Digital Media

Customers of Verizon Communications who pirate music files may soon receive an unwelcome letter from the company.

Verizon, the second-largest phone company in the United States, is expected to begin issuing "copyright notices" on behalf of the Recording Industry Association of America to those accused of illegally downloading songs from the Web, according to sources with knowledge of the agreement.

The sources, who asked for anonymity, said Verizon's letter campaign is part of a test, which is expected to begin on Thursday. Jonathan Lamy, an RIAA spokesman, confirmed the existence of the test but declined further comment.

The move is significant for the music industry because among Internet service providers, Verizon has typically been among the most reluctant to intervene in copyright cases on behalf of entertainment companies.

"We recognize the importance of copyright and the need to enforce those copyrights," a Verizon spokesman said in a statement to CNET. "Without that enforcement, intellectual property won't be generated at all. At the same time, it's important for our customers to be assured that they won't have their privacy rights trampled."

The letter the RIAA will send to Verizon, and will likely be forwarded to customers, is similar to those issued in the past by other ISPs, such as AT&T, Comcast, and Cox Communications. The RIAA's letter has typically notified customers that they have been accused of illegally sharing songs and informed them that such activity is illegal.

In the letter, the user is advised to delete the content they distribute. It's important to note that not included in the letter are threats of service termination or interruptions, or any talk of a "graduated response." That's the term the RIAA uses to describe a deterrent program whereby an ISP gradually ratchets up penalties or warnings to suspected file sharers.

Last December, the RIAA announced that it would no longer seek to file new lawsuits against individuals accused of illegal file sharing. Instead, the trade group representing the four largest music labels would try to convince ISPs to adopt a graduated-response program. While some companies, such as Cox, have said they will terminate service for chronic copyright violators, most ISPs have shied away from suggesting service termination.

More importantly, in the 11 months since the RIAA dropped the filing of lawsuits on a widespread basis, not a single ISP has acknowledged a formal agreement with the RIAA.

As for Verizon, it appears that the company is expanding the antipiracy relationships it has with the entertainment sector. In past years, as many of its competitors began to lock arms with entertainment companies, Verizon appeared to hold back. Verizon fought the RIAA when the group went to court to force the ISP to turn over the name of an alleged copyright violator.

Verizon also opposed antipiracy legislation important to the film and music sectors.

Verizon's attitude toward antipiracy seemed to change in 2005, when the company quietly agreed to forward notices to suspected illegal file sharers on behalf of Disney. In exchange, Verizon received the rights to transmit 12 of Disney's TV channels over its broadband network.

Several other ISPs have recently begun forwarding copyright notices on behalf of the film studios, according to the sources who spoke to CNET. It's not yet clear which other ISPs are involved.

Early on Monday, we learned that the new Verizon Droid does, indeed, swap "semi-functional, giggling-brat-vanity for a bare knuckle bucket of does."

Now, we have the visual evidence. It's evidence a defense attorney would rather enjoy.

The Droid is, apparently, not a smartphone at all. It is a robotphone, according to Verizon's latest TV ad. Yes, it punches its way through steel walls and crushes rocks. Which, I believe, is known in English classes as poetry.

The lyrical content is only heightened when the giggling-brat-vanity words are uttered by an announcer who sounds like he had a previous career as an enforcer with one of the Gambino bambinos.

As the contempt drips from his lips, we see various iPhone-like devices all blinged out in pinks and purples and sequins. They look like purses.

And the subtext, which is about as covert as a right cross from an inebriated wedding crasher, is that the Droid is for boys and the iPhone is for fans of "Project Runway" and "The Real Housewives of Orange County."

Yes, your Droid is your Mixed Martial Arts-lovin', bone-crushin' robot that's going to turn you into a man. And that's what all boys want, right?

The always-impressive Boy Genius Report has gotten its hands on a copy of Verizon and Google's newest commercial for the Droid. The commercial's called Stealth, and it's rather amazing, even though it doesn't tell us much about the Motorola handset that's set to drop Friday.

Mysterious and well-shot, the commercial should start running on TV this week, according to BGR. We're guessing you'll see it first during Tuesday night's premiere of "V" on ABC, or maybe during the World Series. With something this high budget you'd expect Verizon to put it in front of as many eyes as possible. We'll be watching the skies on 11/6.

TiVo said Wednesday that it is suing AT&T and Verizon over three DVR patents. The complaints seek damages and a permanent injunction.

