LAS VEGAS--There is a small groundswell of support among U.S. IPTV players to see network-based digital video recording become part of the video ecosystem, enabling high-definition content to be more easily delivered over bandwidth-constrained copper networks.

“I think we are going to see network-based DVR become commercial here the way it is in places like China,” said Enrique Rodriguez, corporate vice-president of Microsoft TV. “In five years, it will be a natural part of the industry.”

One reason IPTV is taking off much faster in Asia and Europe is that they allow network-based DVR services. Content providers in the U.S. have been very hesitant to allow network operators to store their content in massive amounts for distribution into the home, and successfully sued the only operator – Cablevision – to attempt such a service.

With more HD television sets in American homes today, however, and a growing number of households with multiple HD sets, the demand to both view and record multiple HD channels at the same time will also increase, and that would swamp some IPTV services, such as AT&T’s U-verse with its 25 Megabit per second target bandwidth. Using current MPEG-4 compression, AT&T says it can deliver an HD stream at 6 Megabits per second. Four such streams would consume virtually all the bandwidth, making a voice-data-video bundle unlikely.

Many independent telcos, who deployed early using MPEG 2 gear, are facing an even grimmer future.

If the HD content was stored in the network, however, consumers could access it on demand, and service providers would only have to deliver what was actually being viewed, and not devote extra bandwidth for viewing and recording onto the home set-top box. The technology is already available to do that, Rodriguez said – but the business model isn’t.

“We have to make sure the business models intersect, for service providers and content owners,” he said, in an NAB interview. “We need to establish a set of discussions.”

Content owners have some legitimate concerns, Rodriguez said. There is the matter of DVR users fast-forwarding through commercials.

The answer to that is to make the advertising more relevant and interesting to end-users, said Dan York, executive vice president, Programming, AT&T. “If it seems like every advertising spot is talking to them, they will watch,” he said in an NAB panel discussion.

Even if recorded shows are viewed months later, the technology now exists to make sure they are delivered with up-to-date ads, said John Morrow, vice president of strategy and business development at Cisco. Its set-top boxes contain a software application called Retriever that takes individual viewing data and aggregates it, enabling advertising to be targeted based on interests and geography.

“If a viewer is watching ESPN, the Outdoor Channel and Speed, you can assume they would be attracted to REI and Dick’s Sporting Goods stories,” Morrow said. “If you can go to Dick’s Sporting Goods and say, ‘I can deliver your ads to X number of people within five miles of your store that have these interests,’ you are going to sell more ads.”

There is also research which shows that most people who use DVRs don’t actually fast-forward through the commercials, Morrow added, and the extended viewing availability is additive for content providers. He concedes, though, that content licensing agreements have further complications.

“Some channels, like Turner Classic Movies or TBS, might only have programming rights to broadcast content like movies in a limited window,” Morrow said. “They might have the rights to broadcast a James Bond week, but not to offer those movies on a DVR service or as part of a video-on-demand package. Video licensing is a complicated process.”

That’s why it’s important to get content owners and IPTV service providers talking, according to Microsoft’s Rodriguez, to work out some of the thorny issues that might otherwise limit IPTV in the U.S. Broadcasters elsewhere, such as the BBC, are actually enjoying a content boom because of IPTV’s ability to make their content on-demand deliverable, he said.

“Right now, that’s a very different phenomenon in the U.S. – they are using ABC.com or Hulu.com to do video-on-demand,” Rodriguez said. “The service providers haven’t connected yet on how they let ABC have a business model on their networks.”

Thierry Fautier, director of Telco Solutions for Harmonic goes even further He thinks network-based PVR may be what saves a lot of IPTV deployments.

“In Europe and Asia, telcos have already realized the problem and they are moving forward with network-based PVR,” Fautier said. “When you reach the point of offering two streams or three streams of HD, that’s the end of IPTV. We think that network-based PVR is the future; it’s the solution to a lot of things. We want to help the [network] operators, but we can’t go between them and Hollywood. This is a business decision.”