Verizon wants deeper partnerships with TV makers

Verizon, the U.S. telco and one of the most successful IPTV providers in the world, has made one of the clearest indications of any major Pay TV operator that it would like to work more closely with the CE industry to reduce the number of set-top boxes it deploys. Speaking after the Connected TV Summit last week, Brian Whitton, Executive Director at the company, made it clear that he believes it is a realistic goal to offer an IPTV service through an app for second and third rooms but continue to rely on set-top boxes where there are no connected TV devices present. However, this relies on major CE vendors becoming true partners and working with platform operators to share the ongoing support and customer care burden.

Asked if it is viable for Pay TV companies to become an ‘Operator in an app’, he confirmed: “I think it is viable but in practice getting there is going to be much more complicated than people have been led to believe.” Whitton says there is an opportunity to use connected TVs in place of set-tops in many instances in the home. “That would be attractive for us if you can get it all to work and deliver services without compromising the experience.”

Though still committed to the STB as a proven way to deliver a controlled service with 100% quality assurance, Verizon has clearly been thinking through the implications and requirements for using connected TV apps in their place. The big issue relates to Quality of Experience: ensuring customers get the same premium service they have come to expect via a set-top box, for which they pay good money. This means replicating the customer support model Pay TV operators use today for their own devices.

With FiOS TV, the company is dealing with six different models of set-top box, each of them requiring software development and Quality Assurance (QA). If a customer calls with a problem, the support centre must triage using its knowledge of those six models. But Whitton points out that if an operator wants to replace set-tops with an app then the support staff will have to be familiar with the various Smart TVs from Philips, Samsung, VIZIO and others. If technicians are called to a home, they must understand the different televisions, too.

Whitton suggests Pay TV operators will therefore work with a limited number of Smart TV brands. These will probably be the early adopters and market share leaders who also show an interest in, and understanding of, the deeper partnership opportunity. It is a prerequisite that they buy into the Pay TV customer care model. “The partners will be the ones who understand it is in their interest, and our collective interest, to make sure the experience works,” he explains.

Brian Whitton (left) speaking on a panel at the Connected TV Summit 2012

“They have to be our partner in triaging problems. If we have an issue that we cannot triage ourselves, we must be able to escalate it to them and they cannot say, ‘It is after 5pm so we cannot answer the call’. We have to understand the number of customers that could be affected [by the same problem]. They have to be actively involved in solving issues and creating a software environment that is as refined and as stable as what you find on set-top boxes.”

Whitton would like to see the connected TV makers embrace the MoCA (Multimedia over Coax Alliance) standard to support in-home IP home networking over coax. This provides high capacity and reliability for video distribution and is widely supported by North American operators, where coax is widespread in homes. Whitton estimates that MoCA chipsets have a similar cost to Wi-Fi and he points out that you do not need the mobility benefits of Wi-Fi in a 50 inch television.

MoCA is already being used by operators to support multi-room TV and multi-room DVR services for classic, managed TV. “The reason we were early adopters of MoCA technology is that 90% of homes [in the U.S.] have coax cable and overall throughput is more than what we need for HDTV,” Whitton notes.

Connected TVs can be used as client devices on an IP server/client home distribution architecture and this is one of the instances where they can replace second or third set-top boxes, fed from a central DVR. “We would be able to deliver a video stream from the cloud or from a server in the home [the DVR hard drive] to a MoCA device like a television with MoCA,” Whitton points out. “The reality is that Wi-Fi, off-the-shelf, is non-deterministic and you cannot ensure that there is no packet loss when someone is watching the ball game. The big point, which I cannot stress enough, is that when people buy video – at least in the U.S. – they want 100% assurance that when they turn on the football game it is not going to be disrupted.”

LG, Samsung (Associate Members) and TiVO (Contributor Member) are the biggest CE brands within MoCA today. The standard has widespread support among STB vendors, SoC vendors and North American Pay TV operators, among others.

Is it reasonable for a Pay TV operator to expect partnerships where the TV maker integrates MoCA at their request, and then takes a share of the customer care burden where Pay TV subscribers are using an app on their TV? “Those discussions would make sense,” Whitton says. “You need business terms that are in everyone’s interest and it has to be a genuine partnership activity; the CE manufacturer has to embrace the operating model that the operator has and then invest in the right solutions to ensure that the TV is sufficiently hardened that operating costs do not rise.

“I think there is a steep learning curve for the CE industry when it comes to embracing the concerns of Pay TV operators and what is required on their part. But my sense is that there is definitely an interest from them in this.”

Verizon is already harnessing connected devices. If you subscribe to FiOS TV, FiOS Internet and have an Xbox LIVE Gold membership, you can watch live streaming channels on the Xbox 360 using the Verizon FiOS TV app. And the company is working with Samsung to make the FiOS TV App available to a potentially wider audience via Smart TVs and Smart Blu-ray players. In consumer marketing for the Xbox option, the company makes a point of telling consumers: ‘No Verizon set top box needed!’