Set-tops are a lot smarter than connected TVs

I'm still scratching my head over that deal Verizon (NYSE: VZ) announced with LG (NYSE: LGL) this week which will allow FiOS TV subscribers to access programming from just 26 channels through LG's line of connected TVs.

Verizon has one of the most advanced pay TV services in the country, but most of the content that it offers subscribers won't be available through the LG TVs. In order to access networks ranging from ESPN to USA Network, and the bulk of the FiOS VoD platform, you still need a cable set-top. The LG app also doesn't offer access to programming stored on DVRs in other rooms.

While LG and Verizon could position the FiOS app for LG's smart TVs as a product that might be attractive to subscribers who don't have a set-top connected to TVs in bedrooms and other rooms, FiOS subscribers would be much better off paying an additional $5.99 monthly to lease a second set-top than rely on this app.

I am a FiOS TV subscriber, and have the service running on two Vizio TVs. One is a 42-inch LCD TV that I bought in summer 2010 for about $600 at B.J.'s Wholesale Club. A few months later, I paid about $300 at Sears for a 36-inch LCD TV from Vizio that runs FiOS TV in my bedroom.

Compared to smart TVs from LG, Panasonic (NYSE: PC), Samsung (OTC: SSNLF.PK) and other CE vendors, my Vizio TVs are pretty dumb. They don't have WiFi connections. And Vizio doesn't have an app store like those from LG or Samsung. But when connected to a set-top like the ones FiOS uses from Motorola Mobility (NYSE: MMI), I don't need a WiFi connection or an app store--FiOS already has hundreds of high-def and on-demand channels, along with dozens of interactive applications.

Connected TVs from LG and other manufacturers do have a lot of potential when it comes to delivering interactive programming to subscribers. Showtime and other cable programmers have shown how a connected TV can deliver more advanced interactive content to cable subscribers than the capability offered by cable's EBIF interactive TV platform.

But as Verizon and LG are demonstrating this week with their app for FiOS TV, connected TVs aren't ready to replace the cable set-top. And while LG could argue that its smart TVs could allow FiOS subscribers to access a handful of channels without having to install a second set-top, paying an additional $5.99 monthly to access the entire FiOS offering is pobably worth the cost to consumers that spend several hundred dollars on a new TV.--Steve