Microsoft and Nortel on Monday introduced a fully hosted unified-communications and collaboration service for carriers, the first entirely hosted carrier-grade offering to come out of an alliance struck between the companies two years ago.

At the NXTcomm08 conference in Las Vegas, Microsoft and Nortel unveiled a suite based on Nortel Communications Server 2000, an IP multimedia softswitch, and the Microsoft Solution for Hosted Messaging and Collaboration Version 4.5 (HMC 4.5), a combination of hosted versions of both Microsoft Office Communications Server 2007 and Microsoft Exchange Server 2007.

Carriers can use the software to offer hosted unified communications for their customers, which opens up the service to a broader customer base. Unified communications is the term for an integrated, IP-based software or hosted package that gives companies telephony, corporate instant-messaging, e-mail, video-conferencing and other tools for allowing business workers to collaborate from one user interface.

In March, Nortel and Microsoft teamed up to offer a hybrid of hosted and on-premises unified-communications software and services for carriers based on a previous version of HMC. However, customers still had to install some of the infrastructure on site, which is cost-prohibitive for some companies.

A fully hosted offering extends the service to small and medium-size businesses that can't afford to deploy complex infrastructure on site, the companies said.

Microsoft's relationship with Nortel to provide the hosted service is not exclusive. Though Microsoft does not currently have relationships with Nortel competitors Cisco and Avaya to provide a similar carrier offering, those may come in the future.

Nortel, on the other hand, is already working with IBM to offer carriers a unified communications platform to IBM Lotus Notes and Sametime customers, news also unveiled Monday. The Nortel-IBM offering is not completely hosted, however; customers must have Lotus and Sametime deployed in their network infrastructure.

Nortel has been struggling for several years to remain competitive in the market for telecommunications infrastructure. Its deal with Microsoft two years ago was seen as important for helping the company gain leverage in the burgeoning market for unified communications.