United & Philips Communications, the Netherlands-headquartered media group, announced yesterday that it has chosen Liberate Technologies of California in preference to Microsoft for the supply of digital set-top boxes for its European cable TV networks.

UPC’s digital interactive TV service will launch shortly in Vienna before rolling-out to six million other European households. It will include email and chat, proprietary content, online commerce and banking.

Microsoft is said to have pinned its hopes on adoption of its DTV technology by UPC, the largest cable TV company in Europe – not least because it holds an 8% stake in the cable giant. But UPC last month sent out warning signals that software development delays at Microsoft could drive it into the arms of rivals.

According to UPC chief operating officer Gene Musselman, the decision to use Liberate technology was "a natural step given the fact that it has already been deployed, and it will give our subscribers a compelling choice of interactive services".

Liberate already has a firm foothold in Europe, with its technology already in use by UK cable operators NTL and Telewest, and Ono in Spain.

To further compound Microsoft’s woes, the UPC decision could be mirrored by another major prospective user, America’s largest cable network AT&T. The prospect of delays in delivering set-top boxes can ill be afforded by AT&T which faces deep Wall Street scepticism as to the viability of cable to deliver interactive communication and entertainment services.

News source: Financial Times