Microsoft: IPTV to reach critical mass this year

At least four major telecommunications carriers will be offering services on Microsoft's IPTV platform to hundreds of thousands of users by the end of the year, a Microsoft executive predicted on Friday at the Cebit trade show in Hanover, Germany.

Microsoft's quest to sign up carriers for its IPTV system had some false starts last year when some carriers who'd signed up for pilots either put off their commercial deployments or dropped out of Microsoft's early-adopter program.

Currently, AT&T, Verizon Communications and Swisscom have commercial deployments of IPTV services on Microsoft's software, said Elena Branet, senior marketing manager for EMEA for Microsoft TV. However, except for Verizon's services, which are in more than 20 U.S. markets, the deployments are limited to hundreds or at the most in the low thousands of users, she said.

That is all expected to change soon, said Ed Graczyk, director of marketing and communications for Microsoft TV. He said the number of commercial users of IPTV services from those carriers and BT Group PLC -- which also will have a commercial deployment by the end of 2006 -- should scale up considerably by the end of 2006.

"The second half of the year is when deployments will really take off," he said.

Worldwide forecast for IPTV subscribers by digital consumer market research firm The Diffusion Group seem to match Microsoft's optimism for IPTV subscribers. The group predicts that by 2007, subscribers for IPTV will hit 8.9 million worldwide; by 2010, the number of IPTV subscribers should climb to 37.8 million worldwide.

Microsoft demonstrated to the European market for the first time at Cebit how services built on its IPTV software platform work. Graczyk said that there are key advantages IPTV services has over current cable TV services, and these will be a major draw for consumers.

Among the improvements to current cable services is the ability, demonstrated by Graczyk, to quickly change channels without the pause between them that is part of the current cable TV experience. IPTV users also will be able to watch and control several live video streams on one screen simultaneously.

He also demonstrated a feature in which IPTV service is connected to a user's telephone service, so the user can see if a call is coming in and who it is on the TV monitor. The user then can either decide to take the call, pausing the program he or she is watching, or choose to ignore it.

Even with the improvements over cable, carriers likely won't find a whole lot of new subscribers to IPTV right out of the gate, Graczyk acknowledged. He said carriers will market the services to current customers as an upgrade or special offer first before they begin winning new customers.