Verizon is reportedly abandoning its streaming video platform, says multiple online technology sources. That, if true, raises some very significant questions because it could mean that Verizon has abandoned streaming as a delivery strategy for FiOS TV. If that’s true, then what does it mean for the 5G/FTTN hybrid model of broadband that Verizon has been very interested in?
I can’t confirm the story that FiOS IPTV is dead, but it sure seems from the coverage that there are multiple credible sources. Verizon has been dabbling with the notion of IPTV for FiOS for some time, and for most of the period it was seen as a way of competing with the AT&T DirecTV franchise, which can deliver video outside AT&T’s wireline footprint, meaning in Verizon’s region. The best defense is a good offense, so IPTV could have let Verizon take the fight back to AT&T. I think that AT&T was indeed the primary force in the original Verizon IPTV plan.
AT&T has further complicated the situation since FiOS IPTV was first conceptualized. DirecTV Now, which for at least some AT&T mobile customers is available cheaply with no charge against data usage, elevates DirecTV competition into the mobile space. You could argue that what Verizon really needs is a way of offering off-plan viewing of TV shows to its mobile customers, to counter what’s clearly a trend toward special off-plan content deals from competitors.
A true unlimited plan without any video throttling would support streaming without off-plan special deals, of course, but for operators who have content properties in some form, the combination of those content elements and mobile services offers better profit than just allowing any old third-party video streaming player to stream over you. Even, we point out, a competitor.
On the other side of the equation is the fact that if Verizon really plans to replace DSL tail circuits from FTTN nodes with 5G millimeter wave and much better broadband, would it not want to be able to sell “FiOS” to that customer group? Some RF engineers tell me that it is theoretically possible to broadcast a full cable-TV channel complement over 5G/FTTN. However, you use up a lot of millimeter-wave bandwidth with all those RF channels, and remember that viewers are more interested in bundles with fewer channels, even in a la carte video. Surely it would be easier to just stream shows over IP. Streaming over IP would also be compatible with mobile video delivery, something that could be helpful if Verizon elected to pair up its 5G/FTTN millimeter-wave stuff with traditional lower-frequency 5G suitable for mobile devices. Or went traditional 5G to the home.
So does the fact (assuming again the story is true) that Verizon is bailing on IPTV FiOS mean it’s not going to do 5G/FTTN or won’t give those customers video? I think either is incredibly unlikely, and there is another possible interpretation of the story that could be more interesting.
Look at the home TV when FiOS first came out. It had an “antenna” and a “cable” input, and the latter accommodated a set-top box that delivered linear RF video. Look at the same TV today. It has an Internet connection and increasingly a set of features to let you “tune” to Internet streaming services. There are a growing number that have features to assemble a kind of streaming channel guide. The point is that if we presumed that everything we watched was streamed, we wouldn’t need an STB at all unless we didn’t have either a smart TV or a device (Apple TV, Chromecast, Fire TV, Roku, or whatever) that would let us adapt a non-Internet TV to streaming.
In this light, a decision by Verizon to forego any IPTV version of FiOS looks a lot smarter. Why invent an STB for video technology that probably every new model of TV could receive without such a device? In my own view, the Verizon decision to drop IPTV FiOS plans is not only non-destructive to its 5G/FTTN strategy, it serves that strategy well. So well, in fact, that when enough 5G/FTTN rolls out, Verizon is likely to start phasing in the streaming model to its new FiOS customers, then to them all.
Even the competitive situation favors this kind of move. A pure STB-less streaming model is much easier to introduce out of area, to competitive provider mobile customers, etc. It has lower capex requirements, it’s more suited to a la carte and “specialized bundle” models, and thus gives the operator more pricing flexibility. Add to that the fact that the cable operators, who currently have to assign a lot of CATV capacity to linear RF channels, are likely to themselves be forced to adopt IP streaming, and you can see where Verizon would be if they somehow tried to stay with RF.
You might wonder why all of this seems to be coming to a head now, when it was at least a possible model for the last decade. I think the answer is something I mentioned in a recent blog; mobile video has essentially separated “viewers” from “households.” If you give people personal video choices, they tend to adopt them. As they do, they reduce the “watching TV as a family” paradigm, which is what’s sustained traditional viewing. My video model has suggested that it’s the early-family behavior that sets the viewing pattern for households. If you give kids smartphones, as many already do, then you disconnect them from family viewing very quickly.
Time-shifting has also been a factor. The big benefit of channelized TV is that you only have to transport a stream once. If you’re going to time-shift, the benefit of synchronized viewing is reduced, and probably to the level where caching is a suitable way of optimizing delivery bandwidth. Anyway, if you presumed that “live” shows were cached at the serving office level, you could multi-cast them to the connected homes. Remember, everyone needs to have a discrete access connection except where you share something like CATV channels.
I think that far from signaling that Verizon isn’t committed to streaming, the decision to drop the IPTV FiOS platform is a signal that they’re committed to where streaming is heading, rather than to a channelized view of a streaming model. If channels are obsolete, so for sure are set-top boxes.