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MSN, Cable & Wireless team for video ads

Microsoft's Internet unit lines up Cable & Wireless America to stream third-party advertisements for its upcoming free video service.

Microsoft's MSN has lined up Cable & Wireless America to stream third-party advertisements for MSN's upcoming free, online video service.

Redmond, Wash.-based Microsoft said Monday that it will use technology from Cable & Wireless to encode advertisers' 15-second videos into its proprietary format, Windows Media 9. Cable & Wireless will then use its content-distribution network to stream the ads to MSN Video, a broadband video player set to launch later this winter. MSN Video will feature news and entertainment programming, and it will be free to users.

Financial terms of the deal were not disclosed.

The deal signifies the importance of advertising to MSN Video. By signing on Cable & Wireless, MSN plans to unload some of the production work for delivering the ads. It also hopes to ensure that video ads are streamed fast through the use of Cable & Wireless' multiple servers positioned around the world.

"Microsoft wants to make sure ads start quickly because that's the user's first experience, it gives a little bit more time for the content to load up," said Pat Greer, vice president of content delivery network services for Cable & Wireless.

Cable & Wireless' streaming media services will also help manage advertisers' campaigns and let them track the effectiveness of their commercials.

Microsoft is handling the delivery of the content to MSN Video on its own.

MSN Video marks the latest step by Microsoft to bolster MSN against its Internet rivals. The service will compete against existing offerings such as RealNetworks' RealOne, Yahoo Platinum and AOL for Broadband, all of which are subscription-only services that offer content from a variety of sources.

MSN Video, which has initially been launched as a test version, offers video clips from NBC, MSNBC.com and CNBC. These include content from programs such as "NBC Nightly News, "Dateline NBC," "Today" and "Meet the Press." Microsoft said it plans to add partners beyond the NBC family of stations.

CNET News.com's Jim Hu contributed to this report.