For the better part of the past century, telcos' business plans have been about as dynamic as day-old cereal. But with the incursion of competition from cable operators, carriers have launched high risk/high reward strategies that will put them into the center of the entertainment universe. The question, though, is arising over whether carriers can handle the bright lights.

Two recent reports claim they can but only under certain conditions. The first, which is a forecast from RHK, says IP-based video will reach the $1.3 billion mark by 2006 and is growing at a compound annual rate of 100%. In fact, all of the various incarnations of IP video on demand will generate total revenues equaling more than one-third of DVD sales by 2009. At the same time, In-Stat said the construction of large fiber networks by SBC, Verizon and BellSouth assumes there will be a large-scale adoption by customers of video services.

The key, according to several vendors crossing the cable and telco chasm, is thinking of video as more than entertainment and part of the overall service package.

"A lot of people think IP video has to do with on-demand movies and broadcast," said Satish Menon, chief technology officer of Kassena. "The service of the future is an integrated service all coming to your TV. Being able to do things like video telephony. Why can't I marry my IP telephony services with my TV?"

Other indicators seem to point to interactivity playing a key role in telco TV deployments. ICTV last month created what it's calling a Starter Pack that allows smaller carriers--or bigger carriers wanting to start small--the ability to roll out interactive services.

"We're aggregating and selling all the content in that situation," said Jonathan Symonds, vice president of marketing and business development with ICTV.

For a set of services that seems so futuristic, it's some mundane issues that are causing the biggest near-term headaches. Billing integration, said Symonds, is one of the bigger ones.

"It's not easy. This is a business that isn't used to intelligent CPE," he said. "They like services that are based in the headend."