Microsoft Corp. (NASDAQ: MSFT) has announced a partnership with India's Reliance Communications to launch that country's first high-definition television service meant for exclusive distribution over the internet, according to both companies.

The $500 million deal will encompass the start of internet protocol television (IPTV) in 30 cities within India, beginning with Mumbai and New Delhi. Is Microsoft trying to head off Google, Inc.'s (NASDAQ: GOOG) YouTube outside the U.S. with internet-based television service here? While YouTube content is free (for now), that is precisely what Microsoft may be doing.

Microsoft CEO Steve Ballmer said he expects both India and the U.S. to be the leading markets for IPTV service within a year. As more and more information becomes digital (entertainment, news, etc.), that content will be sucked up by consumers in their homes at staggering rates. At least, that is the idea behind jettisoning the idea of broadcast television and replacing it with internet-based transmission where "one broadcast size fits all" no longer applies.

In India, it's estimated that 71 million homes already have television and 61% of those homes have pay television using either cable or satellite. With 1.1 billion people in India, the market is there for the picking if the pricing can be delivered at the right levels.