MICROSOFT WOOS TELCO REALM WITH IP APPROACH TO VIDEO

After knocking on the door of the cable TV industry for nearly a decade with varying success, Microsoft jumped on the telco video bandwagon last week with an IP TV platform that brings together a version of its Windows operating system with Windows Media 9 compression software and a host of hardware vendors.

Though positioned as a platform for both cable operators and telcos, the initial thrust will be in the telco market. Bell Canada, which has been aggressively pushing into video, and Reliance Infocomm, which provides service in India, already agreed to test the platform. The first demonstration will be at the ITU Telecom show in Geneva this week.

IP set-top vendors have been using Windows set-top software — one of the keys to making the telco video business model work — for at least the past year, but the Microsoft entry marks the first time the software giant has become more than a passive player in this particular segment.

“Our IP TV solution is a result of work we have done with telecom operators over the past 12 months,” said Moshe Lichtman, corporate vice president and head of the Microsoft TV Division. “We've really spent time understanding their infrastructure.”

Microsoft's partnerships include many market leaders. Among its partners are Harmonic Lightwave and Tandberg Television for encoding technology, Juniper Networks for routing, and Alcatel for the DSL access infrastructure. The company also inked deals with Thomson and Pace, which will run Window Media 9 on their IP set-top boxes, and Intel, which will provide silicon for home devices.

Additional deals are likely in the works, according to Michelle Abrahams, a senior analyst for In-Stat/MDR's Converging Markets & Technologies Group. “Because they're Microsoft, they're going to draw in other set-top box vendors,” she said.

Like most in the embryonic telco video market, Microsoft's platform relies on IP transport to move video between a central office and the user. However, the model is slightly different in that it uses Windows Media 9 compression, which the company claims is three times more efficient than the current MPEG-2 standard and twice as efficient as the emerging MPEG-4.

“One of the key concerns telecom operators have are the choke points in their networks,” Lichtman said. “You have to be very smart in how you distribute the video from a central office to the edge of the network.”

Microsoft's package also addresses one of the nagging issues in virtually all IP video systems — the slight delay when users change channels. In most switch digital video systems, the IP set-top only converts the signal into a format that can be viewed on the TV, and channel changes are made further upstream at the digital loop carrier or the DSLAM using the IGMP protocol. In the Microsoft architecture, channel changes are done in software without the need for additional hardware. Such improvements are becoming necessary if carriers want to take advantage of new transport methods while keeping the user experience the same, Lichtman said.

“When we went from analog to digital, the basics like changing channels became a less thrilling experience,” he said.

Prior to this release, Microsoft tried to partner or buy its way into users' living rooms (see figure). But in the telco environment where no single vendor has established dominance, the company has a chance of becoming a significant presence. Also, given its ability to attract the developer community, Microsoft could use the platform as a launching pad for new applications.

MICROSOFT'S VIDEO PLAYS

1997

AUGUST 1997: Company buys WebTV from Sony and Philips

1998

JANUARY 1998: Tele-Communications International, then the largest cable operator, agrees to use set-tops running Windows

1999

JANUARY 1999: WebTV teams with EchoStar to create WebTV Personal TV service for satellite

2000

JUNE 2000: Launches UltimateTV, a collaboration with Thomson and DirecTV that ultimately leads to personal video recording integration with set-top boxes

Source: Microsoft