June 8, 2006 12:00 PM PDT

IPTV promise meets reality

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The first major deployment of an Internet-based TV service by a phone company will soon be under way, but the promise of new interactive features and lower prices for consumers could be a long time coming.

AT&T, the largest phone company in the United States, is preparing to launch what will be the biggest deployment of IPTV to date. As the company moves from a small controlled release of the service in San Antonio to widespread deployment in 20 cities by the end of the year, all eyes will be on Ma Bell and Microsoft, which developed the software enabling the new service.

Both companies say they are confident that the technology is ready for prime time. But they plan to move slowly and cautiously as they deploy service.

"We expect demand to be very strong," said Christopher Rice, executive vice president at AT&T. "But we need to be careful how we manage this demand. We learned a lot of lessons from the early days of DSL. We don't want demand to outstrip capacity."

IPTV promises to change the way people watch TV. They'll be able to interact with television shows, choose multiple camera angles while watching sporting events, search and view movies and TV programs from an almost limitless library of digital content, share pictures and home videos, access more high-definition content, and even shop from their TVs. And with the telephone company entering as a new competitor against cable, prices on TV service are expected to fall.

But cutting-edge features and deep discounts in pricing could be a long time coming, because, at least initially, AT&T's service will look a lot like what cable providers already offer. And unlike its current DSL strategy, which has slashed prices down to $12.99 for 3Mbps downloads, AT&T, which hasn't yet published pricing for its new TV service, said it isn't planning huge discounts out of the gate.

"We plan to be competitive with the market on pricing," Rice said. "Just like with our other products, people will get discounts the more services they buy from us. But we have no plans to be a low-cost provider."

AT&T's service, called U-verse, will not look much different from what is already being offered by cable providers. Like cable, U-verse will offer a digital video recorder, video on demand, and at least one channel of high-definition content.

It's a new market for carriers with brand new technology ... It's hard to get cookie cutter about these early deployments.
--Christine Heckart, general manager of marketing, Microsoft TV
Meeting customer expectations
Still, users who have been testing the service in San Antonio say AT&T's service is an improvement over what they can get from cable. Alan Weinkrantz, who has a blog describing his experiences using the AT&T service, said he especially likes the IPTV interface and the fast channel changing. He's also impressed with the breadth of on-demand titles that are already available in the video library.

He plans to become a regular, paying customer when the service is available commercially in San Antonio. But he said the price has to be right and AT&T must prove that high-definition programming works. Currently, AT&T is not offering any high-definition channels as part of the trial.

"I'm very intrigued by what IP can offer in the future," he said. "The interface is very simple to use. So, if I only had to pay $5 more and HD worked, I'd be willing to pay for it."

Christine Heckart, general manager of marketing for Microsoft TV, said consumers just want basic TV features right now. She said that adding more interactive applications too soon could overwhelm customers.

"This year we just need to get solid deployments with competitive offerings," she said. "It's a new market for carriers with brand new technology. The rollout will be very high-touch. It's hard to get cookie cutter about these early deployments, and there will be unforeseen issues that need to be worked out."

CONTINUED: What interests consumers most…
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IP television, Microsoft TV, deployment, AT&T Corp., discount

11 comments

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Am I worried about competition from the phone companies?
You should be in fear. If anyone can come in and match you on features and price, a large bunch of people are going to immediately jump ship.

But you know it won't stop there. They won't match you on price, they'll beat you. And they'll do it, offering more features.

Why? Because they don't want dissatisfied cable customers, they want all cable customers.

Finally, you'll have to actually compete and innovate. You'll have to go beyond boring commercials of guys with bad attitudes and a satellite dish on their heads being mean to customers and actually improve your service, improve your customer service, improve your installation process, offer more selection, more choices and compete.

It'll be yours to lose and if past progress is any indication, you will lose it.
Posted by TV James (680 comments )
Reply Link Flag
Competition
Be nice to see Cox cable have a bit of competition.

Maybe they will stop raising their rates every
year at twice the rate of inflation.
Posted by shineon4me (6 comments )
Reply Link Flag
How long before a Microsoft virus/worm takes it down?
Even you M$ luvers can't deny it, hackers will be owning this Microsoft based system in no time.
Posted by aabcdefghij987654321 (1721 comments )
Reply Link Flag
Remember Webtv???????????????????
slow
Posted by paulsecic (298 comments )
Link Flag
How often will my Microsoft IPTV crash and need to be rebooted?
You think that was a joke question?
Posted by aabcdefghij987654321 (1721 comments )
Reply Link Flag
no joke
But since it's connected to the Internet it should
be able to just "phone home" to Microsoft a few times
a day and download the latest patches and Security Pack.
Posted by Jackson Cracker (272 comments )
Link Flag
How much will MS be invading my privacy?
I assume, based on past behavior, MS will be looking to collect as much data as they can get away with and reselling it to marketers or using it to monopolize another market.
Posted by 206538395198018178908092208948 (141 comments )
Reply Link Flag
How about Verizon's service?
I will not use the service from Microsoft, but I might add the verizon service to my mix.

I just killed my cox cable TV (Bad analog, good digital) but I still use them for my Internet and my phone. I get my TV from Dish Network.

It would be cool to have a second channel of high speed Internet, as well as better reception on some low bandwidth channels like Scifi (Lots of macro pixels in dark spots on the screen).

I don't see it as a choice of one verses the other. All the services have advantages and disadvantages. Why not mix and match?
Posted by ralfthedog (1589 comments )
Reply Link Flag
H.264/AVC (MPEG-4 Part 10) QuickTime Streaming Server option
AT&T should use a system based in UNIX like Mac OS X Server,
heck AT&T invented UNIX. Coupled with that they could use a H.
264/AVC (MPEG-4 Part 10) & an industrial strength version
QuickTime Streaming Server option, then they would have a
scalable solution from 3G mobile phones upto 1080P HD:

<a class="jive-link-external" href="http://www.apple.com/quicktime/streamingserver/" target="_newWindow">http://www.apple.com/quicktime/streamingserver/</a>

Forget the M$ instability...
Posted by libertyforall1776 (650 comments )
Reply Link Flag
H.264/AVC (MPEG-4 Part 10) & QuickTime Streaming Server option
AT&#38;T should use a system based in UNIX like Mac OS X Server,
heck AT&#38;T invented UNIX. Coupled with that they could use a H.
264/AVC (MPEG-4 Part 10) &#38; an industrial strength version
QuickTime Streaming Server option, then they would have a
scalable solution from 3G mobile phones upto 1080P HD:

<a class="jive-link-external" href="http://www.apple.com/quicktime/streamingserver/" target="_newWindow">http://www.apple.com/quicktime/streamingserver/</a>

Forget the M$ instability...
Posted by libertyforall1776 (650 comments )
Reply Link Flag
i signed up for att/uverse when i called w/question, my 10 minute wait time was 45 minutes!! then told the system was down, call back monday. i will, to cancel my uverse bundle !! how can u expect any service when they cant even keep the order/service site up.
Posted by barrelli (1 comment )
Reply Link Flag
 

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