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Small IPTV Carriers Find Life After Alcatel

Alcatel's (NYSE: ALA; Paris: CGEP:PA) exit from the IPTV middleware business earlier this year had real consequences for many carriers. Some are now waiting in limbo for Microsoft TV, while others are jumping ship for new solutions. (See Alcatel's IPTV U-Turn.)

As part of the IPTV partnership Alcatel announced with Microsoft Corp. (Nasdaq: MSFT) in February, Alcatel agreed to stop development of its Open Media Platform (OMP) middleware product and begin pushing the Microsoft TV middleware platform. (See Alcatel, Microsoft Confirm IPTV Deal.)

At the time, more than 30 Tier 3 providers and around 25 Tier 1 and Tier 2 providers were using Alcatel's OMP middleware. Alcatel said then it would provide its middleware customers "an upgrade path," meaning a migration to Microsoft TV middleware.

But the Microsoft product is still in network trials, leaving the Tier 2 and Tier 3 carriers in limbo. The smaller carriers -- those that aren't target customers of Microsoft anyway -- have already begun to find new alternatives elsewhere. (See Swisscom Picks Alcatel for IPTV.)

One of those smaller carriers is Michigan IOC Allendale Communications . The company bought the Alcatel middleware solution through Tut Systems Inc. (Nasdaq: TUTS), which sold the product under the iView brand name. Allendale began using iView in May of 2004 and eventually turned up 760 video customers using the platform. But soon after the deployment, Allendale general manager Mike Osborne says, Tut and Alcatel were unable to fix problems or add new features to the product.

"We had a checklist of things we wanted to have changed over time and that checklist never got addressed," Osborne says. That list included fixes to iView's on-screen programming guide, and preparations to migrate to the more efficient MPEG-4 codec for HDTV.

Osborne says there were "no false promises" from either Tut or Alcatel, but it became clear that the relationship was ending.

"Over a period of time they [Tut Systems] basically ended up telling us that there weren't going to be any more upgrades because Alcatel had already put all its eggs in Microsoft's basket," Osborne says.

United Telephone Mutual Aid, a 12,500-subscriber IOC in North Dakota, tells a similar story. United assistant general manager Dennis Hansel says his company bought the Alcatel middleware (also through Tut Systems) in October 2004 but held off deployment because of a number of unresolved software problems. Hansel says changes to the programming guide and the digital video recorder (DVR) were needed, as well as the addition of advertising injection and localization features.

By March, Hansel says, Alcatel had already divested the middleware product to focus on Microsoft deployments, and Tut, caught in the middle, could do little to help.

But, according to Hansel, the Tut people didn't just lie down and accept the product's fate.

"In March we were down in Minneapolis and we met with those guys [Tut], and they were trying to get the original people that developed the product [the Canadian company Thirdspace and U.K. concern Imagic], and they were going to take a stab at getting the software done right." (See Alcatel Denies iMagic Fadeout.)

But it never happened. "I don’t know if Alcatel withheld the digital rights to the software or what," Hansel says. "It's one of those things that nobody will tell you."

So United's relationship with Tut and Alcatel ended badly. "We had a very bad taste in our mouth on what was sold to us," Hansel says.

Alcatel VP Jim White tells Light Reading that the Alcatel middleware customers will all be offered the chance to switch over to Microsoft TV, in time. But White acknowledges that the larger carriers will be first in line.

"Let's face it, the set-top box and encoder guys are attracted to the bigger deals," White says. "They like to go back to their bosses and say 'Hey, we got this big deal.'"

Executives from Tut Systems declined to comment for this story.

Former Alcatel middleware customers are now beginning to show up on the customer rolls of smaller middleware players like Minerva Networks Inc. Allendale, United, and two other IOCs recently added their names to the 50 IOCs already using Minerva's product.

Minerva CEO Mauro Bonomi believes perhaps 20 more IOCs now face the same quandry Allendale and United found themselves in this year.

As for the 25 Tier 1 and Tier 2 Alcatel middleware customers, Bonomi believes they are at a similar crossroads. Therein could be an opportunity for Minerva.

"You can say 'well those guys are waiting for Microsoft,' and indeed some of them are, but some others have decided that they probably don't want to go down the path of a closed system, and they are now evaluating open platform solutions like Minerva," Bonomi says. (See IPTV: Microsoft's Window to Carriers.)

— Mark Sullivan, Reporter, Light Reading

zher 12/5/2012 | 2:54:30 AM
re: Small IPTV Carriers Find Life After Alcatel Does Cisco has its own IPTV middleware?
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