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Microsoft TV has formalized a deal to supply set-top software for a forthcoming IP-based video service from SBC Communications. The companies said the deal's value will exceed $400 million over 10 years.

SBC Labs has been testing a video service based on Microsoft's IPTV Edition since June 2004. The telco said it will begin field trials in mid-2005, and expects to roll out services commercially later that year. Instead of broadcast methods, SBC will use a switched video system. In comparison, an upcoming video service from Verizon will use an RF overlay that much resembles the way cable operators offer video today.

Under SBC's Project Lightspeed initiative, the telco is embarking on a fiber network rollout that will reach up to 18 million homes by year-end 2007.

In addition to supplying video tuning and program guides, Microsoft's platform will also enable SBC to offer a range of applications, including video-on-demand, TV-based caller ID and instant messaging and photo sharing.

The deal with SBC marks more momentum for Microsoft TV, which has struggled in recent years to ring up deployments with cable operators or telcos. Comcast Cable began the commercial deployment of Microsoft's Foundation edition software in Washington state on Nov. 15.

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