Verizon Adds Internet Capabilities to FiOS TV

Verizon has added the ability to access certain Internet applications and websites on its FiOS TV IPTV service. It added what it calls its Widget Bazaar applications marketplace, located within FiOS TV's Interactive Media Guide, with free Facebook, Twitter and ESPN Fantasy Football Widgets.

With the Twitter Widget, FiOS TV subscribers can follow Tweets related specifically to the program, movie or sporting event they are watching. They also can select from a list of top topics to view Tweets associated with today's hottest topics and trends, search for specific Tweets, and create and save a favorite-topics list.

FiOS TV subscribers with Facebook accounts can log in to Facebook through the FiOS TV Widget to update their Facebook status with messages about what they're watching, view their own photos, and view their friends' photos and status updates.

The ESPN Fantasy Football Widget provides on-screen access to personalized ESPN Fantasy Football points and football statistics, including rosters, box scores, scoring leaders and player information. All the information is available, at no additional charge, for FiOS TV customers who are registered ESPN Fantasy Football players.

Verizon will add to the FiOS TV Widget Bazaar additional free and transactional applications developed by the company and others. It will publish its Software Development Kit (SDK) to enable open development. The open development platform will enable developers to publish applications to the more than 7 million interactive set-top devices in FiOS TV homes.

Later this month, customers who subscribe to the Home Media DVR service will be able to search and view on FiOS TV user generated online videos from video-sharing sites blip.tv, Dailymotion, and Veoh. In addition, a new My Videos feature will let these subscribers view via FiOS TV personal videos stored on their PCs.

Verizon has put a page on its website that contains more information about these features.

This is a good start at providing access to Internet applications by Verizon. It is starting to make good use of the IP capabilities of its FiOS TV service. Verizon was able to move in this new direction because it now has taken over the development and maintenance of its middleware software. Other IPTV providers will follow Verizon's example.

Verizon Adds 299K IPTV Subscribers in 1Q09

Verizon added 299,000 IPTV FiOS TV subscribers in 1Q09, leaving it with a total of 2.217 million. It also added 298,000 FiOS FTTH subscribers, giving it a total of 2.779 million at the end of the quarter.

Verizon continues to make strong progress. Its FiOS TV service is clearly an important part of its FiOS offering.

Verizon Adds 303K IPTV Subscribers in 4Q08

Verizon added 303,000 IPTV subscribers in 4Q08 leaving it with a total 1.918 million at the end of the year. This compared to the 282,000 FiOS Internet subscribers it added in the quarter, ending the year with 2.481 FiOS Internet subscribers. Its FiOS ARPU was more than $133 per month in the quarter.

Verizon had a good year, adding nearly 1 million IPTV subscribers in 2008. This shows the strength of its FTTH strategy.

DOCSIS 3.0 is Cheap

An article on Light Reading cited a statement by Charter Communications that it will cost about $8 to $10 per subscriber to bring DOCSIS 3.0 services to a home, including the new cable modem termination system (CMTS) equipment and the routing systems. It does not include the cost of the new DOCSIS 3.0 cable modem or the cost of provisioning the service.

Verizon has said that it costs them $800 to $1,000 per home to make its FiOS fiber service available with a maximum 50 Mbps data service today. The cable companies can accomplish the same thing for one percent the cost. DOCSIS 3.0 will provide the cable companies a strong defense against FiOS and be a very strong offensive weapon against ATT's VDSL U-verse service.

Verizon Adds 233K IPTV Subscribers in 3Q08

The growth of Verizon's FiOS TV IPTV service resumed its historic rates adding 233,000 in 3Q08 giving the company a total of 1.615 million subscribers. Verizon increased the number of homes that could order FiOS TV by 1.2 million, giving a total of 8.2 million by the end of the quarter. Its FiOS TV sales penetration is at 19.7 percent. Verizon said that it had effective promotions during the quarter.

The number of new FiOS broadband subscribers increased to 225,000 in 3Q08 giving a total of 2.199 million. Its total number of broadband subscribers increased by 129,000 to 8.459 million at the end of 3Q08. The FiOS sales penetration is at 24.2 percent of the 9.1 million homes that it can serve. Its over all FiOS ARPU is $130.

Verizon's FiOS is on a strong growth curve. I expect that this growth will slow down in 4Q08 due to the current financial crisis.

