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Microsoft partners to create satellite services company

The software giant partners with Israel-based Gilat Satellite Networks to create a new company that will offer two-way broadband satellite service for its MSN Internet access service.

Microsoft is partnering with Israel-based Gilat Satellite Networks to create a new company that will offer two-way broadband satellite service for its MSN Internet access service.

Microsoft will invest $50 million, or a 26 percent stake, in a new company to be called Gilat-To-Home. The new company will focus on delivering high-speed, or broadband, Internet access via satellite connections to consumer homes.

"MSN Internet Access via satellite is a tremendous value proposition for our subscribers, especially those who live in areas where broadband connectivity is not an immediate option," Richard Belluzzo, group vice president for the consumer group at Microsoft, said in a statement.

The satellite partnership is only the latest in a long string of investments by the software giant in high-speed communications companies.

Microsoft has stakes in AT&T, Comcast, Qwest Communications International, digital subscriber line start-ups, fixed wireless firms such as Teligent, and a handful of international cable operators.

The software giant has used the investments to push its high-end software into the telecommunications industry, a market in which it sorely lacked a presence.

In addition, Microsoft has been rebuffing its Internet strategy to compete more aggressively with industry leaders America Online and Yahoo. Monday, the company unveiled a $150 million advertising campaign for MSN that spans television and print.

The heightened Internet push comes months after Microsoft unveiled a revised Internet strategy. MSN, which formerly tried its hand at creating content but stumbled, is now being marketed as a destination to highlight its software services, such as its Hotmail free email service, its Web identification and payment service, MSN Passport and its instant messaging client MSN Messenger.

Gilat-To-Home will be led by Zur Feldman, the former vice president of operations at Packard Bell, who will become chief executive. Microsoft senior vice president Jon DeVaan and Gilat Satellite chairman Yoel Gat will serve on the board of directors with Feldman.

The company will begin selling its satellite service in Radio Shack stores across the country by the end of this year.

Microsoft last November inked a surprise deal with Radio Shack to promote its MSN Internet services and broadband connections in the electronics retail chain's 7,000 stores. As part of the deal, Microsoft invested $100 million into RadioShack.com, the retailer's e-commerce effort.

Along with the Radio Shack deal, Microsoft inked a marketing agreement with Best Buy to promote its Internet products. The deal included a $200 million investment by the software giant in Best Buy.

The spate of deals highlights Microsoft's efforts to boost consumer appeal for its Internet products. Many see the deals to market products and services through retail chains as Microsoft's attempt to garner a more mainstream consumer base.

News.com's Corey Grice contributed to this report.