Barry Flynn discovers that the German telco preferred the quality of IPTV services, the way components fitted together and how the system handles time-shift TV. Maybe Tier One telcos are playing it safe too

Wait and see?

Yet, as Michael Lantz, who runs Swedish IPTV content aggregator Accedo Broadband, observes, “Everyone knows that Microsoft has had problems delivering. If I were Deutsche Telekom I would have waited to see if BT or someone had made a successful launch and made the technology work.” Branet counters that “if you had asked them [competitors] to put together a competitive service with the same benefits as ours, starting from scratch, I would challenge anybody to do it faster”. But Marie-Christine Levet, chief executive of Club Internet, TOnline France’s broadband offering, admits that she has adjusted the timing of her projected IPTV launch because the Microsoft system was delayed, agreeing that late delivery “was a concern.”

System works

However, Levet insists, Club Internet’s current 1000-user IPTV pilot, due to transition to a commercial offering at summer’s end, has shown that the system now works well, although at a price. Observers like Lantz reckon that while Microsoft has probably given the telcos “a fairly good deal on the software,” the Microsoft solution is hungry for both bandwidth and storage. Levet agrees but declares that a superior television experience proved to be the clinching factor. Besides being the most user-friendly among competing solutions, she points to rapid channel-changing, and says it had “features that other systems didn’t, like picture-in-picture”.

It also has easy-to-use DVR (Digital Video Recorder – or PVR) functions. The way Video on Demand is integrated into the Microsoft programme guide is also attractive, says Levet. “I really believe that for VOD, the Microsoft solution will entice people to rent movies much more easily than other solutions. It’s just one click away. So we hope that this will increase the ARPU (Average Revenue Per User) for the consumer.” The picture T-Online parent Deutsche Telekom paints for choosing Microsoft is a similar one. According to Telekom spokesman Mark Nierwetberg, “Microsoft’s solution just came out with the best performance.” Asked to list areas of superiority against other IPTV solutions Telekom fieldtested, he points to “the way that all the components interact with each other”, the “quality of the IPTV services”, and how Microsoft handles time-shifted TV and access to the TV channels themselves. And though Nierwetberg is unwilling to say how Deutsche Telekom might one day choose to extend its IPTV network deeper into the home, he cites that Microsoft’s overall vision fitted well with “the way we think about the future development of the product.”

In fact, Telekom subsidiary T-Com, which owns and operates Telekom’s wireline network, has a ‘future home’ concept, T-Com Home, that closely resembles the Microsoft Home in Seattle, where every room and entertainment device is networked. Deutsche Telekom won’t admit it but Microsoft’s eventual ability to deliver on that promise clearly played a key part in securing the deal. Telekom is reluctant to discuss the extent to which Microsoft competes on price, but Nierwetberg doesn’t disagree about high upfront server costs. “If you want to launch a product which is mass-market capable, you always have to look into investments into your server farms and into larger infrastructure deployments, so that is not necessarily a point for or against Microsoft,” he says.

One reason that neither side mentions is that, by choosing Microsoft, Tier One telcos may just be playing safe. “I don’t think anyone will be fired for choosing the Microsoft IPTV solution,” says Lantz. “If you go to your boss and say you have chosen some unknown small company brand with low revenue and [incurring] a huge loss, that’s more of a shaky decision.”