Comcast Rolling Out DOCSIS 3.0

A Light Reading article states Comcast is introducing DOCSIS 3.0 cable modem services in the greater Boston area, in New Jersey, as well as in Minneapolis-St. Paul, where it was originally introduced. This service will be available in three packages:

• Extreme 50 at 50 Mbps downstream for $139.95 per month


• Ultra tier at 22 Mbps downstream for $62.95 per month
  
• Deluxe 50 tier at 50 Mbps downstream targeted to business customers runs $189.95 per month and includes static IP addresses

Comcast said it plans to roll out Docsis 3.0 to more than 10 markets and nearly 10 million homes and businesses in the next several months -- equal to about 20 percent of its U.S. cable footprint. It expects to support Docsis 3.0 on all of its systems by mid-2010

Comcast said that Docsis 3.0 will enable it to offer speeds in excess of 160 Mbps further but hasnot specified when it would launch services with speeds higher than 50 Mbps.

Comcast is now using Docsis 3.0 to compete against Verizon's FiOS fiber service, which is where it is at a competitive disadvantage. These 50 Mbps services should help, but Comcast's pricing is high. You can get 20 Mbps downstream on FiOS for $57.99 and 50 Mbps downstream for $144.95. If I had the choice, I would choose fiber; however existing customers may find Comcast's pricing close enough to keep them from changing to Verizon.

Verizon FiOS to Support Internet TV

A Light Reading article said that Verizon will add You Tube and Straz Play on demand service to its FiOS TV IPTV service. Content from both of these services will be selected from delivered to the TV.

This is the start of a trend that we predicted in our report The Battle for Broadband TV: TelcoTV vs. Internet TV. Our conclusion was that Telco IPTV providers should embrace Internet video and Internet TV to compete more effectively against cable and satellite services.

Verizon FiOS TV Growth Slows in 2Q08

The growth in Verizon's FiOS TV IPTV service slowed in 2Q08. It ended the quarter with 1.382 million FiOS TV subscribers, up 176 thousand from 1Q08. This is the first time that the quarterly growth in FiOS TV subscribers was below 200 thousand since 2Q07. FiOS TV penetration was 19.7 percent at the end of the quarter. FiOS is available for sale to 7 million homes and passes 9.6 million homes.

The dip in FiOS TV growth reflected a dip in FiOS broadband subscribers, adding 187 thousand subscribers in 2Q08 giving a total of 1.974 million FiOS broadband subscribers. This is the first time that the quarterly growth in FiOS broadband subscribers was below 200 thousand since 1Q07. Verizon exceeded 2 million FiOS broadband subscribers in July 2008. FiOS penetration was 23.5 percent at the end of the quarter. Its FiOS ARPU is not more than $130. FiOS broadband is available for sail to 8.4 million homes and passes 11 million homes.

Verizon has made the following changes to its FiOS service recently:

• It will launch FiOS in New York City
• It offers a 50 Mbps downstream/20 Mbps upstream service to its entire FiOS footprint
• It offers more than 100 HD channels

In spite of this slow down, Verizon is doing well with FiOS. I expect that its sales will pick up, especially in 4Q08.

Verizon to offer 50 Mbps FTTH

Verizon will offer a FiOS FTTH service with 50 Mbps downstream speeds and 20 Mbps upstream speeds across its entire FiOS footprint. This service will be available for $89.95 per month in New York and Virginia and for $139.95 elsewhere. It also offers a service with 20 Mbps in both directions for $64.99 in all markets.

Verizon is raising the broadband performance bar. The cable companies will have to respond with similar DOCSIS 3.0 offerings to remain competitive. This also shows the advantage of Verizon's FTTH strategy compared to AT&T's VDSL strategy. ATT offers a maximum of 6 Mbps today which will increase to 10 Mbps later in 2008 when it introduces its channel bonded service.

Verizon Offers Starz Video Download Service

Verizon offers a $5.99 per month Starz Play video download service to broadband subscribers in the U.S. from a website it has set up for the service. The movies are viewed on the PC using viewer software downloaded from the website.

Films are stored on the PC and may be viewed off line. Films will be automatically deleted from the PC when they are removed from the service. Some titles will expire in a few days and others will be available for months. It will typically take 30 to 90 minutes to download a film. Movies can be watched while they are downloading. The service uses Microsoft digital rights management software and does not permit burning the movies onto a DVD.

Verizon's broadband customers can pay for the Starz Play monthly subscription fee on their Verizon bill. Other broadband users can charge the fee to a credit card.

I have felt for a long time that the Telcos need to get involved with over the top Internet content. I think that this is just the start and that the Telcos will eventually merge unmanaged over the top content with their managed IPTV services.

Verizon at 1.2M IPTV Subscribers

Verizon added 263 thousand IPTV subscribers in 1Q08 ending with a total of 1.206 million. It also ended the quarter with 1.803 million FiOS Internet subscribers, adding 262 thousand in the quarter. Verizon can now offer FiOS TV to 82 percent of the 7.9 million homes that the service passes. It believes that it is on track to attain its goal of 25 percent FiOS TV penetration and 35 to 40 percent FiOS Internet penetration.

