Compression Hiccups Hit Microsoft, SBC

A surprise decision by SBC Communications to make MPEG-4 its primary compression framework has forced Microsoft to make adjustments in its IPTV platform even as problems with MPEG-4 chips are delaying availability of next-generation set-top boxes.

Sources say SBC’s decision was prompted in part by quality disparities in side-by-side comparisons of MPEG-4 Part 10, otherwise known as H.264 or Advanced Video Coding, with VC-1, the standardized version of Microsoft’s Windows Media 9, at SBC and content providers’ facilities. Moreover, with consensus building in the content community that MPEG-4 was likely to become the universal replacement for MPEG-2 in the digital TV world, SBC had little choice but to avoid arguments over compression formats as it seeks to negotiate content deals with suppliers.

“I think the argument is pretty much over between MPEG-4 and VC-1,” says Jim Olson, president and CEO of SkyStream Networks, a supplier of next-generation encoding systems which recently won the encoding contract for the nationwide IPTV rollout of Nippon Telephone and Telegraph in Japan. “The die was pretty much cast when SBC made its choice.”

But the situation complicates things for SBC and Microsoft. Not only must SBC sweat out the waiting period for MPEG-4 chips; Microsoft must take steps to make sure its middleware program can operate as effectively with MPEG-4 as it can with VC-1.

SkyStream has provided Microsoft its MPEG-4 encoder and is offering some expert input as the software provider attempts to recode its software to integrate with VC-1. “Their middleware is geared around VC-1 implementation, so it will take some work,” Olson says.

Microsoft’s MSTV group appeared to be taking the disruption in stride. “There’s the MSTV perspective, and there’s the corporate perspective on this,” says Ed Graczyk, director for marketing and communications at MSTV. “At MSTV we’re agnostic on the codec (encoder/decoder) question. At the corporate level people believe there are a lot of advantages to VC-1, in particular when you talk about connected devices. For example, there’s no MPEG-4 decoder in PCs.”

Microsoft’s corporate vision is that the Media Center platform for the PC will become the point of content management for all devices in the home, whereas MSTV is focused on delivering a solid end-to-end IPTV platform. “Most set-top box manufacturers are supplying boxes that will decode either format plus MPEG-2,” Grazcyk says. “So we’re fine with it. Whatever the customer’s decision is today, they’ll have the flexibility to go another way later. In fact, we have one customer who is using both formats – MPEG-4 for broadcast and VC-1 for on-demand services.”

Ironically, VC-1 appears closer to implementation at the chip level, largely because it was developed by one supplier and therefore is not subject to the disparities in interpretations that typically plague commercialization of standards that rely on intellectual property contributions from numerous suppliers. While VC-1 is in the final stages of the standardization process at the Society of Motion Picture and Television Engineers, Windows Media 9 has already been implemented in commercially available set-tops. In contrast, although MPEG-4 encoding and decoding suppliers have been working through the differences in interoperability tests since H.264 was finalized last summer, the system is still not stable enough for mass production of set-tops.

“The telephone industry is coming down on the side of H.264,” says Roy Kirsopp, CEO of Amino Communications LLC, a leading supplier of IPTV set-tops which has begun shipping a box that uses MPEG-2 for standard definition TV and Windows Media 9 for HDTV. “But there are issues. You can see patches and blockages showing up in the video, which is totally unacceptable. It’s going to take time to get it to work effectively.”

Kirsopp says Amino plans to ship an H.264 set-top capable of decoding standard definition television in July, but he quickly added the move is largely prompted by the company’s need to have an H.264 box more for marketing purposes than for any practical reasons. The set-top uses a general purpose digital processor from Texas Instruments Corp., which makes it too expensive for most service providers and largely irrelevant for companies seeking HDTV capability in their set-tops. Kirsopp, who expects to have an HDTV set-top capable of decoding MPEG-4, VC-1 and MPEG-2 in the market by sometime in the fourth quarter, says “we’re talking next year” for deployments of “real H.264,” meaning boxes that meet the cost requirements for large-scale rollouts.

Delays are a headache but nothing exceptional when it comes to implementing a new compression standard, says Jeff Schline, manager for digital TV market relations at Tut Systems, which supplies IPTV headends, including next-generation digital encoding systems. The company last week announced what may be the first deployment of an MPEG-4 headend in North America with Farmers Telephone Cooperative in Kingstree, S.C., but Schline acknowledges there were no set-tops available to support rollout of services.

“It’s a sore point now, but they will come,” Schline says, adding he’s confident the problems will be worked out in time to meet rollout schedules of companies like Farmers that are looking to deploy MPEG-4 headends sooner than later. “It takes three months or more to get the system up and running, so by then I think we’ll see things opening up.”

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