After completing successful trials throughout 2012 and 2013, Deutsche Telekom AG showed off a virtual set-top prototype in public for the first time this week in Berlin.

With the help of ActiveVideo Networks Inc., the German telco has been testing cloud TV delivery in both Germany and Greece, and now says it is moving forward with trials in Croatia, after which is will discuss "initial marketing strategies."

The Deutsche Telekom news is important because it suggests a new wave of TV services may be on the horizon. By hosting set-top functions in the cloud, operators can experiment with offering TV service on devices users already own, or through an inexpensive adapter such as the Chromecast HDMI dongle now being popularized by Google. (See Chromecast Gives Google a Home Run.)

If the devices are cheap enough, operators could even make them free to consumers who want to test out TV service, much like AOL sent out free CDs in the 1990s to promote its Internet service.

The Deutsche Telekom TV trials dovetail with the operator's pilot TeraStream project in Croatia, which incorporates software-defined networking (SDN) features as part of an advanced network architecture deployment. Television services could help Deutsche Telekom generate significant revenue from the network, in much the same way they currently bring in income for Google on its fiber network in Kansas City.

Deutsche Telekom's cloud TV tests are an important data point for service providers without legacy set-tops in the field. However, they also provide real-world evidence of cloud TV's viability to established players that are testing a possible transition to cloud delivery. If Deutsche Telekom can pull it off on a massive scale, it will show other service providers that the approach is scalable.

— Mari Silbey, Special to Light Reading Cable