The planned IPTV converged infrastructure is designed to deliver massive amounts of bandwidth to the bandwidth starved home. In theory, the placement of new to-the-home and in-home pipes from the on-site proprietary media gateway to the STB and the media center PC allows the delivery of IPTV and Web TV, along with traditional data and legacy voice, all at the same cost of service.

The converged network shown in Figure 2 enables a single infrastructure to deliver more services and more revenue at higher margins and ultimately declining costs, by first cannibalizing the existing revenues and then eliminating the costs. Figure 2 describes the new network.

Figure 2: Microsoft vision of the IPTV architecture

Figure 2 shows that all content is digitized, encoded, and stored on ingested servers to be played out over the private IP transport system. This storage and play-out eliminates the current complex chores of determining decoding needs at the consumer device and bandwidth needs at the channel level-that is to say, how the signal was encoded, what the frame rate is, which compression standard was used for video and audio, and if the device supports the encoding standard.

The IPTV infrastructure, in addition to simplifying the private network and user devices, also reduces the total network delivery cost both through inexpensive media gateways at the consumer site and shared use media gateways to the legacy networks.

As shown in Figure 2, IPTV produces transport media independence. Virtually any broadband transport media, such as cable, fiber, hybrid fiber coax, DSL, and over-the-air wireless transport can convey the modern IP-based rich media signals, to any consumer equipped with the proprietary media gateway and IP STBs. As seen in Figure 1, however, Web TV can also be delivered to virtually any IP device with sufficiently managed bandwidth terminating on the media center without STBs.

In fact, the implied ability to connect PCs, phones, and home data/voice/video services to the same infrastructure, with no dedicated service overlays, makes the new multiple channel IPTV process more than just another carrier overlay network. In most countries, not including the US, the single IP infrastructure should produce a significantly lower cost per door passed, cost per customer, and cost per service, rather than building the same channel capacity using the current fixed-slot, TDM equipment.

In countries with highly developed TDM and channel slotted infrastructures, such as the US, the low cost per door passed with IP should enable the new IPTV operators to effectively compete in terms of price and performance. As a result, they can cannibalize current video and telephony service revenues that use the slotted networks and best effort data overlays.