BigBand Networks Inc. (Nasdaq: BBND)'s announcement of AT&T Inc. (NYSE: T) as an ad insertion customer is major news for the digital video technology expert, and it comes at a crucial time. (See AT&T Inserts BigBand for Ads.)

The fact that the largest U.S. IPTV provider is using BigBand's Media Services Platform (MSP) is a major endorsement of that system, and could give the technology some much-needed market traction. Sluggish sales in 2010 had forced BigBand to go through two rounds of staff cuts and other streamlining. (See BigBand Hits a Sour Note and BigBand Cuts Staff as Orders Dry Up .)

Initially, AT&T is using the MSP to do local ad insertion on linear live channels, something the BigBand MSP accomplishes by splicing into encrypted streams without having to un-encrypt and re-encrypt the streams as produced by AT&T's middleware, Microsoft Corp. (Nasdaq: MSFT) Mediaroom. That is one advantage of the BigBand system, says company VP of Advanced Technology John Reister.

"It's particularly important for IPTV, because it is encrypted pretty much as soon as it is acquired and stays encrypted right through to the customer premises," Reister says.

The BigBand MSP is also capable of enabling targeted and interactive advertising, although AT&T has not announced plans to do either.

Why this matters
Advanced digital video features are becoming more important for video service providers as they look for new revenue streams and new ways of differentiating their content from over-the-top video and other video sources. In addition, the advertising options BigBand enables would work for multi-screen video as well, as AT&T and other service providers explore ways to monetize video to PCs and mobile devices such as tablets and smartphones.

BigBand's been touting the MSP as a product that will help improve its growth prospects, and today's announcement, which gave the vendor's stock a 12 percent boost in morning trading, offers some proof. For more Here's a look at recent BigBand developments:

• BigBand, Clearleap Team on Cable IPTV
• BigBand: 1B Ads Served
• BigBand Touts SDV Milestone
• BCM, Arris, BigBand Team On EBIF Demo
• Cox Taps BigBand for SDV Expansion
• BigBand Tweaks Board
• BigBand Plays It Personal

— Carol Wilson, Chief Editor, Events, Light Reading