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Video services

Microsoft Seals $500M IPTV Deal

Reliance Communications Ltd. (RCom) plans to launch its IPTV service before the end of March 2008, and will invest heavily, up to $1 billion, in its video systems and network infrastructure to roll out the service in the coming years.

The Indian operator today announced it will use Microsoft Corp. (Nasdaq: MSFT)'s MediaRoom IPTV platform to provide services such as high definition TV, video on demand, and DVR (digital video recording) to its broadband subscribers. The software licensing deal is valued by Microsoft at $500 million over an unspecified number of years.

According to local press reports, the carrier's chairman Anil Dhirubhai Ambani told a press conference in Mumbai that a further $500 million could be spent on its fiber network to help roll out the service, which will be launched initially in Delhi and Mumbai. Reliance first announced its plans to hook up to 1.7 million business and residential buildings to its fiber access network back in 2003.

"Reliance Communications is well poised to leverage its next-gen optical fiber network to unleash the 'Connected Digital Home' phenomena," stated Prakash Bajpai, Reliance's president of Home and Enterprise Business, in the press release issued today.

That Reliance is using Microsoft's video management and delivery system comes as no surprise, as the two companies have been working together on broadband TV since 2003. Reliance was one of a number of carriers, including Telecom Italia (TIM) , BCE Inc. (Bell Canada) (NYSE/Toronto: BCE), and SBC Communications, now part of AT&T Inc. (NYSE: T), that worked with Microsoft to develop the company's IPTV platform. (See Microsoft IPTV: Now That's Italian!)

The launch of the service has taken longer than Reliance expected, though, as the carrier had planned to offer TV services over broadband connections before the end of 2006. (See Reliance Steps Up IPTV Plans.)

But such delays are not limited to Reliance. The rollout of IPTV services by other Indian operators, most notably Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) , has been hampered by regulatory issues, content availability, and the need to upgrade the country's access networks, though the market appears to be gaining pace as operators such as Bharti Airtel Ltd. (Mumbai: BHARTIARTL) build out their capabilities. (See IPTV: Bollywood or Bust?, Indian Telcos Tackle Broadband Shortage, Indian Regulator Tackles IPTV, and UTStarcom Rolls IPTV in India.)

The country's broadband market is still at a very early stage, though. The latest statistics from Telecom Regulatory Authority of India (TRAI) show that, at the end of September, India, which has a population of more than 1.1 billion, had only 2.67 million broadband connections, up from 2.56 million at the end of August, and up from 1.82 million a year earlier. The Indian government has set a target of having 20 million broadband users by 2010.

So with its IPTV service now nearing launch, Reliance needs to boost its broadband subscriber numbers. It has been trialing the service with 20,000 customers in Delhi and Mumbai, but it is unclear how many existing retail broadband customers in total Reliance has currently. The operator could not be reached for details of its broadband subscribers or its IPTV-related capex plans as this article was published.

Reliance, which recently announced net income of $328 million in its second quarter, currently has more than 38 million customers, but the vast majority, 36.3 million, are mobile subscribers. In total it has nearly 800,000 business and residential fixed-line connections, including 666,000 fiber-to-the-building connections. (See Reliance Reports Q2.)

— Ray Le Maistre, International News Editor, Light Reading

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