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Siemens Pushes IPTV: Page 2 of 3

The two-way streams also give telephone carriers the ability to collect data from subscribers, which industry experts said is nearly impossible to do on a satellite network and difficult on cable. The data could be used to help determine the type of content subscribers want most.

Siemens's long-term strategy is to push out the service through electronic retail stores, such as Best Buy Inc., but the nascent technology is changing rapidly and the market is still too small, Petty said.

Despite future plans, Siemens is relying on Tut Systems's media content and system integration services for data and video services over broadband networks to build out the North American IPTV market. The agreement could increase net income for both companies.

Tut Systems would welcome the boost. On Jan. 30, the content provider delivered improved annual revenue for 2005, but reported an operating loss. Revenue for 2005 reached $37.4 million, with an operating loss of $17.5 million, or 60 cents per share; compared with $25 million and $13.4 million, or 63 cents per share, respectively, in the prior year.

Siemens has about 85 commercial customers worldwide that offer IPTV to "tens of hundreds" of connected subscribers, Petty said. Many of the operators are overseas, such as KPN Royal Dutch Telecom and Belgacom in Europe and Advanced Datanetwork Communications (ADC) in Thailand. Today, Siemens’ IPTV contracts cover more than 38 million broadband lines worldwide.

China’s Shanghai Telecom Co. Ltd., and Shanghai Media Group (SMG) in December reported collaborating with Siemens to offer IPTV services to a market that includes 25 million broadband users and 360 million television viewers.