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Microsoft's Mediaroom stakes its IPTV media center claim

IPTV media centers like Microsoft's Mediaroom are becoming an important way for telecoms to deliver added services and garner revenue.

As telecoms become IPTV providers, picking the right set-top media center today could add revenue options tomorrow. Microsoft has thrown its considerable weight behind its Mediaroom platform, but the market remains open.

With IPTV, set-top boxes play an even more critical role than in traditional cable networks: Not only must they integrate closely with the back-end billing and support systems, they are also charged with provisioning the value-added interactive services that IPTV can offer as a competitive edge.

Mediaroom, for example, includes typical DVR services, as well as video on demand, an interactive program guide, and the ability to stream video and audio from customer devices. Many platforms also include ways for third-party developers to create and integrate their own applications.

In 2007, there were only 13.5 million IPTV subscribers worldwide, the Media Research Group estimated. But that number is expected to grow to 72.6 million by 2011.

"It is still relatively new technology," said Vince Vittore, an analyst with Yankee Group. "We're still in the infancy of IPTV."

Vittore said available IPTV set-top platforms come from three lineages.

The first is once in-house service provider platforms that are now being commercialized, such as France Telecom's Soft at Home.

The second class is third-party creations such as Dreampark, which claims to be Europe's most deployed IPTV middleware, and offerings from the likes of Nokia Siemens.

Microsoft's offerings represent a new class based simply on the software giant's size and its aggressive move into the market, Vittore said.

He said Microsoft's ambitious television strategy has been multipronged, with service provider partnerships on one end and consumer devices on the other – for instance, the Xbox 360, which can occasionally double as a set-top box.

"The advantage that they have is not just that they're everywhere," Vittore said. "They also have the marquee customers in the telecom industry."

That includes a close partnership with AT&T and its U-Verse rollout, but also more than 20 other service providers around the world. Bill Gates recently said Microsoft has more than 1 million Mediaroom users worldwide.

The ability to deliver new services is critical to a set-top strategy. They either help providers reel in or keep customers or sell up services for additional revenue. These services were one of the criteria used by NTELOS, a Waynesboro, Va.-based telecom, when it decided a few months ago to begin offering IPTV in addition to high-speed Internet.

After weighing several other options, NTELOS ended up choosing Mediaroom, in part because of its robust application delivery platform.

"We wanted to make sure we were meeting our customers' needs," said Landon McDowell, manager of OSS and engineering at NTELOS. First and foremost, he said, were the basics: high definition and DVR.

But beyond that, NTELOS wanted to utilize value-added features like on-screen caller ID.

For this, NTELOS reached out to 180Squared, a young startup founded by former Microsoft employees who were involved in Mediaroom's development. The company offers application development services, as well as integration help to service providers.

"Microsoft isn't just solving the IPTV problem, they're tackling the connected home problem," said Amir Littman, vice president of business development for 180Squared.

That broad scope means a variety of potential services -- Littman envisioned customers ordering pizza delivery straight through their TV and charging the food to their telecom bill.

For providers seeking to maximize revenue per customer, these add-on features could be a strategic asset.

"A lot of services coming through are going to be coming through the Mediaroom platform or another [IPTV] platform," Vittore said. He expects double-digit growth for IPTV over the next few years.

IPTV's extensibility can address problems faced by a variety of carriers. Smaller providers can distinguish themselves and grow their subscriber base by including these value-added applications, Littman said.

He added that better-established players with market dominance can use the services to build customer loyalty and brand stickiness while creating new products to sell on top of existing services.

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