If telcos are to be successful with their IPTV offerings one of the biggest hurdles to overcome will be dealing with in-home networks, according to a recent analysis from Multimedia Research Group.

Looking largely at the physical layer interconnection that will bring together IP set-top boxes with residential gateways and other devices in the home, the reports suggests that carriers will make management of all those units a key differentiator. Before they can manage the in-home network, though, progress need to be made on settling differences at the physical layer. Bob Larribeau, program director for IPTV at MRG, said there are some moves by telcos to use in-home IP over coax equipment, but it’s still very early in the market. Additionally, the idea that users will be able to connect everything wirelessly via 802.11n networks is a goal, but not realistic yet.

“If 802.11n was here now and it did everything everyone says it can, it wouldn’t be an issue,” Larribeau said.

Once the physical layer is settled, carriers must ramp up to provide support for the inevitable problems arising when consumers connect multiple devices to a gateway or router. Predicting that in-home issues will generate about half the customer service calls, Larribeau said being able to manage consumer devices as part of the network is what will separate carriers from competitors.

“Our view is that the real competition is between the service and the computer vendors,” he said. “We think that the consumer products tend to be more complementary and present some interesting opportunities.”

What’s more, carriers need to exam their relationships with Microsoft very closely, he said. While the software giant is providing middleware to many large IPTV efforts, the company could become a prime competitor.

“We think the service providers need to think through the relationship with Microsoft in terms of using the Microsoft software platform,” he said. “To what degree is Microsoft going to serve them?”