RCom, MS sign $500 mn IPTV deal

Reliance Communications (Rcom) and Microsoft announced a strategic partnership to provide internet protocol television (IPTV) services in the country.

RCom will pay $500 million to Microsoft Corporation as licence fee and spend another $500 million for setting up the necessary IPTV infrastructure.

The companies have been working on the IPTV platform since 2003 and will roll out the service by the end of this financial year. RCom has tested IPTV at over 20,000 households in Mumbai and Delhi.

"We will roll out services in the top 30 cities and in a few leading metros by early 2008, while the rollout in the remaining cities and towns will take place in a phased manner. We are also in talks with leading content providers in the country. As our launch is on a large scale, we will source content from most of these companies," RCom chairman Anil Ambani said in press conference today.

RCom will leverage its nation-wide infrastructure to deliver TV services, including video-on-demand, digital video recording, instant channel changing and personal media sharing, he added.

IPTV provides for two-way interactive communication and allows consumers to watch TV while using the telephone line and broadband internet.

RCom will pay Microsoft $500 million in license fees for using its platform - Mediaroom - under an exclusive agreement spread over eight years.

The company will invest another $500 million for setting up a "world class" IPTV infrastructure.

Microsoft Chief Executive Officer Steve Ballmer, who was also present at the press conference, said the companies are targeting the mass market, unlike in the west where the focus in on the affluent class.

"IPTV is in its early stage in India, but would catch up in 12-24 months. Most of it will happen in two countries, India and the US, and in India we are expecting tens of millions of customers," Ballmer said.