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The announcement comes as Deutsche Telekom, Europe's biggest telecommunications company, expands its national network of high-speed digital subscriber lines so it can deliver television and interactive services using the internet-based technology called IPTV.
Bonn-based Deutsche Telekom will use the Microsoft TV IPTV Edition software platform to offer the services. The software will let subscribers view normal TV programming as well as digital video recording, interactive TV and video on demand.
Mark Nierwetberg, a spokesperson for Deutsche Telekom, said the company hopes to have 1 million subscribers by the end of 2007 for the service, which will be deployed on its VDSL network.
"In recent months, the experts at T-Online have run the Microsoft TV platform through extensive tests, and we are convinced that we will be able to offer excellent-quality IPTV services that will expand as we need them to," chief executive Kai-Uwe Ricke said.
"IPTV delivered via VDSL will enable better, more service-oriented, more interactive and, above all, more customised television."
The new high-speed network has drawn the ire of the European Union because Germany's government wants to exempt it from the obligation to grant access to rivals. That runs contrary to EU aims of opening up national telecom markets.
The new VDSL network will let users get broadband internet access of speeds as high as 50 megabits per second. Currently, most DSL lines permit only 2 mbps to 6 mbps.
Ten cities are expected to have the service by mid-2006, including Berlin, Hamburg, Cologne and Munich.
Microsoft CEO Steve Ballmer said the deal with Deutsche Telekom was the company's biggest IPTV contract in Europe and its second-biggest worldwide.
"Working together, Microsoft and Deutsche Telekom will help create a revolution in TV entertainment for consumers across Germany," he said.
