& cplSiteName &

Why Did Verizon Buy OnCue?

Mari Silbey

There's one thing that's puzzled me ever since rumors of a Verizon deal to purchase Intel Media's OnCue assets first surfaced. And now that the deal is done, I'm no less mystified by it. (See Verizon Snatches Intel Media Assets.)

Many have reasoned that Intel Corp. (Nasdaq: INTC)'s OnCue could give Verizon Communications Inc. (NYSE: VZ) the boost it needs to make the transition to a full IPTV service. That would help the company battle against Comcast Corp. (Nasdaq: CMCSA, CMCSK) and its growing cloud-based Xfinity platform, and it would extend Verizon's footprint across the country in preparation for the day when service providers are expected to compete nationally.

There's just one problem with the logic. Verizon doesn't need Intel to make any of its IPTV dreams come true.

Three years ago at CES, Verizon executive Joe Ambeault told me that the company had already worked to overhaul its infrastructure so it could deliver everything over IP. Ambeault painted the picture of FiOS TV as an app, and he suggested that while many business challenges remained, the technical hurdles to making that idea a reality were already more or less solved.

Fast forward to today and I have confirmation from an expert source in the trenches. Technically speaking, Verizon has the equipment and the ability to deliver television over IP already, even without the OnCue assets.

All of which leads me back to one question: Why did Verizon bother to buy Intel's dying TV service?

My only conclusion at this point is that there's a sexy combination of software and hardware in the OnCue assets that Verizon thinks will give it a more compelling offering for consumers. Despite being a software leader five or so years ago, Verizon hasn't invested much in its TV interface in ages. It could partner to bring its guide up to speed quickly, but I can see why bringing a finished product and more expertise in house would be appealing.

On the hardware front, Verizon's got plenty of set-top options at its disposal. But maybe Intel has invented something new; something innovative like Fanhattan LLC 's tiny little box that connects to a motion-controlled remote.

On the other hand, maybe Verizon just couldn't put its own pieces together for the IPTV transition. Maybe so many of the components are locked up in different corporate silos that it's been impossible for the company to make the logistics work. Maybe that's why the big bosses decided to bring OnCue into the fold instead.

I don't know the reason why Verizon pulled the trigger on the Intel deal. However, at the rumored discount price of $200 million, maybe it also doesn't matter too much. In the end, it's only what Verizon does with the investment that anyone will really care about.

— Mari Silbey, special to Light Reading

(6)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
User Rank: Blogger
1/26/2014 | 1:55:48 PM
Re: One man's trash is another man's treasure
I agre, Mari. It's like Europe in the summer of 1914 waiting for WW I to break out. The big question is: Which company will be the Serbian nationalist to assassinate the Austrian archduke? 
User Rank: Light Sabre
1/23/2014 | 4:06:49 PM
Re: One man's trash is another man's treasure
One thought... don't forget how much equipment VZ purchases from other people to deliver their content.  They have STBs from Cisco and Motorola that they pay probably limited amounts of money for.  And VOD streamers from Cisco.  And QAMs from Harmonic for their live channels.  And encoders for those channels from Cisco and perhaps others.  Maybe they have in mind replacing some of that stuff with in house equipment developed by some team they'll put together between in-house and On Cue talent? 

User Rank: Blogger
1/23/2014 | 1:53:16 PM
Re: One man's trash is another man's treasure
Connery- I'm betting on "d". But right now we're in a nuclear arms race with a policy of mutual assured destruction. Nobody's quite ready to go outside their footprint yet, because they know that when they do, all of the other dominos will fall. Eventually (who knows when) it will be all-out war. 
User Rank: Light Sabre
1/22/2014 | 6:37:48 PM
Re: One man's trash is another man's treasure
Yeah its not obvious. 

They can talk about offering OTT nationwide all they want--actually doing it is something else again.  I assume their own content partners would NOT be in favor of such a move, and might even have contractual language preventing it.  Plus what would happen if they were to offer a competitive TV package into a Comcast territory...?  Would Comcast:

a) outright block the service now that Net Neutrality is dead? 

b) rate limit the service so it didn't work very well

c) interfere with the service like they did with torrents before so it didn't work very well

d) do something trickier like raise their peering rates with VZ to accomplish the same

e) simply lower the caps until most people who wanted the service priced themselves out of the equation or found they couldn't stream shows much of the month


I'm not sure, but I am sure Comcast would respond.  And if you think content companies have been difficult about allowing streaming outside the home, and getting such rights has been difficult... wait for this!  Some partners might outright pull their content from VZ at the thought of price competition in TV causing price cuts and thus pressure on their potential earnings.
User Rank: Light Beer
1/22/2014 | 4:00:32 PM
Re: One man's trash is another man's treasure
Perhaps it was done to take them off the market thereby, preventing some other company from buying them, adding to the competition. In other words, a defensive play. 
User Rank: Blogger
1/22/2014 | 1:12:59 PM
One man's trash is another man's treasure
I had the same reaction when I heard the news: Verizon, you're buying OnCue because...why? Because Redbox is doing so well?? (Chortle, choke, cough)

As was speculated in yesterday's LR boards, perhaps VZ thinks the purchase would help an IPTV plan or eventual LTE video play. But it doesn't get over the fact that trying to replicate a full slate of live TV channels through an OTT play is a dead-end strategy. The content rights simply are too damn expensive.


And yet, beyond the on-demand realm of Netflix, Hulu and YouTube, it seems there should be room for some type of OTT play with live TV that would appeal to consumers and meet the selfish needs of programmers and service providers. Now if I could just figure out what that is... 


