Microsoft continues its invasion of the living room. The search for equilibrium in communications also continues.

Technology Review reports that

Verizon Communications Inc. plans to use Microsoft Corp. technology for its rollout of television service over a new fiber-optic network, becoming the third major telephone company to help fulfill Microsoft's long-stymied bid to barge into the TV business. …

The deal with Verizon comes on the heels of a contract from SBC Communications Inc. to use Microsoft's platform to launch that telephone company's planned TV service and an agreement with BellSouth Corp. to conduct trials with the technology.

By signing up the nation's three biggest local phone companies, Microsoft has taken a sharp detour to achieve in just three months what it failed to accomplish in a decade, bypassing the traditional cable establishment to establish a serious beachhead in the video entertainment industry. …

[T]he contracts may position Microsoft at the focal point of the expected convergence of TV and the Internet, helping replicate and reinforce its dominant position in the computer industry. That convergence calls for a television signal to be transmitted in the language of the Internet, known as Internet Protocol, or IP.

"IPTV" works much the same as the Internet-based phone service known as VoIP, or voice over Internet, which breaks calls into data packets, sends them over the Internet and reassembles them on the other end.

The advantage can be twofold, but there are questions about whether IPTV can replicate the immediacy and quality of a traditional cable feed.

One benefit is that IPTV can require less bandwidth than existing cable systems, which shoot every channel available to a customer in a continuous stream all the way to that viewer's set-top box. The viewer then selects a channel to watch, typically using a remote control and a set-top box.

With IPTV, only the desired channels are transmitted to the home. In theory, that allows the company selling programming through an IPTV system to offer a limitless choice of channels.

The evil empire is alive and well. Too bad for the rest of us.

According to The Seattle Post-Intelligencer Microsoft's

Home and Entertainment division, which includes its Xbox video-game console, achieved its first quarterly operating profit, boosted by strong holiday sales of products, including Microsoft's blockbuster "Halo 2" video game. …

The strong earnings last quarter resulted largely from the holiday shopping season and the November release of 'Halo 2.' More than 6.3 million copies of the first-person shooting game have been sold so far.

Clearly Microsoft is doing its best to grab control of as much of the entertainment market as it can. And it is beginning to see some success.

More interestingly, as phone companies position themselves to compete with cable companies, and as regional phone companies buy nationwide transmission networks (like SBC buying AT&T) it's clear that we are in the middle of an equilibrium puntuating period in communications. It will be a while before a new equilibrium is found. If you were going to pick a winner by buying stock in one or more companies, which ones would you buy?