SBC Inks Deal with Microsoft for IP TV

SBC has jumped into the IP TV market, sealing a 10-year, US$400 million deal with Microsoft to provide television services using the software giant’s TV Internet protocol television edition software platform.

Microsoft has been trying to crack the TV market for years, investing billions of dollars in companies and seeing little result.

“I do think it is a good deal for Microsoft,” Amy Harris, program manager for broadband markets and technologies at IDC, told TechNewsWorld. “They finally have a very high-luster client onboard with their IPTV solution, and that very client is the leading DSL provider in the U.S. So this is a big deal for Microsoft TV.”

On the Market in a Year

SBC has been testing the service since June. Field trials will begin in mid-2005, and the company said it hopes to begin taking orders for the service at the end of next year. The TV service is part of the telecommunications giant’s Project Lightspeed, which aims to spread a fiber-optic network to 18 million customers by the end of 2007.

“For the broadband industry, SBC’s Project Lightspeed initiative has major implications,” Harris said. It completely changes the competitive landscape by leveling the playing field for the telecommunications companies vis-a-vis their competitive battle against the cable operators. The telcos will finally have the triple play — data, voice, video — that cable has had for several years.”

Harris added that having the offerings does not necessarily translate into consumer interest. SBC said its TV service will feature instant channel changing, customizable channel lineups, video on demand, digital video recording, multimedia interactive program guides, event notifications and content protection features.

Saving Bandwidth

By using a switched video distribution system, which sends only the content a consumer has requested, SBC will be able to free up a lot of bandwidth.

Although she said that telcos need to position themselves as strong competition to cable operators and VoIP providers, Harris questioned whether SBC’s effort will pay off:

“Keep in mind, too, that the payout at the end of the three years may not be what SBC is counting on,” she said.

“While SBC upgrades its network to fiber to offer advanced IP services, the cable operators are not going to be sitting still. They, too, will be upgrading and pushing out new, advanced service offerings. Thus, the question to keep in mind is whether SBC’s $4 billion-plus investment will position SBC into the driver’s seat versus cable operators or whether the competitive landscape will look much the same as it does now in three to five years.”

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