SBC Communications, as part of its efforts to compete head-on with the cable industry for television subscribers, plans to announce on Wednesday that it will pay $400 million to Microsoft for software used to deliver TV programming over high-speed data lines.
It would be a crucial move into unproven territory for SBC, which like the other regional telephone giants wants to grow by expanding beyond phone and Internet services and into entertainment. To do that, SBC expects to spend more than $4 billion during the next three years on its fiber-optic network in order to offer faster Internet connections capable of carrying digital video programming.
The deal is also a milestone for Microsoft. The company has spent roughly $20 billion in the past decade trying to break into the television business, but it has little to show for that investment, industry analysts said. The 10-year agreement with SBC is Microsoft's first commercial contract to help deliver programming to millions of homes.
News source: C|Net News.com