Deutsche Telekom recently announced that it will use Microsoft’s IPTV Edition software to deliver TV service over broadband to millions of consumers throughout Germany.
The alliance will enable Deutsche Telekom to deliver next-generation television, as well as complementary interactive services and a range of entertainment products, over its ultra high-speed VDSL broadband network. Under the agreement, Telekom will use Microsoft Internet Protocol Television software to deliver TV on the network.
Microsoft will support Deutsche Telekom with marketing to help develop IPTV in the country. The agreement reached with the giant telco is Microsoft’s largest IPTV-contract on the continent to date and its second largest worldwide.
Microsoft said it expects most of its customer operators to end trials and move to commercial IPTV offerings in the second half of 2006, triggered by an upgrade of the Microsoft TV software as well as cheap IP TV set top boxes based on one chip.
Customers will use the platform to receive regular TV programs as well as advanced television services including standard- and high-definition programs, interactive TV, digital video recording and video on demand.
The German telecoms giant plans to offer access to the new network–which has speeds of up to 50 megabits per second–in 10 German cities from mid-2006, including Berlin, Hamburg, Cologne and Munich.
"The announcement represents Microsoft’s largest IPTV agreement in Europe to date and is a very significant milestone in our long-standing relationship with Deutsche Telekom," Microsoft Chief Executive Steve Ballmer is quoted as saying in the Telekom press release.
The move marks the biggest European contract Microsoft TV has signed and the second largest after one with AT&T in the United States, the world’s largest software maker said.
"It is a very large deal for us and brings the overall number of contracts to 13," said Microsoft TV’s marketing manager Christine Heckart.
Both firms declined to give financial details, but the "T-Home" television service offering is at the heart of a 3 billion euro ($3.7 billion) network upgrade which Deutsche Telekom hopes to bring to 50 German cities by the end of next year.
We forecast 1 million customers by the end of 2007. The main feature of the new network will be television and video services, said Deutsche Telekom spokesman Mark Nierwetberg.
Several carriers throughout the world have been testing Microsoft’s IPTV software for more than a year, and now many of those tests are turning into commercial deployments.
There were a lot of rumors that this deal would go a different way, said Heckart, alluding to the fact that Siemens headquartered in Germany and is an important equipment supplier to Deutsche Telekom, offers a competing IPTV solution. "This deal and the others we have announced recently validate our technology and show the momentum we are getting in this market."
Including Deutsche Telekom, Microsoft has announced that 13 broadband service providers will use its IPTV Edition software. Just last week, it announced that Telecom Italia signed on as a customer. Other announced customers include T-Online France, British Telecommunications, Swisscom and Verizon. Three companies–BellSouth, Bell Canada and Reliance Infocomm–are still testing the software, Microsoft said.
Microsoft began offering Microsoft TV in the 1990s to deliver TV and video programs to set top boxes in the home, but had trouble winning over major cable TV companies.
Its breakthrough came a few years ago when broadband speeds had increased enough for telecoms operators to start offering television and video services over Internet Protocol (IP) networks, resulting in a service called IP TV.
Deutsche Telekom’s IPTV service will ride over the carrier’s newly built VDSL (very-high-bit-rate DSL) broadband network. VDSL is the supercharged sibling of normal ADSL broadband and offers data speeds of up to 50 Megabits per second. With those speeds Deutsche Telekom said it can deliver several high definition television programs simultaneously to the home.
Telecoms operators such as Deutsche Telekom are looking for additional sources of income to offset declining voice revenues which are falling due to increased competition.
Prudential analyst Inder Singh said he expects that by 2010 the global IPTV infrastructure business will have grown to $5.9 billion, with Asia having the largest number of subscribers, followed by Europe and the United States.
Pyramid Research said IP TV is a vehicle for carriers to offer a range of new IP-based services to their traditional voice telephony subscribers, but it warned that carriers will face substantial competition from existing pay-TV companies.
Most Microsoft TV customers are now telecoms carriers