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Microsoft's telly-over-the-net tech gobbled by Ericsson for mobes

Just as everyone gets used to watching TV via the Wii

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Sweden's telecoms giant Ericsson has bought Mediaroom, the Microsoft-built technology that pipes TV over the internet.

It gives the world's largest maker of mobile network gear the keys to a quarter of the world's video over IP (IPTV) market - and 400 staff to improve the delivery of telly to pockets, palms and living rooms.

Microsoft's Mediaroom system delivers programmes, films and sport to 22 million set-top boxes in at least 11 million homes, we're told. Half of those subscribe to AT&T's U-verse, and the rest are spread across Deutsche Telekom's Entertain, TELUS Optik TV and 35 or so other packages; all of which accounts for 25 per cent of the globe's IPTV market. By the end of 2013, that share will rest with Ericsson.

Neither party is saying how much the Swedes paid for Mediaroom, but given the entry it provides to a growing market, the sum won't be small. Microsoft said it will now focus on the XBox games console platform to sell content including video.

This means that if XBox is going head to head against U-verse, Microsoft has decided to jettison Mediaroom to avoid the awkward situation of providing the technology that powers the telly service of its new rival AT&T.

BT Vision and U-verse lead the nascent IPTV market while Netflix and LoveFilm prove there's space for over-the-top players, so-called because they piggyback a telco's broadband connection to provide a competing service: for example, Netflix will stream TV over a BT line when BT would prefer it if you instead subscribed to BT Vision.

For a long time IPTV was considered the reserve of the ISP; it was considered the only company able to guarantee the necessary quality of service to provide a watchable video stream. But faster internet connectivity has rendered such guarantees redundant - now any software can pipe telly over broadband reliably - and the business is primed for a rapid expansion.

Even Intel is launching a branded over-the-top service, Google is likely getting involved, and Samsung reiterating its service offering while everyone keeps a nervous eye on Apple. New technologies including MPEG DASH (which adapts the rate of video data streamed to match the connection) and H.265 (which touts better compression) will also drive wider adoption, but connected TVs will be the decisive factor.

Last year America watched more internet video on TV screens than on laptop or desktop computers, which is a hugely important shift. Users are buying kit capable of displaying IPTV in the living room, but they're also learning that the kit they've already got (such as the Nintendo Wii) can do just as good a job, which is why the delivery platform is so important.

Ericsson wants to expand Mediaroom into mobile: it will provide a single delivery platform capable of pushing the same video over wireless and fixed links to allow media companies to offer cross-device television based on a single subscription or pay-per-view model.

The Swedish hardware giant already knows a lot about how to optimise video over the air, so it should be in a position to add that functionality to Mediaroom and in time to take advantage of the forthcoming revolution in TV viewing. ®

The smart choice: opportunity from uncertainty

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