Telstra Says 'Not Yet' to MS Internet TV

Australian telephone company Telstra told the Wall Street Journal Wednesday that it had pulled out of a deal with Microsoft to use its Internet TV service. The company denied the decision had anything to do with the technology, but rather the company's "current state of readiness" to make the necessary upgrades to launch the service.

Telstra would not rule out that it could sign a deal with a Microsoft competitor when it is prepared to re-enter the IPTV market.

The announcement is not the first setback for Microsoft's television plans. European telecom SwissCom announced it was forced to delay its launch over problems with the software behind it.

According to representatives from the company, the Internet TV software is incapable of recording one program while watching another, which SwissCom says customers expect, and Microsoft says is a hardware issue.

SBC Communications, the largest American telecom using Microsoft's service, told the WSJ that its rollout plans were on schedule. It should be mentioned that SBC had already pushed back its rollout once - last year it expanded the rollout date from "the end of 2005" to either late 2005 or early 2006.

Microsoft insists that the high-profile problems are only bumps in the road and the company is on track to deliver the IPTV software to its customers this year, telling the WSJ "we have a customer list that's the envy of the industry."