BT Deal Lifts Microsoft’s Fortunes

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Microsoft Corp.’s Internet-protocol television division got a boost last week with the news that British Telecom plc intends to trial the company’s IPTV Edition software in early 2006 and deploy it commercially later next summer.

The news comes after a series of setbacks for Microsoft. Both SBC Communications Inc. and Swisscom have moved back IPTV launch dates, for several reasons, while Telstra declined to follow through with a planned IPTV test.

BT plans to integrate an IPTV offering with Freeview, a digital terrestrial TV service that’s growing in popularity in the U.K. BT plans to provide customers a set-top box that has both Freeview and IPTV services in one integrated box, Microsoft said.

“TV over broadband services will play an important role in BT’s triple-play offering for consumers,” Gavin Patterson, group managing director of BT Retail, said in a statement.

BT will use its existing digital subscriber lines to deliver IPTV to the set-top, Patterson said in the statement.

Various reports have cited a number of problems with the various Microsoft tests, including integration with other vendors.

Microsoft TV director of marketing Ed Graczyk, said Swisscom has delayed widespread IPTV deployment until it gets a set-top with an integrated digital video recorder.

Microsoft tested IPTV earlier this year with Swisscom with an external hard drive on a Thomson set-top. Graczyk said Swisscom plans a limited launch at the end of this year with external hard drives, with a broad commercial launch next year.

“With SBC, everything is very much on target for a summer trial and commercial launch by the end of this year,” he said.

The software will allow BT to offer standard and HDTV channels, on-demand programming, digital video recording, interactive program guides, instant channel-changing and picture-in-picture functionality using multiple video streams.

Microsoft has begun integration work with set-tops, DSL access multiplexers, content providers, encoding and network infrastructure companies and billing and customer-service management firms, according to Graczyk.

BT will use an advanced codec, but hasn’t chosen a platform yet.

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