The purchase of OnCue might have you wondering what plans Verizon has for the service. A clue can be found in the phrase “integrate IP-based TV services with FiOS video” from the press release. FiOS TV is not IP, and desperately needs to be.
You could be forgiven for thinking that FiOS TV is already an IP-based TV service since it is delivered to the home over fiber optic cable. A key decision made by Verizon at the very start of the project to accelerate introduction of the service means FiOS TV has more in common with cable than IPTV. It also inherits many of cable’s limitations.
At the time FiOS TV was introduced, using a cable QAM-based architecture in the home looked like a smart move. Content providers were nervous about IP distribution, and consumers were comfortable distributing TV inside the home with coaxial cable. It also meant Verizon could use an “off-the-shelf” cable set-top box at the television.
To implement this approach, Verizon used a large chunk of the fiber bandwidth to send all the channels to every home all the time, just like cable. IPTV services like AT&T U-verse don’t do this. When a consumer tunes a channel, only that channel is delivered to the home.
Today, Verizon’s decision doesn’t look so smart. The company even admits as much in the press release:
“This transaction provides us with the capabilities to build a powerful, capitally efficient engine for future growth and innovation.”
To service TV customers today, the company must maintain two completely different network infrastructures: one based on cable, one based on IP. OnCue will allow the company to move to a single infrastructure to deliver to the television, and to all the connected devices their customers are now using. Later in the press release the company confirms this is the plan:
“Verizon expects to integrate IP-based TV services with FiOS video.”
FiOS TV inherited another cable problem: it is very difficult to innovate service features on a QAM-based system. That is why operators like Comcast are moving to a hybrid model with services like X1. Innovation on IP-based systems can leverage all the power of the Internet community to accelerate development. Verizon must migrate FiOS TV to IP, and quickly, to keep up with Comcast. That’s what this line in the press release is getting at:
“FiOS customers are also expected to benefit from elegant search and discovery, interactivity and cross-screen ease of use.”
These are features in Comcast’s X1. OnCue is built take advantage of the IP architecture because it is, at core, an Internet TV service. It includes many of the advanced features Verizon needs to keep FiOS TV competitive, and will let it move at web speed in delivering more.
However, there is one last thing in the press release that should help the company jump out ahead of the competition: “integrated with the Verizon Wireless 4G LTE network.” Putting FiOS TV on LTE will give the service a huge competitive advantage that companies like Comcast simply cannot match. Subscribers will literally have TV service in their pocket where ever they go.
To understand more about the benefits of an all-IP infrastructure, you can download the free nScreenMedia white paper: The Virtual Operator Advantage.
Why it matters
Verizon is hampered in evolving its FiOS TV service because it elected to use a cable architecture.
The company must maintain two networks to service its customers.
OnCue will unify FiOS TV on an all-IP network, allowing it to compete more effectively with any other pay-TV system.