SBC made massive strides in offering video over DSL, by striking a $400 million deal with Microsoft, who'll supply the software for all SBC subscribers. It's a massive win for Microsoft, who up until now hadn't had much luck breaking into your living room, despite spending billions.

Once SBC was given the kind of "regulatory environment" they wanted (namely they don't have to share next-gen services with competitors), they quickly became bullish on next generation broadband, taking the wraps off of "Project Lightspeed", the sequel to the now defunct "Project Pronto".

As part of Project Lightspeed, SBC says they'll be deploying 20-25Mbps worth of connectivity to half of their subscribers (18 million users) within three years. They'll be doing this by running fiber to the neighborhood node, then running ADSL2+ (or perhaps VDSL or VDSL2) to your front door. This is in contrast to Verizon, who is pushing for fiber straight to the home.

From there, Microsoft's TV Internet Protocol Television (IPTV) Edition software platform will manage user video content via a set-top box. SBC and Microsoft will have to fend off critics who suggest the 20-25Mbps provided won't be enough to offer full HDTV service, voice service, and broadband as effectively as FTTH or cable carriers - something the companies say they've solved via compression techniques.

According to SBC's press release, the companies will begin field trials for the service in the middle of 2005, with commercial deployment in late 2005.

About a million Comcast customers in Washington State will see a similar service in a trial starting this month. Microsoft has spent an estimated $20 billion in recent years in the hopes their software would be the centerpiece of American living rooms; a dream that until now had been looking rather shaky.