AT&T has plumped for Liberate as its technology partner for the forthcoming stateside trial of interactive TV services, leaving Microsoft' costly global TV initiative all but out for the count.

This doesn't mean that the final decision has been made, but it's as good as. The TV industry has a tight timetable for full roll-out next year, and a change of technology provider now would affect everyone from content providers to infrastructure players. And that's pretty unlikely.

Microsoft was very publicly castigated by European cable giant UPC for late delivery of its software and in June we got the nod that Java would be included in the year-end trial, which was as good as a wink really, to this blind horse. UPC has also plumped for Liberate over Microsoft for its key Vienna trial, in spite of investments by Redmond in the company, leading Business Week to rechristen the Redmond initiative as Inactive TV.

The trial will use GI's DCT-5000 set top box, an enormous device that uses a MIPS processor. GI now a subsidiary of Motorola, demo'd the machine for us in June, when we noticed that it was booting the Windows CE kernel. It transpires that that is about the limit of the Microsoft involvement, however, and for anything strategic the PowerOpen and Java APIs are being used.

Which must make Microsoft's gift of $5bn inducement (shouldn't that be 'investment'?-ed.) to AT&T to take CE in its set-top boxes one of the most spectacularly ill-judged business deals of all time. We wonder if Microsoft shareholders will ask for their money back?

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