Simply put, TiVo is pursuing the same legal playbook it followed against Dish/EchoStar. The patents in question include 6,233,389, 7,529,465 and 7,493,015.

TiVo recently won another legal victory against EchoStar, which was found in contempt of court in its legal spat. TiVo won $103 million in damages, but the case will have another hearing in November or so. EchoStar appeals continue. Meanwhile, the U.S. Patent and Trademark Office is reviewing TiVo's patents at Echostar's request.

In a statement, TiVo CEO Tom Rogers said:

We will continue to pursue enforcement where necessary to stop infringement of our intellectual property.

On a conference call, Rogers noted that TiVo was still going to generate value through partnerships and distribution deals, but wanted investors to recognized the company's intellectual property portfolio.

The lawsuits against AT&T and Verizon come as TiVo reported a fiscal second quarter net loss of $2.9 million, or 3 cents a share, compared with a profit of 3 cents a share a year ago. The company reported revenue of $57.3 million, down from $65.2 million a year ago. Wall Street was expecting a loss of 5 cents a share.

Rogers called the quarter "solid" since the company delivered adjusted EBITDA of $5.2 million. TiVo said it has been focused on distribution via the likes of RCN and Best Buy. The company also said DVR rollouts with Comcast and DirecTV are on track.

Updated August 27: to correct amount of quarterly net loss.

Verizon is opening its Widget Bazaar up to third-party developers to create a richer application store for its Fios TV service.

(Credit: Verizon Communications)

Verizon Communications is about to open up its new Widget Bazaar to third-party developers to create an "app store" for its Fios TV service in a move that could forever change how people watch TV.

Verizon first announced the Widget Bazaar just a couple of weeks ago. Initially, the company described it as a storefront for new widgets or applications developed by Verizon partners for its Fios TV customers. At the time, Verizon executives downplayed the possibility of a sprawling Widget Bazaar teeming with thousands of applications developed by third parties.

Twitter widget for Fios TV.

(Credit: Verizon Communications)

But now Verizon is making it clear that the company has much bigger ambitions for the Fios TV app store, which includes opening its APIs and software development kit to third-party software developers. It also plans to create a process for approving those applications. And like the VCast app store, which was announced last week for new wireless applications, Verizon plans to allow developers to charge for their applications, and it will provide hooks into the company's billing systems so that developers can charge for their applications.

"From the beginning we said we wanted Fios to be a platform for innovation," Verizon CIO Shaygan Kheradpir said. "So we are not limiting innovation to any particular circle of developers. But we are taking things one step at a time. And we will start with applications from our partners, and then we'll move toward opening it up to third-party developers."

Details of how applications will be approved haven't been revealed, but it's likely the business arrangement for the Widget Bazaar will be similar to that of the newly announced VCast app store, which means that developers will likely keep 70 percent of revenue from their applications, while giving 30 percent to Verizon. This is the same ratio Apple uses in divvying up revenue for its popular iTunes App Store.

Kheradpir said Verizon will provide more details in the fourth quarter when it makes the Widget Bazaar developer SDK available.

Enhancing TV viewing
The first two applications created for the new Widget Bazaar were for the social-networking applications, Twitter and Facebook. Kheradpir wouldn't share usage numbers, but he said he has been surprised by the quick uptake in usage over the past couple of weeks. And already the company is evolving the applications based on subscriber feedback. For example, when the widgets launched, Fios TV subscribers were only able to read and access only basic information through the Twitter and Facebook services. But as of this past weekend, users are now able to post updates both on Twitter and Facebook.

Even as the company adds more functionality to the existing Widget services, Kheradpir said the company is being careful not to re-create the Web experience on the TV. This is a lesson that Verizon and others marching down the IPTV path have learned from Microsoft's early WebTV efforts in the late 1990s.

WebTV, which came with a keyboard, allowed people to surf the Net on their TVs. But Kheradpir argued that "surfing" isn't exactly what people want to do when they're sitting in front of their TVs.

"People don't necessarily want a full browser on their TV," he explained. "TV viewing is still very much a sitting back experience. And what people really want is a service that is relevant to the TV viewing experience and also provides a simple interface with one click access."

Kheradpir said that Verizon is not trying to completely change the act of watching TV, but instead the company is looking to enhance the TV viewing experience. He thinks that Verizon can do this by providing interactive applications that are contextually relevant to users and the media they are consuming.

