Verizon to Beta-Test Redbox Streaming Service in January
Redbox Instant by Verizon will beta test with 100,000 of the telco’s broadband customers in January, with a goal of starting the video streaming service by late Q1 or early Q2, CEO Lowell McAdams told us at the UBS investor conference in New York. Redbox Instant by Verizon, a joint venture between the telco and Coinstar, had planned to start in the second half of this year (CD Feb 7 p5), which the video-rental provider later said would be this quarter (CED April 30 p5). McAdams conceded Tuesday that “little glitches” in software were found during a 60-day internal test this fall that needed to be corrected.
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The beta test in January is designed to “shake out any kinks that are left in the process, but as of right now we are feeling very good about it because it opens up a whole new market when you take LTE outside the FiOS footprint,” McAdams said. Verizon owns 65 percent of the joint venture. Redbox parent Coinstar controls the remainder.
Verizon’s focus will be on delivering Redbox Instant to its FiOS customers, including 4.6 million video subscribers, and smartphones, followed by a possible tie back to Coinstar’s Redbox kiosks, McAdams said. Verizon also has 5.2 million FiOS Internet customers. Redbox Instant will give Verizon a service to counter cable operators’ “TV Everywhere” strategy, McAdams said. TV Everywhere, which Verizon participates in, is where cable programmers including those owned by Time Warner Inc. (http://xrl.us/bn4tug), stream programming that can be seen by broadband subscribers also buying pay-TV packages that include those linear channels. Redbox Instant is expected carry a subscription fee and will rely heavily on Verizon’s 4G LTE network that’s available to about 419 U.S. markets covering 250 million people, analysts have said. The LTE network covers more than 80 percent of the U.S. population, and Verizon expects to have fully deployed 4G across its 3G network in 2013, the company has said.
Verizon wants to make sure “whatever content you can get on FiOS you also get on wireless” through Redbox Instant, McAdams said. “We obviously have to work through all the content issues and we don’t dictate that,” but if content providers “want to play we will take them on,” he said: “We are going to continue to use Redbox kiosks, but I'm not sure that’s an integral part” of the streaming service.
Verizon also will move to make Redbox Instant available to smart TVs, McAdams said. Verizon first discussed a video streaming service for smart TVs with Samsung two years ago, McAdams told us. “We are cautiously optimistic” about Rebox Instant “because until you are up and running six months or so, you don’t know how to judge it,” McAdams said. “But it gives us a platform we can build on going forward if the over-the-top plays become far more relevant across the country."
Verizon, having spent $3.9 billion this year buying advanced wireless spectrum from Cox Communications and the SpectrumCo venture of cable operators including Comcast and Time Warner Cable, has no immediate interest in further acquisitions, including Dish Network’s 2 GHz spectrum, McAdams said. “I don’t know where Charlie Ergen’s head is at right now, but he can be a player” in wireless “if he wants to be,” McAdams said of Dish’s chairman. “Right now, we wouldn’t have an interest in that spectrum."
Verizon has sold some “smaller licenses” for its 700 MHz lower A and B block spectrum, which has garnered “lot of interest,” McAdams said. The carrier will decide in January whether to continue to sell licenses or keep the spectrum to expand its 4G network, he said. Verizon announced plans in April to sell the spectrum, which it acquired as part of a FCC auction in 2008. Verizon also has installed activation systems in its stores for Comcast as part of its agreement last year with Bright House Networks, Comcast, Cox Communications and Time Warner Cable to resell respective services. Verizon and the cable companies signed a Justice Department consent decree earlier this year modifying terms of the pacts, and expects to “ramp up” the venture in 2013, McAdams said. Aside from Cox, the cable companies also have formed a technology joint venture with Verizon to integrate wireline and wireless products, the carrier has said.
While analysts have speculated that Verizon Communications may consider buying up some of partner Vodafone’s 45 percent of Verizon Wireless, McAdams declined direct comment. Verizon Communications owns 55 percent of the venture, and Vodafone’s financial struggles in Europe have led to speculation about a possible change in 12-year-old partnership.
"Vodafone has been a very good partner for us and we have great relationships on many levels of the business,” McAdams said. “I enjoy learning from them about global trends and we partner where it makes sense, but we don’t force the issue. Right now they have their hands full with Europe and other places and I don’t see it ratcheting up.”