updated 11/17/2004 8:20:36 AM ET 2004-11-17T13:20:36

SBC Communications Inc., the second-largest local phone company in the United States, said Wednesday it signed a 10-year, $400 million agreement with Microsoft Corp. to provide next-generation television services using Microsoft's TV Internet protocol television edition software platform.

SBC said it has been testing an IP-based television service built on the Microsoft TV IPTV Edition platform since June 2004. SBC and Redmond, Wash.-based Microsoft will begin field trials in mid-2005 and plan commercial availability of the IP-based television platform in late 2005. (MSNBC is a Microsoft-NBC joint venture.)

In the first quarter of 2005, construction is expected to begin on the SBC Project Lightspeed, the company's effort to deploy fiber closer to customer locations to provide new IP-based services, including IP television, voice over IP and faster Internet access. Project Lightspeed is expected to reach 18 million households by year-end 2007.

The companies said the IP-based TV service will include instant channel changing, customizable channel lineups, video on demand, digital video recording, multimedia interactive program guides, event notifications and content protection features.

SBC said it plans to use a switched video distribution system, which streams only the content the customer requests instead of broadcasting all channels to everybody at once. This technology frees up large amounts of bandwidth for other applications.

"Our video on demand will come with a substantial content library," said SBC chairman and CEO Edward E. Whitacre, Jr. "The customer gains additional control over the content they want versus what is delivered to them. We get the flexibility of not being constrained by bandwidth."

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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