Net-based technology would allow limitless TV

The next big thing in television could be a technology borrowed from the Internet. IPTV (the ''IP" stands for Internet protocol) will let users choose from a vast variety of video entertainment, available on demand through a simple piece of wire. Telephone wire, to be exact, because phone companies -- not cable TV firms -- are leading the way.

SBC Communications Inc., which offers phone service in 13 US states, is spending $5 billion to build the first IPTV network in the United States, set for launch late this year or in early 2006. Verizon Communications Inc., which is spending $3 billion to bring TV service to its customers, will use IPTV to deliver on-demand movies.

Cable companies could adopt IPTV technology as well. But for telephone companies the technology offers the first chance to sell TV services. It's also an opportunity for Microsoft Corp., which is providing much of the underlying technology, to become as powerful in entertainment technology as it is in software. IPTV could shake up the cable industry in the same way that voice-over-Internet phone systems have roiled SBC's own voice telephone business

Already, about a million people use IPTV systems, mostly in Hong Kong and Italy. Last month, British Telecom said it would work with Microsoft to deploy IPTV in Britain. On this side of the Atlantic, SBC spokesman Michael Coe said his company expects to make IPTV available to 18 million homes over the next three years.

''There's a lot of pent-up frustration with the cable companies; consumers are looking for another alternative," said Coe. ''We're going to be that alternative."

But SBC and other IPTV contenders won't find it easy to crack the US market. They'll face ferocious competition from cable and satellite TV companies, local governments armed with rolls of bureaucratic red tape, and bewildered consumers with no idea why they should choose IPTV.

''I think it's years before these guys get any significant share," said Maribel Lopez, IPTV analyst for Forrester Research in Cambridge.

Traditional cable and satellite TV systems are broadcast technologies. The cable or satellite dish delivers hundreds of channels to a set-top box. The customer then picks the channel he wants, and ignores the rest. ''By definition, with broadcast you're sending all things to all people at the same time," said Ed Graczyk, director of marketing for the TV division at Microsoft.

But it's difficult for cable systems to offer new or unusual programming, because adding one channel means dropping another. And since a standard phone line can't handle nearly as much data as coaxial TV cable, phone companies haven't been able to compete with cable providers.

IPTV solves this problem by abandoning the broadcast approach. Because it's based on Internet technology, watching IPTV is like visiting Web pages or reading e-mail. A viewer can connect to the TV provider's video server and choose whatever programming is available there. The shows are then streamed to the home TV via the telephone wire. Switching programs means switching to a different server.

There's no limit to the number of Web pages. In the same way, an IPTV system has no limit to the number of possible TV channels. IPTV boosters say the technology will enable a limitless array of new programming options, as well as traditional fare. ''In some parts of the country there are people who want to watch cricket," said Coe. ''We can send it."

IPTV lends itself to on-demand viewing. If you miss ''Law & Order," the network will play it for you whenever you choose.

The use of Internet protocol means that all manner of information can be embedded inside the video stream. For instance, a viewer watching a Red Sox game could punch up a menu of statistics on the player at bat.

Still, skeptics question how many consumers will care about flashy features.

''Most consumers have no idea what IPTV is," said Greg Ireland, IPTV analyst at IDC Corp. in Framingham. Just getting them to think about switching will require SBC to launch a massive marketing campaign.

So far SBC hasn't revealed its pricing plans, but does say the service should be ''competitive" with cable. Still, about 85 percent of US households already have either cable or satellite TV, so IPTV can only grow at the expense of its rivals, and cable and satellite providers will fight to keep their customers.

Indeed, the cable industry is already working with city and town regulators to throw up roadblocks against IPTV. Thousands of local communities regulate cable TV providers. These communities also want jurisdiction over the new TV systems. This would be a regulatory nightmare for the phone companies, while escaping from such regulation would give them a major advantage over cable companies. The cable companies say that's not fair.

In its headquarters state of Texas, SBC pushed hard for legislation that would have let it operate a IPTV service after merely receiving state approval. But Texas mayors teamed up with cable industry lobbyists to scuttle the bill. Now SBC is lobbying for a similar federal law, and it has the support of Federal Communications Commission chairman Kevin Martin.

Meanwhile, IPTV still faces technical hurdles. In May, the Swiss telecommunications company Swisscom said that technology problems were delaying rollout of a Microsoft-based IPTV system until next year.

And Massachusetts' own telephone company, Verizon, has decided to forgo IPTV in favor of running fiber-optic cables directly into consumers' homes. These cables will deliver a standard digital cable service, with IPTV used only for delivering on-demand movies.

''In our case, we're using a technology that is much closer to what traditional cable companies have used," said Verizon spokesman Eric Rabe. ''We also think that IPTV is not ready for prime time yet, and we don't want to wait whatever period of time to get there."

No one doubts IPTV is coming. The question is how long it will take to become mainstream. Even if SBC holds to its plan to offer it to 18 million households over the next three years, IDC's Ireland predicts that only 30 million people will be using the technology worldwide by 2009, with two-thirds of them in Asia.

But SBC spokesman Dave Pacholczyk is unfazed by the skeptics. ''People said the same thing about the phone business," said Pacholczyk. ''Why would somebody switch from Ma Bell to somebody else? We know that millions of people have."

Hiawatha Bray can be reached at bray@globe.com.