Tech Industry

Microsoft forges ahead with IPTV push

The software maker takes another stab at the interactive TV market with an Internet-based technology that lets cable and telecommunications companies deliver video.

Microsoft said Thursday it is developing an Internet-based TV technology for cable and telecom operators that lets them deliver advanced video services, such as on-demand movies, using its Windows Media compression software.

As previously reported, Bell Canada will be the first North American telecommunications company to test the new Internet Protocol TV (IPTV) technology from Microsoft TV. Delhi, India-based Reliance Infocomm will also work with Microsoft TV, a division of the Redmond, Wash.-based company, to build and test the television services on its high-speed network in India.

The technology is designed to let telecommunications and cable companies offer new subscriber services using 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. The technology will support high-definition television, next-generation digital video recording, and video-on-demand (VOD) functionality.

The initiative, which marks 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. 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.

For Microsoft, the experiments mark a new direction in supplying software to telecom companies--and it could signal that more deals are in the works. Microsoft has long tried to develop and sell software for interactive TV with little success.

But the company has made some inroads with its latest Microsoft TV products, which include its interactive program guide software and its Foundation Edition suite of software. The technology is designed for cable operators to build in digital services such as interactive games, VOD and subscription VOD.

This summer, AOL Time Warner said it would start testing Microsoft TV's program guide in homes in Beaumont, Texas. Comcast Cable agreed to test the program guide and Microsoft's technology on a limited basis in Seattle. Microsoft also has made some headway in Mexico, signing two major cable operators, Megacable and Cablevision Mexico, to launch its software widely.

A potential triple play
Media technology analysts say that the move could particularly serve phone operators as they seek to compete with cable companies by offering new high-speed video services. Cable providers are increasingly selling phone service to subscribers, and telephone companies want to counteract this threat and protect their turf.

"It's a great time to push with this kind of telcos try for a triple play of services--voice, video and data," Adi Kishore, a media and entertainment analyst at Yankee Group, said.

"In order to maintain their revenues and subscriber base, telcos are looking for additional services that match cable in terms of convenience and services. Microsoft gives them an efficient way to do that," Kishore added.

Still, Kishore said that many cable and phone companies are wary of Microsoft's competitive track record, and they are cautious in forming alliances with the software company for fear of losing control and relying too heavily on its technology. Many of Microsoft's IPTV partnerships are just early tests of the software.

Microsoft did not disclose many details of its upcoming test with Bell Canada. But it said that it will work with the Canadian company's Bell ExpressVu digital programming service, which should help Bell Canada to reduce the bandwidth requirements for delivering broadcast-quality video over its broadband network.

"Microsoft TV's IPTV solution will provide high-quality, cost-efficient, next-generation media delivery and viewer experiences," Moshe Lichtman, a vice president in the Microsoft TV Division, said in a statement. "It will allow Bell Canada to maximize the value of its network and its Bell ExpressVu digital programming service."

Michael Coulson, an associate director for Internet service provider development at Bell Canada, said in recent weeks that the company plans to begin testing Microsoft IPTV in Toronto. Customers of Bell Canada's "early adopter" program who reside in six apartment buildings throughout that city, will have use of a set-top box with Microsoft TV's Interactive Program Guide (IPG) and other digital services such as video on demand.

The move plays into Bell Canada's strategy of bundling a range of services for consumers. The package, called "The Bundle from Bell," comprises wireless, high-speed DSL (digital subscriber line), satellite TV and phone service and is designed to allow customers to pay for multiple services on one bill.