Verizon's FiOS TV FTTH IPTV service continues to grow strongly. For the first time it added more IPTV subscribers during the quarter than Internet subscribers. This indicates that it is successfully upselling TV to Internet customers as the FiOS TV service becomes available.

Verizon to Eliminate Analog Tier

Verizon will eliminate its analog tier by the time of the U.S. analog switch off on February 19, 2009. It will start by eliminating its analog tier in New York by April 21. Verizon received a waiver from FCC requirements to provide integrated security set-top boxes on the condition that it convert its offering to 100 percent digital by the analog switch off date.

Verizon has had a very low take up of its analog only offering, so this should not cause a big disruption to its FiOS TV customer base.

Verizon has 1 million IPTV Subscribers

Verizon ended 2007 with 943 thousand IPTV subscribers, but that total has exceeded one million since then. Its FiOS TV IPTV subscriber base increased by 343 percent in 2007. At the end of 2007 it was marketing its FiOS TV IPTV service to 5.9 million homes, up 1.2 million in 4Q07. More than half of this quarterly increase came in December.

Verizon now has 1.5 million FiOS FTTH subscribers, up 245 thousand in 4Q07. This compares to an increase of 226 thousand FiOS TV IPTV subscribers over the same period. Its FiOS Internet penetration is 21 percent of homes passed and its FiOS TV IPTV penetration is 16 percent.

Verizon clearly had a good year for its IPTV service. It would not surprise me to see it add another million IPTV subscribers in 2008.

Comcast to Start DOCSIS 3.0 Deployment

Comcast plans to have DOCSIS 3.0 cable modem technology available to about 20 percent of its subscribers by the end of 2008. Comcast is looking to deliver video content to TV's using this data technology.

However, the initial DOCSIS 3.0 deployment will increase speeds only in the downstream direction. It appearts that DOCSIS 3.0 equpment that supports higher speeds in the uupstream direction will not be available at that time.

This is a move that ATT will have to watch closely due to the limited bandwidth available from its VDSL approach. Verizon's fiber based FiOS network should be able to compete nicely with DOCSIS 3.0 without much difficulty.

The good news for ATT is that the initial deployment is limited in both scope and function. My guess is that Comcast will create a premium, higher priced service, based on DOCSIS 3.0. If Comcast follows such a conservative strategy, ATT will have some time to adjust its strategy to be competitive with this new cable technology.

Verizon Pushing for 400 Mbps MoCA

Verizon is pushing the MoCA alliance to increase the bandwidth of the MoCA data service to 400 Mbps in the next two years. MoCA is a home networking technology that supports Ethernet over coaxial cable and coexists with cable and IPTV RF video delivery. The most recent version of MoCA provides a 270 Mbps wire speed with 175 Mbps throughput.

Verizon has more than 3 million MoCA devices installed in FiOS TV customer homes today.
Considering the telco's deployment and customer ramps, that number will only continue to rise. Verizon ended the third quarter with 717,000 FiOS TV subscribers and is adding about 3,200 new video customers per day. On the high end, the company forecasts having 4 million FiOS TV subs by 2010.

Today, Verizon delivers broadcast video via an RF overlay, similar to a cable architecture, but uses IPTV to deliver video on demand content and widget data. Eventually, Verizon plans to introduce an IP video hub office and eliminate the analog RF transmission package. The company will use IPTV to deliver video on demand, interactive capabilities, and a few broadcast channels. It will later migrate to IPTV multicast for all broadcast content and the eliminate the RF overlay.

Verizon is making a good point; however, it should be shooting for a gigabit in the home network.

Verizon adding 120 HD Channels

Verizon plans to increase from 30 HD channels today to 150 HD channels by the end of 2008 on its FiOS TV IPTV service. By the spring of 2008, the company expects to have 60 HD channels. Its Home Media DVR will be able to record HD programming and then play them on any TV in the home connected to the FiOS TV service.

Verizon FiOS TV currently offers the following HD national channels: TNT HD, ESPN HD, ESPN2 HD, NFL Network HD, HD Net, HD Net Movies, Universal HD, Discovery HD Theater, Wealth TV HD, National Geographic Channel HD, MHD, Food Network HD, HGTV HD, Lifetime Movie Network HD and A&E HD. It also offers local broadcast channels in high definition and HD premium channels, including HBO HD, Cinemax HD, Showtime HD, TMC HD and Starz HD.

This shows that HD will become the standard method for watching TV in the U.S. over the next couple of years. The general availability of inexpensive HD sets will cause the rest of the world to follow before much longer.

Verizon adds 202K FiOS TV Subscribers in Q3

Verizon added 202 thousand new subscribers to its FiOS TV IPTV service, giving it a total of 717 thousand subscribers at the end of 3Q07. It also added 229 thousand FiOS broadband subscribers, giving it a total of 1.3 million.

