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Charter signs with Microsoft TV

The two agree to a seven-year deal to use Microsoft TV's software for 1 million Charter Communications customers to provide e-mail and Internet access, among other features.

Charter Communications announced Wednesday that it has signed a long-term deal to license Microsoft TV's interactive television software.

While the financial terms were not disclosed, the companies said it was a seven-year deal and that Microsoft TV's software would be used for 1 million Charter customers. Those customers will be able to access e-mail, Internet browsing, and local and national news services.

Microsoft TV is the interactive TV software arm of the software titan. Its software is used in set-top boxes for other major cable companies--primarily in Europe--as well with DirecTV with Ultimate TV satellite service.

St. Louis-based Charter is one of the largest cable companies in the United States, with about 7 million subscribers in 40 states. The company also provides high-speed Internet access to consumers. Microsoft co-founder Paul Allen is the chairman of Charter Communications.

The interactive television market has taken longer to grow than many had expected, but the promise of recurring revenue from subscribers has many companies, including Microsoft, willing to wait until the market matures.

Some companies have even scaled back their efforts to bring services to subscribers, such as AT&T, which in June revamped its interactive television plans.

Despite a $5 billion investment from Microsoft, AT&T decided to concentrate on lower-end interactive television services, where rival Liberate Technologies was further along than Microsoft.

Microsoft's TV group had suffered several setbacks and delays with its software, which many industry analysts attribute as the reason for AT&T's change of heart.

The Charter deal is a good sign for Microsoft's TV efforts. The two are field testing the services in St. Louis on Motorola DCT-5000 set-top boxes, which support more advanced services than the Motorola DCT-2000 set-top boxes used by AT&T. AT&T has more than 3 million Motorola DCT-2000 set-top boxes in use.