Your IP TV solution supports Flash. Can you tell us a bit about it?

We are the pioneers supporting Flash. We have full integrated Flash SDK in our server side meaning we have a full plug in to Micromedia. Anyone that knows Flash can develop his own user interface using our component. Everything is connected automatically and providers can do fast implementation. Only problem today is that there is no production set top box that supports Flash.

How big a threst is Microsoft in the middleware category?

We never underestimate Microsoft. They are very aggessive. Legacy telecom vendors have not been aggressive in the last two years in pushing IPTV and therefore Microsft somewhat succeded in entering that market. The current strategy of Microsoft will not succeed, however. The current startegy of Microsoft is to push a full end to end solution-meaning you have to buy everything from Microsoft. The set top box has to run Microsoft, the server side is Microsoft, the VOD is Microsoft and the DRM is Microsoft. I think that strategy will not survive. Microsoft will have to breakup its end to end solution.

Which parts of Microsoft IP TV solution for instance do you see being dropped by the market?

My prediction is that the first component to be broken off their solution will be DRM. Once that happens then the video server will be replaced.

Which are the biggest IPTV deployments in the world today?

The real biggest deployment in the world is actually France Telecom with Thomson. PCCW claims for much more numbers. PCCW actually ships the triple play box for a very low price and they count that as an IPTV subscriber. But a lot of people in Hong Kong just buy the pack for the broadband and keep the box in the closet. France Telecom numbers are real.

Are any of your customers asking you for IP TV solution as part of an overall IMS plan?

We are starting to integrate with VoIP and triple play offerings. We are trying to integrate and see how we work with SIP protocol. It is not a major thing yet. Last year we spoke a lot about IMS. We spoke a lot with Lucent. None of our customers as of today request specific IMS solutions but we are doing some work there. At this point it is still a low priority. One of our partners for the IMS activity is Comverse.

Who do you consider market leaders in IPTV middleware server side?

Alcatel and Nokia-Siemens are the leaders. Alcatel has to decide whether they will ship Microsoft or Lucent IPTV solution. Nokia Siemens is shipping today more subscriber licenses than Alcatel.

Why do we see small operators more successful in IPTV as compared to large operators?

I think there are two reasons. One is lot of those tier 1 customers chose Microsoft and Microsoft solution is still not ready. They chose Microsoft years ago. The second reason is because the telcos which are much bigger are not quick in their decisions. If you end up putting too much on the table, it is delay and delay.

What are the major challenges in IPTV in the US?

In the US, first of all the cable broadband is much stronger than ADSL broadband. The ADSL connection is lower quality because there are large distances from the DSLAM. Thus providing high bandwidth is an issue. ADSL can be replaced by fibre to improve bandwidth. Moving to fibre is a big cost though. On the other hand US does have three to four TVs in every house. Taking all that into consideration in order to succeed in a deployment in the US, you have to offer high definition and in order to do that you have to have that high bandwidth.

In contrast, in Europe, the distances between customer premises and DSLAM are much shorter. In France everyone can get 12 and 15 Megabits/sec over DSL. They don't need fibre just yet. However at the same time, in France one to two TVs is the norm and not something like 4. HD is not strong as yet and it is not something that is a must, because cable and satellite companies in Europe do not have that yet. Therefore IPTV providers in Europe can provide a compelling and competing service to cable and satellite at 12 megabits. In Hong Kong PCCW also provides 12 to 15 megabits/sec in each house and there is one TV and not 4. You can do only one stream and HD does not exist yet. In the US, if you are going to compete with Comcast with one TV offering and no high definition, that is a problem.