Hot on the heels of Microsoft Spain planning to turn its Xbox 360 into a set-top-box (STB), Telefónica has also reached an agreement with the computer giant for a similar service.

The Xbox 360 will likely have the video functions of other STBs such as the ability to stop and also take advantage of the hard disc inside it. New services will almost certainly follow.

The agreement between both companies will allow Telefónica to have a standard technology STB, which will allow it to get connected to other devices. In addition the telco will save on maintenance expenses related to its Movistar Imagenio DSL-TV platform and also the fact it will not have to develop its own technology. Telefónica will also benefit from Microsoft's scale economies.