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Verizon wants its Microsoft TV

The nation's largest phone company plans to use Microsoft's software to power its fiber-optic television service.

Verizon Communications on Friday said it will use Microsoft software to power its television service over fiber-optic lines. The service is slated for release this year.

The agreement will give subscribers to Fios--the broadband video service Verizon will launch later this year--an interface to surf channels, record programs digitally and access shows on demand. Verizon plans to offer cable TV-like services through Fios, which will pipe in high-definition video, high-speed Internet access and eventually phone calls over a speedy fiber-optic line.

The deal is a boon for Microsoft, which has aggressively courted cable companies and the Baby Bell phone giants to use its Microsoft TV software. In November, SBC Communications agreed to pay $400 million to use Microsoft TV for its own fiber-based video service, U-verse, slated for release in the latter half of this year. In January, BellSouth began trials of Microsoft TV for its own video service.

"This agreement with Verizon is another significant example that some of the world's largest network operators are choosing Microsoft TV as the software platform for their digital TV and digital home services," Moshe Lichtman, corporate vice president of the Microsoft TV division, said in a statement.

The companies did not release financial details.

Microsoft has spent years trying to get into video. Its prospects are looking up because the Baby Bells are spending billions to launch their own TV services over fast Internet connections, hoping to better compete with their cable rivals. The Bells hope to use video and broadband Internet access as way to lure customers away from cable giants such as Comcast and Time Warner Cable, and to retain subscribers in their rapidly deteriorating phone business.

Verizon has already outlined an ambitious and expensive build-out strategy for Fios. The company hopes to wire up to 3 million homes with a fiber connection by the end of 2005. SBC is spending $4 billion over the next few years to stretch fiber into neighborhoods and then deliver services over copper phone lines. BellSouth is also looking at bringing fiber as far as neighborhood "nodes."

The Bells are opening their wallets to catch up to cable's market lead in broadband and to blunt cable's incursion into the voice business. Comcast, Time Warner Cable and Cablevision have either introduced or plan to roll out their own Internet-based phone services, a technology often cheaper than the Bells' circuit-switched lines.