This means allowing Twitter subscribes to view in real time Tweets about the TV shows or live events they're watching. The way it works is that the screen is split into two sections. And on one side a small window plays the video, while on the other side of the screen, the tweets fill up the screen.

On a personal note, Kheradpir said he found that linking Twitter to his Fios TV service actually improved his experience of watching the Academy Awards. The new Fios TV Twitter widget was being beta tested when the live awards ceremony aired in February.

"Awards shows like the Oscars can be really boring," he said. "But when I could watch it with the live Twitter feed, it was really funny. When Danny Boyle (director of the award winning movie "Slumdog Millionaire") took the stage, everyone started Tweeting, "Why is Rudy Guiliani up there?' I hadn't thought about it, but then I realized he does look a lot like Guiliani. It was really funny."

Kheradpir, who says he now relies on Twitter for breaking news updates, also said that Twitter on Fios allows people to be engaged in the discussion right from their couch. Instead of viewers being talked at by newscasters and others on TV, they can now contribute to the dialogue and discussion. And if their views are insightful, the Twitter community rewards them by re-tweeting their comments.

It shouldn't come as a big surprise that people would want to be more engaged while watching TV. Over the past decade since the Microsoft WebTV experiment came and went, the Internet itself has turned into a much more interactive medium. News stories posted on the Web encourage reader feedback with "Talk Back" sections. People have created their own blogs to share their views. User-generated video sites like YouTube have exploded. And now social-networking platforms like Facebook and Twitter allow people to easily link to other items on the Web and share their views on various topics.

And as people become increasingly more mobile, these tools have moved to cell phones, allowing people to remain engaged and interact with one another on the go.

But Kheradpir also believes that creating new applications for the TV is also about leveraging the big, expensive flat-screen HDTVs that people have in their living rooms. And he believes that for many people, sharing their digital content on the biggest screen they own makes sense.

"I've been shocked at the number of Fios TV subscribers who are streaming pictures from their Facebook pages onto their TVs in the past two weeks," he said. "But it's obvious when you think about why people want to look at pictures from Facebook on the living room screen. It is the biggest and best screen in the house."

Kheradpir added that these screens are the most underutilized technology in the home today. And he is probably right. With many digital cameras offering picture quality of 10 megapixels or more, it makes sense to view those photos on the largest screen possible.

For more than a year, Verizon has been offering Fios TV subscribers the ability to access their digital pictures and music stored on home PCs on TVs anywhere in the house. But now the company is allowing subscribers to also view their home videos on TVs throughout the home. And they will soon be able to attach any device with an SD memory card, like a digital camera or a cell phone, to also view and share pictures, video, and music throughout the home.

Verizon will offer an online simulator to allow developers to test their Widget Bazaar applications.

(Credit: Verizon Communications)

Using these basic capabilities in the Fios TV platform, Kheradpir said he envisions developers creating all kinds of new applications. For example, he said a new application could be created that allows people to stream Internet radio while syncing a picture slide show from a laptop or BlackBerry phone.

Kheradpir said the opportunity for developers to create new applications that take advantage of these capabilities is huge. As of the end of the second quarter of 2009, Verizon reported it had more than 2.5 million Verizon Fios TV subscribers. And because most people have multiple TVs in their home, this translates to about 8 million TV screens that developers can access through their applications, he said.

While he couldn't provide too many details since the SDK won't be available until later this year, he did say that Verizon has already created a Web site, code.verizon.com, where developers can go to share ideas and offer suggestions. It will be through this Web site that the SDK will be released, and it will also be the place where developers can submit their applications for approval on the Widget Bazaar.

He also said that the company plans to offer an online simulator to allow developers unable to access the Fios service because they're not located in Verizon's Fios territory to test their applications.

While Verizon's cable competitors are also leveraging their IP networks to offer new services to their subscribers, so far, no one else has opened its network to third party software developers. Still, Verizon is by no means the only company dabbling in widgets for the TV.

The most well-known competitor in this areas is Yahoo with its TV Widgets platform. Yahoo has partnered with HDTV and Blu-ray player manufactures to get its widget technology embedded in the hardware. Some of the manufacturers it's working with include LG, Samsung, Sony and Vizio. Using these TVs or Blu-ray players, users can get access to content from Netflix, Twitter, and Flickr through the Yahoo TV Widgets.

