The early knock on telephone company TV efforts was that the service they were providing looked too much like what consumers were already buying from a cable or satellite company, forcing telcos to compete too much on price.

With the most recent developments, however, including those from this week's Consumer Electronics Show, IPTV is definitely getting a competitive edge from new capabilities that integrate Internet content, features and functionality into the TV set.

Having spent a virtual day at CES Sunday, courtesy of multiple Webcasts, I think what Verizon announced with its second generation of FiOS TV and what Microsoft added to its IPTV platform with the integration of Xbox 360 and Xbox Live elevates IPTV above the ordinary video fray. In Verizon's case, enabling consumers to not only view Web video on their TV set but to search for it from the comfort of the living room is a significant step forward. Microsoft is clearly targeting the younger generation with the ability to track buddies, initiate and receive voice or text chats via the TV set.

These are capabilities that are coming this year to IPTV consumers--capabilities cable doesn't have yet.

That's not to imply telcos have a serious competitive advantage over the entire field. Motorola is also delivering new set-top boxes to Comcast that will enable place-shifting of music, video, pictures and more. In general, there is a sudden rush to link the Internet and its burgeoning video repository with the family TV set, and it's happening in many different ways. Just this week at CES, AOL and Sony announced a deal to make AOL TV available on Sony's TV sets, and smaller companies such as Media Zone and TVNGO also pushed Internet TV agendas. Then there's The Venice Project, the new effort from the ever-dangerous Janus Friis and Niklaus Zennstrom, the founders of both Kazaa and Skype.

In many respects, the "over the top" competition can prove more dangerous, as it not only sucks up consumer dollars and affinity but also increases bandwidth consumption. ISPs such as cable and telecom companies are not in a competitive position to increase service rates but could be faced with costly network upgrades if the volume of two-way video traffic continues to increase.

That's a big reason why it's important that IPTV continue to evolve and improve -- not to mention deploy. AT&T has fallen behind its own schedule for rolling out U-verse. Verizon's new features come first to New Jersey and then to its other 10 states.

IPTV is looking more interesting all the time, but it has to be available for the market to discover its value.

E-mail me at CWilson3@telephonyonline.com.