Verizon gathers the pieces for its own answer to Netflix

We’d all be happier if we could get our home broadband and TV service over a simple wireless connection, with no cables, cable boxes, wires, big dusty set-top boxes, and guys who show up late to install it all. It’s a wonder that these artifacts still exist.

The news Wednesday that Verizon is in “advanced” talks to buy the broadband video service that Intel has been working on may be pointing in the direction of a radically simplified living-room TV setup. Verizon might be assembling a way to deliver broadband TV service wirelessly to homes all across America using its 4G LTE network. Let’s connect some dots.

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Verizon is poised to buy Intel’s video entertainment division, Intel Media, or at least the division’s main product, OnCue Internet video service. OnCue is an “over-the-top” video service, meaning it runs over the public Internet and is agnostic to the ISP. Netflix and Amazon Instant Video are also “OTT” services.

Most people in the video industry believe that in the next decade or so old-school pay TV services like cable and satellite will give way to a new wave OTT services that look more like Netflix. And Verizon’s movements in the last couple years strongly suggest that it would like to take its place in that next generation of pay-TV providers.

If it wasn’t already obvious that Verizon wants to be like Netflix, the company partnered with the movies-by-kiosk service Redbox in July 2012 to provide video streaming via a new service called RedBox Instant. Some observers think that Verizon may have plans to use Intel’s OnCue stuff to make that service work better.

Intel’s Internet TV ambitions were thwarted by troubles licensing video content, but Verizon is far less of a babe in the woods than Intel is when it comes to the intricacies of the TV business. It has already been selling cable-like video service to more than five million FiOS subscribers on the East Coast, and has the relationships with video content owners to support it.

Some believe that Verizon could use Intel OnCue as an online video add-on to its FiOS TV service (which hasn’t been selling too well lately). “The most obvious synergy would be enhancing the existing Verizon FiOS television (and internet) services,” says Albert Lai, COO at the online video platform company Brightcove. “With recent announcements of subscriber losses, customer attrition is a major concern.”

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Verizon’s HomeFusion appliance is like a big mobile hotspot.

But the thing that makes Verizon’s potential buy of Intel Media and OnCue is the Verizon 4G LTE network. Verizon has already demonstrated an interest in selling premium TV content over that network: It paid the NFL $100 million for the right to stream all NFL games to Verizon wireless devices starting next year.

Verizon’s LTE service can be delivered to homes, too.

Verizon has also demonstrated a keen interest in using its 4G LTE network to supply home broadband service. The company quietly began testing the service, called HomeFusion, last year, and later announced that the service is available nationwide. However, I can’t get it at my address in San Francisco.

A brief chat with a Verizon sales rep revealed that the service is available in most major markets, but just not at every address in those markets. The rep said Verizon began selling the service over the phone only six weeks ago, although it’s been available in stores since last year.

Verizon says HomeFusion will deliver speeds of 5 to 12 megabits per second (mbps) for downloads, but customers are routinely seeing speeds up to 20 mbps. Those speeds are competitive with DSL service, and certainly fast enough to deliver an OTT video service, like, say, OnCue.

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In a HomeFusion household, a new Internet video service could be delivered to the living-room TV (or any other connected device in the house) via Wi-Fi.

With its LTE network servicing homes, and a branded Verizon Internet service running over it, Verizon owns both the delivery pipe and the content. That’s something that Netflix and Amazon can’t claim—they are at the mercy of the big ISPs to deliver their video services.

In the Verizon household of the future, you’d have a small black receiver box somewhere in the house that catches the LTE signal, then turns it into a home Wi-Fi network that can connect up to 20 devices. One of those devices could be the smart TV in your living room. That’s just one small network box, no wires, and no set-top box. You’d pay for your video service on the same bill with your home and mobile phones and your broadband service.

I’m not going to guess the price of this tidy little bundle, but the video part of it, at least, would very likely be less expensive than Comcast or DirecTV.

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