But Kheradpir doesn't seem worried about Yahoo or others who embed technology into consumer electronics products. He said that Verizon's value is in offering its subscribers a total solution.

"Our job is to make it as easy as possible for consumers to consume the applications or services they want to use," he said. "We make it simple."

NEW YORK--As Verizon Communications looks for ways to differentiate itself from its cable and satellite TV competitors, the phone company is adding new social-networking widgets as part of a broader plan to create a Widget Bazaar for its Fios TV service.

The Widget Bazaar is essentially a scaled down version of the increasingly popular wireless application stores that are hitting the market these days. Unlike the virtual application stores being developed for wireless handsets, Verizon's Widget Bazaar will not be open to a wide range of developers, and the company will retain complete control over what applications are in the Bazaar.

Instead Verizon will provide its software development kit only to a select group of developers, and the applications will be tested and verified for use. So instead of thousands of apps available for download, Fios TV customers will likely eventually see hundreds of lighter-weight widget apps, said Shawn Strickland, vice president of video solutions for Verizon Communications.

The idea behind the Widget Bazaar is to give TV viewers more ways to engage with the TV content they view. And it will offer advertisers, marketers and content owners another way to connect with viewers.

"We are not trying to re-create the PC experience on the TV," Strickland said during a demonstration of the new features at Verizon's headquarters in Manhattan. "We're trying to enhance the TV viewing experience."

Verizon has already been offering some widgets as part of its Fios TV service. The company first launched these one-click Internet-based applications to provide news headlines and weather to its TV viewers. Then it added widgets to allow viewers to see what other people in their vicinity are viewing and to help them discover popular TV shows.

Now the company is adding widgets for the popular social-networking Web sites Twitter and Facebook. At least initially, each of these applications will only allow users to read and access information. Posting new information will be very limited in the first version of the widgets, Strickland said. This means that users will be able to read updates on Twitter and Facebook, but they won't be able to update their accounts from their TVs.

In its first version the Twitter widget will offer a more generic Twitter experience. Subscribers won't be able to access their individual Twitter accounts. Instead they will be able to see tweets from the entire Twitter community based on either a category or topic they've selected or based upon what they're currently watching on TV. The way it works is that the screen is split into two sections. And on one side a small window plays the video, while on the other side of the screen, the tweets fill up the screen.

Verizon executives demonstrate the Fios TV Twitter Widget.

(Credit: Marguerite Reardon/CNET )

The Twitter feed could come in handy while watching a live event, like a baseball game or the presidential inauguration, Strickland said. For example, if a Fios TV subscriber is watching the Yankees baseball game, he can continue watching the game while also following a Twitter feed about the game or the team.

Because the Twitter feed comes from the entire Twitter community, it's not necessary for viewers to even have their own Twitter account. Eventually, Fios TV subscribers will be able to access their own Twitter accounts to tailor the tweets they view from the Fios TV service.

The Facebook widget works in a similar way. Fios TV viewers can continue watching a TV show while accessing their Facebook account on the other half of the screen. When in the Facebook application, Fios TV subscribers can view status updates, photos, and other posted items from their friends or from their own page. Since the application allows pictures to be blown up on a big screen TV, Strickland believes that sharing pictures with friends and family from Facebook will become one of the primary uses of the Facebook Widget.

Verizon demonstrates its Fios TV Facebook Widget.

(Credit: Marguerite Reardon/CNET )

Unlike the Twitter Widget, which doesn't allow any updates or posts from the TV, the Facebook widget allows users to update their status based on what they are watching on TV. But other updates aren't possible in this first version of the software.

Strickland emphasized again that Verizon is not trying to replicate the Facebook experience from the Web on the TV. But he said that other features and functions will be added down the road. For example, in its first release, the Facebook Widget only allows one user account to be accessed per set-top box. In a few weeks, the application will allow multiple Facebook members to view their profiles and their friends' profiles from a single set-top box.

"We are not trying to re-create Facebook or Twitter for the TV," he said. "Viewers don't want to take time out from their TV. But we are trying to bring these social-networking applications to the mass market in a way that enhances their TV experience."

These two new widgets are just the beginning of what Verizon plans to do with the Widget Bazaar and the Fios TV service in general. The company also plans to add online video viewing to the Fios TV service. Later this month, Fios TV subscribers will be able to search for and view videos from sites such as DailyMotion.com, Veho, and BlipTV. These videos are mostly user-generated or are from independent sources. While Verizon has plans to strike more deals with other online video providers, Strickland said it's unlikely the company will add access to produced content from sites like Hulu.com or from Netflix's video-on-demand service.

