All telephone calls and television service eventually will be carried over the Internet, Microsoft Corp.’s chief executive said yesterday.
“We can debate when, but all TV will transition to be over the Internet,” Steven Ballmer said during a speech to government contractors. “And, frankly, all voice calls will transition to be over Internet technologies.”
Voice over Internet Protocol (VoIP) carries phone calls over Internet lines. Internet Protocol TV (IPTV) offers enhanced video-on-demand features and the ability to view programs originating from anywhere in the world via broadband data pipes.
“Both phenomenon are guaranteed to happen,” Mr. Ballmer said.
VoIP is being used by millions of Americans, but IPTV isn’t ready for widespread adoption, analysts said.
VoIP service works with both digital subscriber lines and cable-modem broadband connections. It allows subscribers to call anywhere worldwide for less than traditional land-line phone services and offers numerous add-on features from voice mail to online call logs.
But VoIP’s real power is letting users “describe a set of rules for how you get interrupted,” Mr. Ballmer said.
For example, a call from his wife’s phone number will always be put through, while his son may have to hit a button to indicate that it’s important and not just another request for the latest Microsoft gadget. His broker would not get through after trading hours.
VoIP shortfalls include limited access to Enhanced 911 services that can pinpoint a caller’s location and no phone service if the power or Internet connection is out. Numerous VoIP providers failed to meet a Nov. 28 Federal Communications Commission (FCC) deadline to offer E911 to all subscribers. The FCC also said the companies must stop marketing in areas where they can’t offer the service.
Research firms estimate there could be more than 20 million VoIP subscriptions in the U.S. by 2010, bolstering Mr. Ballmer’s assertion, but the future of IPTV is less clear.
IPTV will increase the proportion of video delivered over the backbone of the Internet, but it will not replace cable and satellite TV providers who are ramping their video-on-demand features, said Laura Behrens, a media industry analyst at Gartner Inc.
From a business and financial standpoint, IPTV will look like cable TV service in its early stages, and providers such as Verizon and AT&T Inc. will have to convince consumers that IPTV is more attractive than their cable or satellite offerings, Ms. Behrens said.

Mr. Ballmer said IPTV will resonate with U.S. viewers because of the enhanced services it offers. For example, IPTV enables viewers to search for a video on the Internet using a TV remote and to watch as soon as it is found, avoiding the need to download and view it on a computer.
But early IPTV deployments, expected as early as next year, likely will be a disappointment because of the wrong mix of products, marketing and technical capabilities, Ms. Behrens said. How badly that start goes will determine how quickly IPTV takes hold in the U.S., where both Verizon and AT&T have announced plans to offer the service in millions of major metropolitan area homes within two years.
IPTV also requires a substantial amount of bandwidth to work properly, and content providers are worried about piracy over the Web, said Rob Enderle, an analyst at the Enderle Group, a technology consulting firm in San Jose, Calif.
Hong Kong has the most IPTV users in the world, recently surpassing 500,000 subscribers, so American providers aiming for 20 percent market penetration within five years will be a “tall order,” Ms. Behrens said.
In addition to Microsoft, which has numerous partners making TV set-top boxes supporting its IPTV software, Google Inc. is expected to increase its Internet Protocol offerings next year, as are other hardware and high-speed access providers, Mr. Enderle said.