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Verizon buying Intel Media to prepare for Web-based TV

LOS ANGELES — Someday, the full lineup of channels from Verizon's FiOS TV service may be available on your phone.

That's the vision outlined Tuesday after telecommunications giant Verizon Communications announced that it is buying Intel Media, a division of Intel Corp. that has been preparing to launch a service that streams TV channels over the Internet.

Verizon said the acquisition will help it accelerate the development of a next-generation video services based on Internet protocols and reduce the cost of building its own. Currently, Verizon FiOS video subscribers can stream some live channels over mobile devices, but the selection is limited and most channels can't be viewed outside the home.

Francis Shammo, Verizon's chief financial officer said Tuesday that the company is positioning itself to compete in "the whole mobile-first world in video."

Gerard Hallaren, an analyst with Janco Partners, said the acquisition prepares Verizon for the day when all TV signals are delivered via the Web, in what is come to be known as an "over the top" service like Netflix, Hulu or Amazon Instant Video.

Today, full pay TV service requires being in the service area of various cable TV or telecom providers. An "over the top" service would allow Verizon to provide a TV package to customers outside of its service area.

"The entire TV market five years from now will be 'over the top,' " Hallaren said. "Verizon is getting in fairly early here."

Intel started the division in 2011, with the idea of generating demand for Web-delivered video. Intel would benefit when companies used its chips to build data centers and make set-top boxes. But Intel would have faced a large expense to license channels from media companies and to get the service off the ground with marketing.

Selling the unit was seen as preferable to operating at a loss in the initial startup period. And the company would still benefit from data center demand even if the Web-delivered video service was operated by another company.

Verizon already has 5.3 million video customers and existing relationships with channel operators.

Verizon buying Intel Media to prepare for Web-based TV 01/21/14 [Last modified: Tuesday, January 21, 2014 7:33pm]
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