Bluewin, a unit of leading Switzerland-based telecommunications company Swisscom, is Microsoft TV's third IPTV partner and the first public European phone company to test the service.

The technology is designed to let telecommunications and cable companies offer new subscriber services that use their two-way broadband networks. Planned features for Microsoft IPTV include instant channel changing, interactive programming guides with integrated video and multiple picture-in-picture capability on standard TV sets. Microsoft said the technology will support high-definition television, next-generation digital video recording and video-on-demand functionality.

Bluewin aims to use the technology to introduce pay TV services to its roughly 200,000 digital subscriber line (DSL) customers. Financial terms of the deal were not disclosed.

"IPTV holds the promise of offering richer TV services to our customers, which will ultimately provide them with more choice and better control over their TV experience," said Adrian Bult, CEO of Swisscom Fixnet, which controls Bluewin. "Microsoft TV's end-to-end solution will enable us to more easily and efficiently begin testing these new services."

For telcos, the technology may be especially attractive, as they try to compete with cable companies that are lurching into telcos' territory. Cable providers are increasingly selling phone service to subscribers, and telephone companies want to counteract this threat by offering customers voice, video and data services.

IPTV, a new product line for Microsoft TV, taps the Windows Media Series 9 video compression technology to more efficiently send video and advanced services over telephone or cable lines, according to the company. The product differs from the Microsoft TV Foundation software, introduced earlier this year, which provides cable operators with an infrastructure to deliver similar interactive services but uses MPEG-2, the existing video compression standard for cable.

Despite interest from telecommunications companies, the IPTV concept has a long road ahead due to difficulties in delivering video over the "last mile," said Matt Rosoff, an analyst at Directions on Microsoft. He said Microsoft TV is pitching telcos on the ability to use their telecommunications infrastructure to send video out to subscriber homes the same way they would with data or voice. While the technology is there to transfer video from the central station to the last station (or head end) before it reaches subscriber homes, the "last mile" is still considered too weak, Rosoff said.

"The bandwidth on DSL lines is not thick enough to deliver the kind of experience customers are used to with TV," Rosoff said. "Microsoft is making an assumption that that problem is going to be solved by better video compression or by governments or providers running fiber-optic cable to people's homes."

"Today's 'last mile' infrastructure is not ready to carry video at the quality that people expect," he said.

Ed Graczyk, director of marketing for Microsoft TV, disagreed, saying bandwidth isn't a challenge today. Microsoft TV's IPTV sits atop IP networks and delivers video via the compression technology of Microsoft Windows Media 9 Series, which compacts files at three times the efficiency of MPEG-2.

He added that the overall architecture of the IPTV system is efficient, too, because it uses two-way broadband networks as opposed to one-way broadcasting systems like that of cable or TV. With the IPTV technology, telcos can unicast and multicast channels such that they can target individual video streams to an individual set top box, instead of broadcasting say, all 250 channels, to all subscribers.

"We're taking advantage of modern video compression technology," Graczyk said. "MPEG-2 is a 12-year-old technology. Using modern technology, we can deliver that same high-quality video stream with a lot less of the bandwidth."