updated 7/7/2005 6:56:49 PM ET 2005-07-07T22:56:49

France Telecom and Microsoft Corp. said they will collaborate on developing Internet telephony and technology for distributing video and data over telephone lines.

One of the collaboration projects is a series of phones based on Microsoft software that use Internet technology to carry calls. That includes a handset that consumers can use as a cell phone but that switches to a wireless Internet network while at home. The companies say the phone will be launched in 12 to 18 months.

The second joint project involves the development of software that allows operators to provide voice, video and data services to consumers. It will likely be one or two years before results of that project come to market.

The companies have each dedicated dozens of engineers to the projects, they said.

France Telecom, one of the world's largest telecommunications operators, has more than 126 million customers. It had revenue of $64 million (euro53.5 million) in 2004.

Microsoft, the Redmond, Washington, software giant, had revenue of $37 billion (euro31 billion) last year. (MSNBC is a Microsoft - NBC joint venture.)

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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