With the number and quality of available content and infrastructure choices increasing rapidly, it's clear that telcos can truly begin to select a best-of-breed video solution to serve each unique base of subscribers; with more to come. In June, one had to be sleeping under a rock not to have heard about SBC's multi-billion dollar IPTV announcement with Microsoft. A little less widely publicized but also of interest is the new partnership between CinemaNow, a provider of movies over the Internet, with Entone Technologies, an IPTV technology supplier that offers customer premises equipment and video server technologies, to provide an integrated content delivery solution to telcos and IP network service providers. Entone's announcement, in turn, was on the heels of video server supplier Kasenna's acquisition of ViewNow. There's no dispute that the choices are increasing.

In light of these positive developments, let's step back and look at a bigger picture. As interactive TV and video-on-demand become mainstream telco services, it's interesting to compare the telcos' progress with the evolution of the cable world. After all, both industries are similar in that both have invested heavily in the networks and infrastructures behind their respective services. 

While telcos are introducing TV for the first time, with the hope of leapfrogging over cable, cable operators (in addition to offering voice for the first time) are working to make their TV services better. But stop for a moment: what does "better" mean?  Telco engineers say "better" is a function of minimizing channel-change latency, good picture quality despite compression to the nth degree and the ability to reach twelve thousand feet from the CO. The marketers will say that "better" is the ability to offer tiered TV and on-demand service bundles and then in turn be able to bundle those with phone, broadband Web access and other services. Well and good. But the cable operators are going even one step beyond that: to try to make it "better" for the subscriber.

How can he say that, you ask? After all, the IPTV middleware folks have fine-tuned their user interfaces and made them consistent from one service area to the next. User interfaces follow the "two-clicks-or-you've-failed" rule of good Web design. The interoperability testing between middleware, switched digital video networks, applications servers and even content protection systems is largely done. The set-top boxes have all been ported. Content is less of a challenge every day. But the degree of vertical integration now practiced by some cable operators extends beyond even this degree of interoperability.

Media industry watchers think of most cable operators as an extension of the vertically-integrated media companies that own most of them--the camel's nose in the consumer's tent. They point to the fact that The Walt Disney Company owns everything from Disney Pictures and ABC (content) to part of TiVo (interactive TV applications) to a host of television stations and the MovieBeam service (channels to the consumer).

But one supplier, Digeo, does vertical integration a different way. Everyone knows Paul Allen as the co-founder of Microsoft with Bill Gates, but industry watchers also know him as a major stakeholder in the cable industry. As a Paul Allen company, Digeo is virtually an R&D arm for cable.

What makes Digeo different? In a phrase: the user experience. Because the cable industry, through CableLabs, has a well-defined set of television and communications standards, Digeo can leverage that and turn its attention to the user. Rather than integrating applications that depend upon legacy set-tops and software from multiple vendors, it developed a custom reference design for a home media system that holds sway over the entire user experience based upon requirements gathered directly from users.

Unlike the road being followed by PC-derived media centers, Digeo has learned to focus on TV and not to color too far outside the lines. As a result, Digeo's Moxi Media Center offers TV and PVR functionality, plus the ability to support two other TVs via existing coax or wirelessly. It doesn't "feel" like a home network system in the same sense as a PC, yet it can host the living room experience to other TVs in the home. One Digeo official exclaimed: "It appeals to your inner couch-potato." Yet some of its add-ons are very much like what other home gateway suppliers also deliver; including photos-on-TV and an MP3 jukebox with content from USB-connected devices.  

To be fair, TiVo, UCentric and others offer such multifunctional, multi-TV devices, but Digeo's "secret sauce" is the user interface, which presents all of this functionality through an easy-to-navigate horizontal menu bar that bears no resemblance to the usual "rows-and-columns" interactive program guide. Digeo licenses its design to Motorola for the Motorola Moxi Media Center, Scientific-Atlanta licenses its conditional access system to Digeo for incorporation into a Moxi-branded version and Digeo also offers its designs directly to service providers.

Just as the telco video phenomenon is still nascent, Digeo's solution is also not yet widely available. Although the company has not announced its subscriber counts, it has but a handful of commercial deployments in California, Minnesota, Oregon and Tennessee. But like the telcos, they're just getting started.

Perhaps what Digeo is doing should be seen as a signpost on the technology roadmaps of the IPTV supplier community. What's most interesting is how Digeo is getting the job done by being able to go beyond the integration of individual technology and content pieces; to deliver a compelling "whole" based upon a three-way partnership between a technology supplier, the service provider and the end user.

Steve Hawley is principal consulting analyst of Advanced Media Strategies. He may be reached via his Web site, http://www.tvstrategies.com.