Nevertheless, a lot of companies want to be IPTV's gatekeepers and toll-takers. Or, as they say in Hollywood, "What I really want to do is direct." Directing the flow of content over a network looks like a more appealing business than providing mere transport at a flat rate, without much potential for service providers to add value. Dozens of tech companies have developed hardware and software products to help service providers manage digital content and related services.

Cable companies are offering telephony and Internet services to complement their video content in the oft-cited data, video, and voice "triple play." Throw in wireless services, and you've got a quadruple play. The phone companies are responding. AT&T (formerly SBC Communications Inc.) is deploying high-speed fiber-optic lines to customers' homes to provide integrated IP-based television, broadband, voice, and wireless services on the Microsoft TV platform. Just last week, AT&T began selling an Internet-based TV service with 200 channels to customers in San Antonio.

Verizon's LG VX8000 phone

Verizon Communications Inc. is deploying a fiber-optic broadband, data, and video service, which also relies on Microsoft TV, in four states, with more to come. In late 2004, Comcast began deploying Microsoft TV Foundation Edition, a version of Microsoft's IPTV infrastructure software for the cable industry, in the state of Washington, though, like other IPTV rollouts, it's an early-stage initiative with limited reach.

It's still a nascent market. According to In-Stat, there are only several hundred thousand IPTV users in the United States. The research firm expects AT&T and Verizon to have some 3.6 million subscribers between them by 2009. Things are moving faster in China and elsewhere in Asia, driven by modernization and the rush to prepare for the 2008 Olympics in Beijing.

"Trench warfare is about to begin between the cable companies and the [telco]-sponsored IPTV platforms," says Mitch Mitchell, a VP with consulting firm A.T. Kearney.

Operators In Control

There's a key distinction between IPTV and the Internet: IPTV is a closed system in which the operators, not users, control the applications. Services are delivered in a protected network environment where surfing generally is limited to what the operator provides. "With a closed system, the content providers and networks feel much more comfortable about the protection of their content than they would over the Internet," explains Shawn Strickland, VP of product man- agement for Verizon's FiOS TV.

IPTV architects envision an interactive experience with authorized file sharing that goes beyond the spoon-fed programming choices with which we all grew up. So far, however, IPTV seems to have more in common with the cordoned-off service model that AOL used to initial success but later abandoned. "The AOL experience has shown that you have to open up to some extent," says Strickland, who contends that the telcos and cable companies are moving toward a model that's closer to what AOL and Yahoo are doing today. The term he uses is "promoter."

That may be a valuable, even lucrative, role in a world of unlimited channels. It's one that search engines such as Google, MSN, and Yahoo perform to varying degrees on the Web, and it's certain to be necessary on IPTV networks. Television viewers "can't find what they want when they want it," says Jim White, VP of market development for Triple Play at Alcatel. "IPTV will let you do a lot better job at finding what you want, at searching."

Advertisers, meanwhile, are looking for ways to develop closer relationships with potential customers. White believes the desire for better advertising metrics will motivate companies that spend millions on advertising to embrace IPTV.

	Apple's video iPod

The emerging TV model requires new infrastructure to manage, distribute, and monetize content. For example, application service provider Entriq Corp. offers its MediaSphere service to handle billing, security, and customer service in digital stores customized for specific types of content and delivery channels such as broadband, wireless, and IPTV.

For service providers, flexibility is critical because delivery channels often are siloed: There's typically one delivery method and business unit that deals with the Web and another for television. Harris Corp. has developed its H-Class Content Delivery Platform to unify those systems, giving content providers the ability to manage IPTV network services, mobile services, and on-demand services from the same management architecture.

John Delay, director of strategy for Harris' networking business, says that even if content owners and providers can simplify asset management, significant obstacles remain. The next five years are "going to be a real roller-coaster ride," he predicts. Delay questions whether small mobile devices are well suited for conventional video and how long it will take for new and more Web-effective advertising models to develop.

On-Demand World

Many players share those doubts, but they're forging ahead. Starz Entertainment Group LLC, which runs the Encore and Starz movie channels, has partnered with RealNetworks Inc. to create a subscription service called Starz Ticket. Broadband users can get unlimited downloads of a rotating selection of more than 300 movies for $12.95 a month, and the company partnered with Sony and Microsoft in introducing last week a $9.95, 800-movie mobile service called Vongo. "What we're aiming for is to duplicate in the movie arena what we see with music," senior VP Tom Southwick says.