Microsoft is rumored to announce an Xbox LIVE subscription TV service next week at the E3 conference on the heels of Apple's unveiling of its iCloud service.

The service named Xbox LIVE Diamond, will combine Microsoft's mediaroom IPTV services with Xbox LIVE.

Frank Shaw, Microsoft's corporate vice president of corporate communications, said a week ago, in his blog, “For the last 10 years at Microsoft, we’ve been turning up the heat on how we think about Xbox, and next week at E3 you will get a chance to see how far we’ve come.”

Microsoft has proposed a “virtual cable operator” which will be delivered to media companies over the Internet and charged with a monthly fee, reports said.

Winrumors reported that “Microsoft is on lock-down for its big announcement and some demos and details might be held back if agreements are not in place in time. Xbox is the gateway to games, music, movies and TV shows – in short, it is central to entertainment

If the announcement is true, Microsoft is expected to launch its service on June 6, which will coincide with Apple's Worldwide Developer Conference, where Apple will present iCloud, iOS 5 and Lion at the WWDC keynote.

Next Monday at E3 in Los Angeles, the Xbox home entertainment pot will be boiling over during a 90-minute event. company is turning up the heat on a whole new era of home entertainment, said Shaw.

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