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SBC, Microsoft ink $400M IPTV deal

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SAN ANTONIO � SBC Communications Inc. will use a Microsoft Corp. software system to transmit television over high-speed Internet connections like the ones SBC will offer after replacing the local arteries of its copper telephone network with fiber-optic cables.

The deal announced Tuesday, valued at about $400 million over 10 years, is a big win for Microsoft, which has been struggling to gain a foothold in the television technology market for years.

The selection of Microsoft's platform for delivering TV using "IP" or Internet Protocol technology is the latest in a monthlong barrage of announcements by SBC detailing its foray into fiber and television.

The initial phase of the plan to replace copper cables with fiber is slated to cost $4 billion and make IP-based TV and speedier Internet access available to 18 million of SBC's customers by the end of 2007.

San Antonio-based SBC, the nation's second biggest phone company, has said at least some of those customers will be offered IP-TV by late next year.

The TV service would include conveniences similar to cable, including video on demand, picture-in-picture viewing and digital video recording, as well as new features such as Caller ID and instant messaging on the TV screen or alerts when desired programs are about to air.

"Our service will change the way people experience TV," said Edward Whitacre Jr., SBC's chairman and chief executive. "Finally, customers will watch what they want when they want from a virtually unlimited and interactive content selection."

While Verizon Communications Inc. will gain far more capacity with its costly plan to replace all the copper in its network, SBC says it will optimize bandwidth by not broadcasting all programming to all customers at once. Rather, it would only transmit content that a viewer desires at that time.
The Internet TV offering will be built on Microsoft's Internet Protocol Television software platform.

Steve Ballmer, Microsoft's chief executive, called it "a virtually unlimited opportunity for innovative, cross-device services and entertainment experiences."

The sale is an important one for Microsoft, which has devoted substantial resources to extending its role in the computer world into the TV-watching experience.

The Redmond, Wash.-based software maker has invested in cable companies and developed technology for set-top boxes among other initiatives, but largely failed to gain a foothold in the still nascent market.

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