Verizon aborts Fios TV mission – are execs or tech to blame?

Verizon’s FiOS IPTV revamp has been canned after almost seven years of pumping blood, sweat and a whole load of cash into the project. The upgrade was a critical moment for Verizon’s TV business, and it is difficult to foresee Verizon magicking up a plan B to plug its diminishing pay TV subscriber base. Early suggestions are that Verizon is instead pursuing live programming projects – probably under the illusion it can still transform Go90 into a success story.

An inside source speaking to DSLReports said, “Employees received an email on Tuesday instructing those involved in the (an internal) trial to choose new packages and schedule a subsequent tech visit to remove and replace the set tops.”

Back in June, Verizon announced the second version of FiOS TV, shifting its fundamental delivery system from RF communication using pure QAM to an all-IP network, using a new gateway combined with an Optical Network Terminal (ONT), which is traditionally a separate unit from the set top itself usually in the external network and not in the home. Technical hiccups have been rife along the way, but there was always some confusion about the form the video would take, whether it was supposed to be a series of multicast channels, ABR channels using HEVC or at least H.264, or more advanced QAM signaling for carrying IP packets to be transcoded in the new set top, then delivered over WiFi. These were all feasible options, clearly none of which satisfied Verizon enough to take FiOS TV any further than beta trials.

Verizon is yet to comment on the move, making it difficult to put a finger on whether it was an underlying technology flaw that it perceived as not worth resolving, or if the decision came directly from the top as part of a wider transitional business move. If the latter is the case, a major mobile push could be on the horizon while video projects are put on the back burner – although Verizon investors will wince at the thought of all those $billions invested in TV going up in flames. Another outside possibility is that it could license the X1 Xfinity technology from Comcast – stranger things have happened, as it would plug straight into a hybrid QAM/IP environment, with fiber instead of cable. A more sensible possibility is that it provides broadband to a home, and offers a sales channel for OTT media players like Roku, with channels for FiOS developed for it.

That said, a lot of video technology at Verizon is handled in-house through its multiple acquisitions, including assets from Intel and the EdgeCast CDN, as well as managing its own CMS using the Verizon Video Lifecycle. When Microsoft tried to install Mediaroom, it had to be adapted by Verizon personnel for QAM, and then it was radically re-written in-house, to get it to work.

Verizon also operates the streaming technology arm Verizon Digital Media Services and digital advertising subsidiary Oath. Verizon has not listed which vendor supplied the FiOS TV trial hardware, but previous FiOS TV equipment is supplied by Arris, Cisco (some of which is now Technicolor) and Motorola (now Arris), and Verizon has also integrated TiVo recommendation software (from its acquisition of DigitalSmiths).

Verizon CFO Matthew Ellis said in October, “We are continuing to look at what makes sense for us to launch, something that’s differentiated in that space, probably around live programming, but how and when we launch something is to be decided.”

This statement of low confidence suggests Verizon will be looking to follow in the footsteps of AT&T by buying major media assets, although it looks to be out of the running for a piece of the currently available 21st Century Fox. Live sports rights are part and parcel of Verizon’s live programming business going forward, having extended its deal for NFL rights this week. Yet the video woes at Verizon go deeper than that, with innate workings that are seemingly incapable of rolling out something in the guise of Comcast’s Xfinity or DirecTV Now.

Even zero-rating data usage for Go90 and rolling out a revamped UX has not given Verizon’s mobile-first OTT service the kiss of life that it hoped for.

We believe FiOS TV trials involved testing advanced WiFi devices from chip firms Quantenna and Broadcom, running 802.11ac Wave 2 MU-MIMO devices to achieve a high-standard in-home WiFi experience. Verizon was perhaps also trialing multiple access points and mesh networking technologies from the likes of AirTies or Celeno, but we think it is unlikely these WiFi technologies are to blame for the failed project, as they have proved very successful at major accounts in the US and Europe. So in-house delivery is not the issue.

Verizon sent an email to employees this week saying, “Some of you have provided feedback and comments, and we appreciate the time you took to test the service for us.” Hopefully DSLReports can get hold of these comments – which may help shine some light on what contributed to the demise of FiOS TV version 2.

Verizon also cut 200 jobs in San Jose this week, citing issues in “product deployment”. Reports state that the latest spate of payroll shaving is unrelated to the recent Oath cuts, meaning they could be associated with the FiOS TV department.