Earlier today, Microsoft and BT unveiled a new IPTV service dubbed BT Vision. Powered by Microsoft's Mediaroom software, the capabilities of the platform are leaps and bounds ahead of those offered by current cable providers.

Also new is the device customers can use to watch TV. BT Vision utilizes the Xbox 360, adding an option to the gaming console's media features to launch the television interface. Although the version on the console isn't an exact copy of the one provided on capable set-top boxes, Microsoft ensured BetaNews the end-user experience is identical.

IPTV has some distinct advantages over traditional cable TV. Because channels are streamed on-demand to the house and no tuner is required, the number of simultaneous recordings are only limited by the amount of bandwidth available. Microsoft showed BetaNews how recording 5 shows at once is now entirely possible.

Microsoft's Mediaroom software can now also stream content to different set-top boxes around the house over Ethernet with a new feature called DVR Anywhere. Pausing a show in one room, and resuming in another; centralized content storage, giving each box the same access to all shows are some of the key differentiating features.

Also new to the latest iteration of Mediaroom is third party applications. Developers can built interactive programs that run on a Mediaroom set-top box, and Microsoft demoed a handful from Nascar, CNN and others. However, it will be up to IPTV operators whether to push these applications to their boxes; customers cannot download them directly.

Although IPTV adoption has been slow in the United States, Microsoft has seen more success in Europe. It expects to have 1 million households using Mediaroom by the end of this quarter.

AT&T is working with Microsoft on U-Verse, which currently reaches about 120,000 subscribers, primarily in Texas. U-Verse is Microsoft's primary deployment of Mediaroom in the United States, but expansion is limited by bandwidth to homes.

Joe Seidel, Director of Global Partner Development at Microsoft said an 80-megabit connection is the ideal environment for most features to work correctly in Mediaroom. Several cities in Texas are the current testbed for the US market, but the demand is growing rapidly, Microsoft claims.

Verizon has also used Mediaroom as a baseline for its FiOS TV service, though it is heavily modified and uses a proprietary program guide interface. Microsoft states Verizon has been receiving many complaints about the usability of the replacement guide.

While it continues to update Mediaroom and uses version numbers internally, Microsoft declined to tell BetaNews what those are. This is most likely due to the company attempting to avoid complaints from consumers who will know they are at an older software revision. Microsoft faces a similar problem with its Windows Mobile platform, as customers are irate over not receiving Windows Mobile 6 from their wireless operator despite it being available for nearly a year.