Verizon (NYSE: VZ) will begin testing a FiOS Media Server this fall which will deliver video wirelessly to TVs and other IP-connected devices in subscriber homes, eliminating the need for coaxial cable, CEO Lowell McAdam said Tuesday.
"That slashes the installation time," McAdam said at the Goldman Sachs Communacopia conference in New York. He said the video gateway device, which the company called the Verizon Media Server when it was unveiled at the Consumer Electronics Show in 2012, would also eliminate the need for set-tops.
Verizon announced in late 2011 that it was working with Motorola Mobility, which is now owned by Arris (Nasdaq: ARRS), to develop the media server. The product could help Verizon compete with the multi-tuner DVRs that have been launched by rivals DirecTV (Nasdaq: DTV), Dish Network (Nasdaq: DISH) and Comcast (Nasdaq: CMCSA). Time Warner Cable (NYSE: TWC) has also said it will deploy a super DVR this fall.
Also worth noting form McAdam's presentation:
- Verizon has nearly 2 million optical network terminals in subscriber homes "that were active at one point and are no longer active," McAdam said, suggesting that nearly 2 million Verizon customers have moved or disconnected FiOS services since the company launched the product. McAdam said Verizon wants to "go back with a product set" which could compel consumers in those homes to become FiOS customers again.
- McAdam predicted the industry will see "some dramatic shifts in the next 12 months" in mobile video. He pointed to the deal Verizon Wireless struck with the National Football League in June to offer subscribers access to live streams of local NFL games covered by CBS and Fox on Sundays, along with the playoffs and Super Bowl. McAdam predicted that some content owners will subsidize wireless delivery similar to the way companies pay for the costs of toll-free 800 phone numbers, and that other content providers will rely on subscription fees or ad revenue to profit from mobile video.
- McAdam said his goal would be to increase the average penetration rate for Verizon's FiOS services to about 45 percent. "We're on average about 39 percent market share on the broadband [product] and about 34 [percent] on TV at this point. We've been gaining about 200 basis points a year," McAdam said. In parts of Texas, which was the first state to launch FiOS TV and Internet in 2005, Verizon has a penetration rate that exceeds 50 percent for FiOS Internet, and FiOS TV is "right at 50 [percent]," McAdam added.
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