Despite partnerships with cable MSOs, Verizon pushes FiOS innovations
Critics of Verizon's (NYSE: VZ) partnerships with Comcast (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC), Cox Communications and Bright House Networks have expressed concerns that it will no longer use its FiOS TV service to compete with cable operators. But Verizon could soon add some very innovative features to FiOS that no other pay TV provider is offering subscribers, including an Android tablet designed to be used as a "FiOS companion."
In addition to the FiOS companion devices, which Verizon revealed in a recent survey to subscribers, patent applications indicate that the company is looking at how it can allow subscribers to navigate content with voice controls. It's also looking at how to use tablet computers to put subscribers in an "immersive virtual environment" where they can channel surf and interact with friends.
Verizon isn't the only pay TV distributor considering deploying tablets designed to navigate cable programming. Google (Nasdaq: GOOG) announced last month that it would give subscribers that sign up for its Google Fiber TV product in Kansas City a Nexus 7 tablet that is designed to be used as a remote control.
Interest from Google and Verizon in supplying pay TV subscribers with tablets makes me wonder: Will major providers ranging from Comcast to DirecTV (Nasdaq: DTV) also look to lease tablets to subscribers similar to the way they lease set-tops and traditional cable remote controls? Cable and satellite providers have already developed apps for devices such as Apple's (Nasdaq: AAPL) iPad and iPhone, and Google Android devices, so you could argue that it would be a waste to supply a tablet to subscribers since so many of them already own tablets and smartphones.
But bundling a tablet with a cable or satellite subscription package is one way for a provider to differentiate its service from a rival's. A cable MSO may also have a better chance at obtaining mobile video rights deals from programmers by promising to deliver content to devices that they control. It'd be worth keeping an eye on Ericsson (Nasdaq: ERIC), which recently acquired France's Technicolor--a company that has been pitching cable operators MediaTouch tablets that could be leased to subscribers. Motorola (NYSE: MSI) has also reportedly developed a tablet called Corvair that could be supplied to subscribers.
Verizon still must win approval from the FCC and the Department of Justice on its spectrum and marketing deals with major cable MSOs. Its cable deals also called for the creation of a joint innovation lab that Verizon, Comcast, Time Warner Cable and other operators could use to develop products that would rely on Verizon's wireless network and digital cable programming. Assuming that the deals are approved, it's likely that some of the navigation innovations that Verizon has patented, including the ability to use voice commands or navigate programming via virtual worlds, could be available one day in both the homes of FiOS and cable MSO subscribers.--Steve