More Blogs from Column
Broadcasters can no longer rely on pulling audiences to the TV screen; they need to pursue their audiences on digital, wherever they are.
Why advanced data analytics are the future for streaming video services.
5G could ride the traditional wireless hype cycle, or – quite possibly – break the chain, suggests Nokia's North American CTO.
NFV feels like it's going nowhere fast, suggests Napatech's Dan Joe Barry.
The NG-PON2 standard is the key to the future of ultra-broadband, believes Calix's Alan DiCicco.
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
Friday, October 28, 1:00PM EDT
Security: The Plusses and Minuses of Open Source Software
Nick Feamster, Acting Director, Center for Information Technology Policy, Princeton University
Wednesday, November 16, 1:00PM EST
SDN 101
John Isch, Practice Director, Network & Voice, Orange Business Services
Friday, November 18, 1:00PM EST
SDN & Open Source
Christopher W. Rice, Senior Vice President of AT&T Labs, Domain 2.0 Architecture and Design
Wednesday, November 30, 1:00PM EST
SDN & the Software Defined Data Center
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
OneAccess NFV Solutions

10|26|16   |   5:30   |   (0) comments

Antoine Clerget, CTO of OneAccess, discusses how his company has expanded its product line from enterprise-class routers to include a universal virtualized CPE as well as a suite of VNFs to help telco customers evolve to an NFV future.
LRTV Custom TV
The Journey Toward Carrier-Grade WiFi

10|26|16   |   3:39   |   (0) comments

In this Light Reading interview, Dave Sperling, CTO at Smith Micro Software and active participant of the WBA's policy working group, discusses the need for carrier-grade WiFi. Technical and business challenges slowing the fulfillment of this goal are addressed, as well as management strategies that will enable communication service providers to optimize end user ...
LRTV Custom TV
ZTE BBWF Highlights

10|26|16   |     |   (0) comments

At BBWF 2016, ZTE showed a broad range of innovative technologies that are kick-starting an ultrafast broadband journey.
LRTV Custom TV
Next-Generation Technology Beyond DOCSIS 3.1

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Liu Jianhua speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Hybrid Video Solutions to Change TV, Change Future

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Ian Locke speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Huawei Future-Oriented Giga Coax Network

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Allen Wang speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Huawei at SCTE 2016

10|20|16   |     |   (0) comments

Join Alan Breznick of Light Reading and take a sneak peek at the Huawei booth at SCTE 2016.
LRTV Custom TV
Assuring Network Quality in a Rapidly Changing Environment

10|20|16   |     |   (0) comments

As the rate of change and complexity increases in agile networks, the importance of introducing DevOps methodologies for integrating active test and assurance solutions throughout the full service lifecycle becomes critical to ensure that customers are experiencing the service quality they demand. The industry landscape is changing, and software-based test and ...
Telecom Innovators Video Showcase
A10 Networks on Service Providers' Industry Needs

10|20|16   |     |   (0) comments

Light Reading's Steve Saunders hears how A10 enables service providers to accelerate, secure and optimize their application delivery to drive down costs, enhance service availability, and better respond to customer requirements, so they can improve customer satisfaction, monetize their network, and grow revenues.
LRTV Custom TV
New NFV Use Cases for Cable TV

10|19|16   |     |   (0) comments

A large number of NFV use cases are focused on the enterprise domain, looking at virtualization of customer-premises equipment (CPE). To date, there has been little focus on the use cases and business case for virtualization of the video content delivery networks required to deliver unicast and streaming video to consumers. Amdocs commissioned Analysys Mason to ...
Women in Comms Introduction Videos
Meet the Future Workforce: New Faces, Expectations & Motivations

10|19|16   |   5:33   |   (1) comment

Millennials and their younger peers, Gen Z, expect more out of their network and more out of their work. Intel's Lynn Comp shares how the industry can prepare for this new generation of workers.
LRTV Custom TV
ZTE Global Services User Congress 2016 Highlights

10|19|16   |     |   (0) comments

ZTE held its 2nd Global Service User Conference in Dusseldorf on October 13-14. Representatives from network operators, leading industry analysts and ZTE senior expertsattended the event, exploring the best practice in managed services and the vision to transform network operations into the operations center of the future (OpCF) in the software-defined networking ...
Upcoming Live Events
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Hot Topics
Attacks Have Major Internet Sites on the Ropes
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 10/21/2016
Trump: Dump AT&T/TW & Comcast/NBC
Alan Breznick, Cable/Video Practice Leader, Light Reading, 10/24/2016
Layer3 TV Comes to Town, Hints at Future
Mari Silbey, Senior Editor, Cable/Video, 10/21/2016
T-Mobile: AT&T & TW Means Ma Bell Not Focused on Mobile
Dan Jones, Mobile Editor, 10/24/2016
Verizon Wants More Data on Yahoo Breach
Alan Breznick, Cable/Video Practice Leader, Light Reading, 10/20/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
Animals with Phones
'Oh, Were You Looking for This?' Click Here
'I was just playing some games...'
Live Digital Audio

A vital part of increasing the number of women in comms is transforming the ways companies can support and empower women. While progressive company policies that support both men and women in achieving work-life balance are a step in the right direction, creating a company culture that supports those policies can at times be more challenging.

During this show, we'll talk to Lynn Comp, Senior Director of Industry and Sales Enabling (ISE) in the Network Platforms Group at Intel, about why those challenges exist and how companies can overcome them. She'll provide insight into how Intel has worked to create a culture that supports work-life balance, and provide steps and guidance for other companies wishing to do the same. We will also leave plenty of time to get your questions answered live on the air.