Swisscom launches Internet TV over broadband

By Peter Maushagen and Sven Egenter

ZURICH  - Swiss telecoms group Swisscom has launched a pioneering Internet television service which it expects to yield annual sales of more than 100 million Swiss francs in the mid-term.

Swisscom is one of the world's first carriers to commercially launch Internet Protocol Television (IPTV), a key tool for telecoms operators competing with the cable TV carriers' combined package of phone, broadband and TV services.

Priced at 29 francs a month on top of the fees for telephone and Internet connection, the service offers more than 100 television and 70 radio channels as well as sporting events and video on demand, the group said in a statement.

The group, whose revenues fell by 2.8 percent to around 4.8 billion Swiss francs ($3.84 billion) in the first half of this year, is offering the service through broadband Internet.

"Bluewin TV should bring a triple-digit million (Swiss franc) sum to the group sales of Swisscom," Chief Executive Officer Carsten Schloter said.

Swisscom has crossed many technical hurdles in trying to offer high-quality TV over old copper telephone wires. It delayed the launch several times due to technical problems with the system, which runs on a Microsoft platform.

"We have suffered a lot," Swisscom Fixnet CEO Ueli Dietiker said. "And we have helped to develop the Microsoft Internet-TV platform."

Microsoft, working with Alcatel, and Siemens are the two main equipment groups in the world offering the upgrade of networks and TV software.

"This is a first-of-its-kind service and a sophisticated project involving many different technologies from various partners," said a Microsoft TV spokeswoman in an emailed answer to questions.

Swisscom has invested 600 million Swiss francs in the construction of the VDSL network, Schloter said in a presentation, referring to the upgraded DSL broadband network.

The group has spent around 10 million francs on the Bluewin TV applications themselves, said Dietiker.

The cash-rich, state-controlled company faces increased competition from cable operator Cablecom and analysts at Zuercher Kantonalbank said the new offer could help Swisscom retain customers.

Dietiker said Bluewin TV would only be available as a package with other Swisscom products, but the company was looking into offering it to other providers.

Shares in Swisscom, which have risen 5.2 percent so far this year, were largely flat at 435 francs at 1614 GMT.

Swisscom CEO Schloter said in earlier versions of the system, switching between programmes took several seconds and there were difficulties in getting sound and image synchronised.

In other countries former telecommunication monopolies are also trying to fight falling prices and increased competition with new multi-media offers.

Two weeks ago, Deutsche Telekom launched its Internet TV offer, which also includes fixed-line telephony, super-fast broadband Internet and IPTV.

(Additional reporting by Lucas van Grinsven in Amsterdam)