Most of the new widgets that will be released will be automatically pushed to subscribers' set-top boxes. And they will come at no extra charge to customers. But some widgets, mostly games, will cost additional money. Verizon already offers some casual games for free as part of the Fios TV service, and they have been a huge success with many subscribers playing the game for an average of 45 minutes each.

One of the main reasons why applications such Facebook and Twitter will initially be consumption-based is because Verizon still hasn't come up with a really good way to provide textual input into the TV experience. Strickland said the company is considering a variety of options for allowing people to input information and interact with the service. One possibility is using smartphones.

"A lot of people are already using smartphones with our wireless service," he said. "The device has been paid for and subsidized already, so it makes sense to use it for other things. I think this adds more functionality at a lower cost than developing an advanced remote control. "

Strickland said that Fios TV customers should expect to see new widgets coming online all the time. The company has greatly reduced the amount of time it takes to develop and roll out the new applications. And it's preparing to introduce a whole slew of new ones in the future. Some widgets to expect in the future include more games as well as widgets developed by programmers and ones to help enhance other online experiences. For example, MTV may want to create a widget to highlight the top song or music video of the day. And Verizon could also offer an online music video widget to stream services like Pandora to the TV.

Verizon's latest enhancements and the emergence of its Widget Bazaar come as the company turns up the heat on its cable TV and satellite TV competitors. While cable has made some technical strides lately to increase bandwidth and functionality, Verizon increasingly is adding more Internet-focused functionality to its service. Strickland believes this is the advantage that the company's all-fiber network has over its competitors. Because it has near limitless bandwidth, it has the capacity to offer advanced interactive services.

Verizon will begin rolling out the new Facebook and Twitter widgets on Wednesday morning in markets in six states including New York, New Jersey, Maryland, Virginia, Pennsylvania, and Texas. The rest of the Verizon Fios TV markets will get the update starting Thursday. Subscribers will not need to do anything. The updates will come automatically to their set-top boxes.

(Credit: Dong Ngo/CNET)

If you want to quickly buy a phone, or just check out what AT&T and Verizon Wireless have to offer, it just got a little more convenient.

Amazon announced Thursday its beta launch of AmazonWireless, a new Web site that offers cell phones and service plans from, for now, AT&T and Verizon Wireless. The online store features Amazon-style shopping, without the rebate hassles that cell phone carriers are notorious for, and free two-day shipping on a large selection of phones.

During this beta-testing phase, Amazon plans to expand the selection of phones and services as well as add carriers. It will also be testing features and gathering input from customers.

According to Paul Ryder, Amazon's vice president of consumer electronics, AmazonWireless is designed for both existing cell phone customers who want to upgrade and those who want start a cell phone service.

AmazonWireless currently offers more than 120 phones, including a large selection of high-end smartphones, as well as the latest budget models. Customers can use their existing Amazon accounts to upgrade their phones or shop by carrier, phone feature, price, color, and brand. You'll also find other familiar Amazon features, such as bestseller lists, product descriptions, and customer reviews.

It's important to note that not every phone offered by the carriers is listed. For example, I checked for the iPhone 3GS just now and it wasn't even mentioned.

Instead of a bloody price war between cable operators and phone companies in the TV market, battle lines are now being drawn over who has the most compelling new features.

Digital video recorders, on-demand services, and more recently Web sites such as Hulu.com have taught people that they don't have to be beholden to a TV schedule. But the TV industry is about to be shaken up even more as phone companies and cable operators, which are all vying for your viewing eyeballs, add new features to their services to lure customers.

So what's it mean for you, the consumer? Well, it's not likely to mean lower prices on the services you already buy. Verizon Communications has already started moderately increasing the price of its service bundle for new customers. But what it's likely to mean is that consumers will get a lot more bang for their buck. When it comes to TV, that means a lot more access to the shows and movies you like, when you want to watch them, and on any device you want to view them on. At least that's the promise.

Whether the dream lives up to the expectation is another story. While some of these new services are being rolled out as we speak, some are still being tested and aren't quite fully baked. But at the very least the revolution is quietly under way and TV viewing could be a whole lot different in just a few short years.

