Alcatel spurns Microsoft, goes its own way with Internet TV

There could be some competition in the market for Internet-based television technology after all.

The hope of Microsoft Corp. to establish its software as the de facto standard for the emerging IPTV (Internet Protocol television) market has dwindled after one of its major allies, the former Alcatel SA, decided to push its own technology -- again -- and as other industry giants, including Cisco Systems Inc., enter the fray.

Alcatel, which made the first U-turn in its IPTV strategy in May 2005 when the French manufacturer decided to align with Microsoft, is now in the process of making yet another.

In November, Alcatel filed lawsuits against Microsoft for several alleged patent infringements, including three related to IPTV. Since then, the company has merged with Lucent Technologies Inc., another player in the IPTV market. And now the newly merged Alcatel-Lucent SA is talking about its own technology again.

Why? Maybe because the French-U.S. telecommunications giant believes it now has enough technology -- and clout -- to carve out its own chunk of what could be a huge market for IPTV systems and services.

"Today, video accounts for only around 5% of the traffic on IP networks," John Giere, chief marketing officer at Alcatel-Lucent, said in an interview at last week's Telecom World conference and exhibition in Hong Kong. "But according to research conducted by our own Bell Labs, that figure could reach 40% by 2010."

Alcatel-Lucent delivers not only core IP technology to manage video but also software to enable video services, such as IPTV, video mail and videoconferencing. The company says it focuses on open standards, which it sees as a key differentiator from Microsoft. "Our technology is open with open interfaces," Giere said. "Many operators don't want to be overly dependent on Microsoft, which offers a proprietary system."

Alcatel-Lucent is developing open application protocol interfaces, Giere said. "The idea is to have Java-based client software that you can enable across multiple devices."

The company is working with several organizations to help establish standards for IPTV-related technology, according to Giere. It has also developed personalization features, allowing users, for instance, to upload their own videos to the network and create their own personal TV channels.

Meanwhile, Microsoft continues to improve its IPTV software system and sign up carriers for field trials and, increasingly, commercial services. And, at least for now, the company isn't calling Alcatel-Lucent a competitor.

Last week, Singapore Telecommunications Ltd. (SingTel) became the sixteenth company to agree to use Microsoft TV IPTV Edition software through a deal orchestrated by Alcatel-Lucent.

"When we came to the IPTV market, we decided to take a slightly different approach," said Ed Graczyk, director of marketing in the Microsoft TV unit. "Our platform was developed with direct input from carriers that had joined our early adopter program. Some of the features in our platform resulted from the unique requirements of these carriers."

If the first wave of technology developed in the Microsoft IPTV platform aimed at creating "a better user experience for viewing TV," the second wave will focus on adding enhancements, such as rapid search functionality for both TV and video-on-demand content and personalization, according to Graczyk. "User-generated content is a big issue," he said.

A big development along the way has been the move by chip makers to embed simultaneous multistream, multicodec video decoding functionality into a chip, a functionality that was previously handled by software, according to Graczyk. "This system-on-chip approach will help substantially reduce costs," he said.

Not only that, but system-on-chip technology could help Microsoft embed its IPTV software into all types of devices, including PCs and gaming devices, so that consumers wouldn't necessarily have to buy a set-top box, according to Graczyk. "Carriers choose us because they know that we will be able to connect all types of devices running on our operating systems," he said.

And what if the carrier is a big fan of the open-source Linux operating system? "I don't think you'll see our IPTV software running on Linux systems," he said. "But you'll see IPTV software running on other systems."

A growing number of competitors hope to achieve just that. In addition to Alcatel-Lucent, Cisco, IBM and Siemens AG are a few of the big names seeking to carve out a slice of the budding market for IPTV services.

Copyright © 2006 IDG Communications, Inc.

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