Verizon is continuing to do well with its FiOS TV service and should easily exceed 700 thousand subscribers by the end of 2007. this will be an increase of 500 thousand subscribers over the year.

This should be good news for ATT, which added about 75 thousand IPTV subscribers in the quarter. It shows that there is strong potential for IPTV services in the U.S.

Verizon FiOS TV Consumer Research

Research firm One TRAK has published a study of Verizon FiOS TV subscribers in 34 communities in Massachusetts. An abstract can be found on its website. It found that:

1. Initial incumbent cable subscriber losses can exceed 10%.
2. Traditional overbuilders, such as RCN, can take a disproportionate hit, effectively insulating the incumbent cable provider.
3. As many as 40% of FiOS TV subscribers could well be coming from DBS.

Comcast is the incumbent cable operator in these 34 cities, while RCN Corp. provides service in nine of these communities. This study is based on information made public by the Massachusetts Department of Telecommunications and Cable, which requires all cable operators in the state to file year-end subscriber count figures by municipality

Across all 34 communities , Comcast lost 5,216 subscribers from a base of 204,160, a drop of 2.6%, while RCN lost 1,813 subscribers, or 7% off its base of 25,895 subscribers. Verizon’s gain was 11,982 subscribers. The average amount of time Verizon was in any one market was about 90 days.

One TRAK points out that since Verizon gained 4,953 more subscribers, that most of this remainder came from the satellite providers.

This is an interesting analysis. It shows again that it usually the weaker competitors, in this case RCN and the satellite companies, that have been most strongly affected by the new FiOS TV service.

It also shows that a large part of the FiOS TV is probably coming from Verizon's ADSL subscriber base. The satellite TV customers are probably nearly all using Verizon's broadband service rather than a cable modem service. FiOS TV should be quite attractive to these users. They can upgrade to a better data service and get rid of the dish at the same time.

Verizon FiOS TV Grows to 515,000 Subscribers

Verizon announced that is FiOS TV subscriber base grew to 515 thousand subscribers, adding 167 thousand subscribers in 2Q07. It added an average of 13 thousand new subscribers per week during the quarter. The company added 460 thousand FiOS TV customers over the previous 12 months.

By the end of the 2Q07, Verizon was offering FiOS TV to nearly 500 communities in 12 states. FiOS TV was available for sale to nearly 3.9 million premises by the end of the quarter, up from 3.1 million at the end of the first quarter. Penetration for the service is 13 percent across all markets, compared with 9 percent penetration against a 2.4 million potential customer
base at the end of 2006.

Verizon ended the quarter with 1.1 million FiOS Internet subscribers, adding 203 thousand subscribers in 2Q07. Its total broadband net adds during the quarter was 288 thousand, so FiOS accounted for 70 percent of its new broadband customers during the quarter.

Verizon's FiOS service passed 7.6 million premises at the end of 2Q07, which it stated was consistent with its year end target of 9 million. Its FiOS Internet service was available to 5.7 million subscribers at the end of the quarter. It achieved a penetration of 19 percent comparing to a penetration of 14 percent against 4.8 million premises at the end of 2006.

Verizon is making good progress with its FiOS FTTP and FiOS TV IPTV services. It is meeting its fiber deployment commitments and is getting strong support from its customers. Verizon is on is way to becoming one of the top three IPTV providers by the end of 2007 along with France Telecom and Free in France.

Verizon Issues $1B IPTV RFP

An article in Light Reading says that Verizon has issued an RFP for set-top boxes and a content protection/digital rights management system for its FiOS TV IPTV service.

Verizon is using Motorola set-top boxes today. Verizon uses an RF feed for its broadcast channels. This requires that the set-top box be a hybrid IPTV/RF cable-like set-top box.

I am currently working on an IPTV forecast that will be released in August. This forecast will show the opportunity for five IPTV product categories that include set-top boxes, content protection/digital rights management systems, access systems, video on demand systems, and middleware software.

The preliminary result from this analysis shows that Verizon will spend well over $1 billion for set-top boxes between 2008 and 2012 and over $50 million for content protection/digital rights management.

Motorola is certainly in a good position to get a piece of this business. I expect that Verizon will select at least one other set-top box manufacturer to keep inject competition. Verizon has three PON vendors today - Tellabs, Motorola, and Alcatel-Lucent.

Verizon started off with the Microsoft cable middleware. It has now taken over the further development of its middleware. I consider Verizon's middleware to be an in house development today.

I believe that Verizon started using Microsoft's content protection/digital rights management system and will replace it as part of this RFP. I believe that Verizon will select a single system. This is a real plum for the content protection/digital rights management system company that wins.