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UPC zaps MS digital TV platform plans

Cableco opts for rival technology

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UPC, Europe's largest cable company, has announced it will not include Microsoft software in its digital TV offering, due to continued delays. The FT today quoted one insider as saying: "We have taken Microsoft off the trials and are re-evaluating what we are going to do."

The companies worked together for three years and Microsoft owns a six per cent interest in UPC (reduced from an eight per cent stake it bought in 1999 for $300 million).

UPC first raised its concerns over Microsoft's technology in April when MS failed to reach a deadline. UPC has seven million cable customers in Europe but only offers a basic service at the moment. Microsoft's expertise was expected to bring interactive aspects such as email and online shopping to the service last year but the software giant's failure to come up with the goods on time saw it put back.

Since then, UPC has been working with MS competitor Liberate Technologies to include such interactive elements.

Microsoft is adamant that it has met all UPC's tests and has been ready to roll the technology out for a while.

This does not appear to reflect the experience of TV Cabo, a leading digital TV market player and high-profile Microsoft partner. Last month the Portuguese firm said it had "teething troubles" with MS' software.

TV Cabo has around 1.8 million subscribers and launched TV Cabo Interactiva, in June this year, using Microsoft TV technology.

Microsoft's software issues also put a question mark over a hoped-for contract with a Brazilian digital TV company that Microsoft spoke of at a recent Digital TV conference in London.

This leaves only American cable company Charter Communications expressing unequivocal support for Microsoft TV software.

Charter announced a field trial with all MS kit at the start of last month, with the intention of rolling it out across the US next year. There is the slight caveat that the chairman of Charter is none of than Paul Allen. You know, the bloke that started Microsoft with Bill Gates.

History tells us that Microsoft is not very good with software first time around. It takes a few revisions, before Redmond gets it right, and a few more revisions before it embraces and extends its way from standards ownership to market dominance.

However, Microsoft may be a significant supplier in Digital TV, but it cannot dominate this market in the same way it dominated the PC desktop. This is because it does not have ownership of key standards.

Microsoft sought, for instance, to persuade television companies (particularly in the US) to go with its own version of European standard Multimedia Home Platform (MHP), created by Sun and wrapped around Java.

The attempt failed and this year the European Parliament made MHP mandatory in the EU for all new digital boxes. A little surprisingly, the US appears to be following suit and going with MHP as well. Perhaps it has learned from the mobile phone business. ®

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