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Verizon Gets All-Digi With It

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
11/24/2008
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Verizon Communications Inc. (NYSE: VZ) has migrated its FiOS TV service to an all-digital video platform, making good on a pledge that it complete the cut-over before all high-power U.S. broadcast TV stations flip the switch on Feb. 19, 2009.

Just before a ban on set-tops with integrated security was to take effect last July, the Federal Communications Commission (FCC) awarded Verizon (and dozens of other video service providers) special "omnibus" waivers on some low-end boxes on the condition that they operate 100 percent digital video systems before the broadcast digital transition takes hold. (See Verizon & Others Get Their Waivers and Son of 'Waiver Central' .)

On the low-end, Verizon continues to use an iteration of the Motorola Inc. (NYSE: MOT) DCT700 box to fuel the all-digital FiOS TV service. The telco's waiver for high-end boxes (i.e., those with on-board high-definition tuners and digital video recorders) expired in July. Since then, it's been deploying Motorola-made CableCARD-equipped "QIP" models. Further out, it's expected that the telco will migrate to separable security boxes that use "VueKey," an upcoming platform that will use the same form-factor and host interface as the widely deployed CableCARD. (See ATIS OKs CableCARD for IPTV and Will VueKey Trump Tru2way? )

Verizon started to phase out the simulcast of analog TV feeds in April, and has given away digital adapters to help customers make the transition. (See Verizon to Change Its Analog Channels.) The telco wrapped up its transition roughly 86 days ahead of the broadcast TV changeover.

As of September 30, Verizon marketed FiOS TV to 8.2 million premises and had 1.6 million FiOS TV customers. The company expects to pass about 18 million homes with its fiber-fed FiOS platform by 2010. It hopes to have at least 4 million FiOS TV subs by then.

Although some cable operators, including BendBroadband and RCN Corp. , plan to go all-digital by February 2009 as a condition of receiving FCC set-top waivers on low-end boxes, most MSOs are on the hook to deliver "must-carry" broadcast stations in analog and digital format. (See RCN's 'Analog Crush' , RCN to 'Crush' It in Beantown , and FCC OKs Dual TV Carriage Rules.) Some small cable systems -- those with 2,500 or fewer subs or with activated capacity of 552 MHz or less -- are exempt from the dual must-carry rule for a three-year period. (See FCC Details Small Cable DTV Exemption.)

Some operators, meanwhile, are moving ahead with analog reclamation strategies that are not directly tied to the broadcast transition.

Comcast Corp. (Nasdaq: CMCSA, CMCSK), which failed to obtain set-top waivers on multiple occasions, wants to recapture about 40 channels of analog and reuse that spectrum for expanded high-definition and video-on-demand (VOD) offerings and for its rollout of faster, Docsis 3.0-based Internet services. (See Comcast IDs First DTA Market and Comcast Seeds Digital Shift With Free Boxes.) Although the operator refers to this as an "all-digital" strategy, "mostly digital" might be a more appropriate term because Comcast will continue to offer a limited analog TV channel lineup.

— Jeff Baumgartner, Site Editor, Cable Digital News

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