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Verizon Dresses FiOS for CES Appeal

Verizon Communications Inc. (NYSE: VZ) announced on Sunday a set of enhancements to its fiber-based FiOS service, but half of them won't be available to the FiOS customers who use legacy set-top boxes.

In a nutshell, FiOS will soon include access to Internet video content and gaming titles, some new remote digital video recorder (DVR) capabilities, and an upgraded electronic programming guide (EPG).

But only the Internet content and programming guide enhancements will be available to FiOS customers using the old Motorola Inc. (NYSE: MOT) 2500 analog set-top boxes, Verizon says. The gaming and remote DVR services must be received by Motorola's digital DCT-6416 set-top box.

Verizon won't say how many of its 175,000 or so video customers still use the 2500 box exclusively. (See Verizon Fueling North American Fiber Growth.) Steve Haire, project manager for Internet services, notes that because many FiOS customers didn't get an HDTV display for Christmas, they're satisfied with the standard-definition 2500 box.

Haire says many FiOS customers (himself included) now use a high-definition, DVR-equipped Motorola 6416 box in the living room and the Motorola 2500 boxes at TVs in other rooms.

To make Internet video content available on the FiOS video network, Verizon plans to hand-pick a finite set of popular video clips and host them at its VOD servers. Verizon spokeswoman Sharon Cohen-Hagar says her company is "getting close" to signing content deals with several Internet video companies including Revver. She says the FiOS execs have also been chatting up YouTube Inc. -- now part of Google (Nasdaq: GOOG) -- for viral content. (See Cable Beats Carriers to Shared Video and Survey: Internet Video Content.)

On the games front, Verizon will roll out new titles in three phases starting this quarter, says VP of FiOS TV product management Shawn Strickland.

The first phase will feature between three and seven casual games (think Trivia, Tetris, etc.) that will be downloaded to the customer's set-top box. The second phase will feature a set of 20 to 30 casual and kids' games that will be hosted on VOD servers and sold on an à la carte and subscription basis. In the third phase, which Strickland says will happen in the second half of 2007, FiOS gamers will get access to "high-end first person shooter and speed racing games" streamed from special FiOS network servers.

Verizon already put a foot in the gaming world with its PlayLinc service, and other service providers are showing interest in getting a piece of the games business as well. (See Verizon Launches PlayLinc and Comcast Invades Games.)

Verizon's "whole-home" DVR application also gets an upgrade, Verizon's Cohen-Hagar says. A user with the Motorola 6416 set-top box will soon be able to program a home DVR remotely using any broadband connected PC. Cohen-Hagar says her company will later extend the remote programming capability to Verizon cellphones. (See Verizon Hones Home Networking and Verizon Moves Toward Home Gateway.)

Finally, Verizon says it has revamped the FiOS electronic programming guide (EPG) to keep track of all the new content and services.

Beginning in the first quarter, the guide will allow users to search through broadcast, VOD, and recorded content at the same time, Cohen-Hagar explains. For instance, if the user punches in "TC" on the remote (which the system recognizes to mean Tom Cruise), all TV shows, VOD titles, and recorded video featuring Cruise will be neatly displayed in the search results. MP3s and photos tagged with "TC" would also appear. A later version of the middleware will also bring up Cruise-related gaming and Internet video (like his freakout on Oprah?), Cohen-Hagar says.

Verizon director of consumer product development Mike Naggar points out that the programming guide enhancements were developed entirely by Verizon's in-house engineers and developers. Verizon last year opted to develop much of the FiOS middleware in-house after rejecting middleware designed by Microsoft Corp. (Nasdaq: MSFT)

Verizon claims that with the new content and services, it'll jump well ahead of cable adversaries including Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), and Cablevision Systems Corp. (NYSE: CVC). Verizon projected it would have 725,000 data customers -- with 175,000 of those also buying video service -- by the end of 2006. We'll have to wait for quarterly earnings to know if it hit its numbers.

— Mark Sullivan, Reporter, Light Reading

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