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Microsoft has turned the channel on its slow-moving television software business by winning a key contract for its new Internet-based TV platform from SBC Communications.

SBC, the second-largest network operator in the U.S., agreed to a 10-year licensing deal, worth $400 million, to use Microsoft's new IP Television (IPTV) software, the companies announced this week.

The IPTV deal, among the largest to date, is part of SBC's plan to compete with cable operators for TV customers.

SBC has been testing an IP (Internet Protocol) TV service built on the Microsoft TV IPTV Edition platform since June 2004. The San Antonio, Texas, operator plans to begin field trials in mid-2005 and offer commercial service by the end of the year.

High-Speed Network

In the first quarter of 2005, SBC plans to begin construction of a new high-speed network that will provide IPTV, VoIP, and Internet access. The company expects to connect 18 million homes to the network by the end of 2007.

Microsoft technology will let SBC compress digital signals and send them over its high-speed network. The software also will provide voice and data services simultaneously, the operator says. The technology also provides a comprehensive security system, including subscriber and end-to-end digital rights management technology, to protect content across multiple devices.

As part of its IPTV offering, SBC plans to include customizable channel lineups, video on demand, digital video recording, multimedia interactive program guides, and event notifications, it says.

Microsoft has landed deals for its IPTV platform with several operators outside of the U.S., including Bell Canada International, Swisscom, Telecom Italia SpA, and India's Reliance Infocomm. In the second quarter Microsoft also announced a deal with U.S.-based Comcast for related TV software.