"I think what we (Verizon and AT&T) are doing is pressuring the rest of the market to respond," said Shawn Strickland, vice president of Fios product management for Verizon Communications. "So Comcast can't just respond to what we are doing in a single market, but they have to respond to AT&T too and it drives innovation in the entire market."

For years, not much had changed in terms of the TV viewing experience. Programmers would highlight their popular shows and vie for top ratings in Nielsen surveys. And viewers would sit back and enjoy their favorite shows. Aside for some competition from satellite providers, for the most part, the cable industry had enjoyed a near monopoly on the TV market. That is until the phone companies came along with their dreams of marrying Internet technology to the TV.

Who would have thought just a few years ago that it would take the old stodgy phone companies to stir things up in TV? But that is exactly what's happened as AT&T has entered the TV market with its U-verse service and Verizon Communications has taken on cable operators with its Fios service.

In just a few short years, these phone companies have gone from playing catch up to their rival cable providers, to actually leading the industry in terms of innovation with new interactive services that leverage their Internet-based networks.

But the cable industry hasn't sat idly. The major players in the market, namely Comcast and Time Warner Cable, have been upgrading their networks to add more capacity both to their Internet services and to their video services. And they've been forging ahead with new digital video recording features and video on demand content. Now, they are about to take the biggest plunge yet into the uncharted territory of online on-demand access to TV shows and movies.

For consumers these new services will soon offer broader access to more content, on more screens and at times that are convenient for viewers and not TV programmers. And thanks to the wonders of the Internet, consumers will also be able to interact with what they're watching.

More interactivity for viewers
For the phone companies, the future of TV is also about deepening the experience and providing more interactivity for viewers. For Verizon's Fios customers this means being able to discover new shows by checking what is the most popular content being watched in their neighborhood. The company also offers sports and news widgets, and its working on social-networking applications that will integrate TV viewing with Twitter and Facebook.

For AT&T's U-verse customers it means taking a TV event and providing a deeper dive. During the PGA Masters golf and the March Madness NCAA basketball tournaments this spring, AT&T partnered with CBS Sports to provide Web-based applications to coincide with TV viewing (CNET News is owned by CBS.) During basketball games, statistics and scores were added to March Madness fans' online brackets so they could be viewed as the games were unfolding.

And Masters golf fans were able to view multiple video feeds on their TV screens to keep up with action at different points on the course. Viewers could also check the score board online to see how the leaders were shaping up. And this information wasn't just available online or on TV, but using an application for the iPhone, it was also available on mobile devices.

"With this kind of experience viewers start to have more control and a deeper engagement with the content," said Jeff Weber, vice president of video products for AT&T. "This is very clearly for customers who care about these types of events, but it gives them an opportunity to be engaged in a way they couldn't before."

But Weber also acknowledged that viewers were primarily interested in watching these sporting events. And he said there was a fine line between balancing the deeper richer experience with not interfering with the primary activity of TV viewing.

"At the end of the day, the killer application is still watching TV," he said. "So we needed to deliver ESPN with as good a quality or better than the cable companies into the living room. But now that we have done that, we are pushing ahead to make it a much richer experience for the consumer."

Verizon's Strickland said adding interactivity to the TV viewing experience also increases the opportunity for advertisers. And it offers a new way to monetize the TV viewing experience.

"The TV is the best entertainment storefront out there," he said. "People spend an average of six hours a day in front of the TV. And interactivity with that audience provides a lot of opportunity to advertisers."

This aspect of the new television age may or may not appeal to consumers. But the truth is that providing TV service and creating content is expensive. And as more people gravitate toward watching recorded TV shows and skipping advertising or even viewing video on demand content, TV providers and the programmers that create the content need to find ways to make money to augment losses in the traditional business model.

Because the phone companies have built their networks using IP technology, they've been able to push the envelope in terms of interactive features. And in the case of Verizon, its fiber architecture has also given it a considerable amount of bandwidth capacity to push the envelope in terms of on-demand services. As a result, today Verizon is offering more than 100 channels of high-definition content. And it's able to match cable competitors in terms of video on demand services.

Cable upgrades
But the cable companies haven't been sitting on their hands for the past few years. They've been upgrading their networks and innovating too. Comcast already has Docsis 3.0 technology, which greatly increases broadband speeds and network capacity, in at least a dozen markets. Time Warner Cable was one of the first companies to introduce its start-over solution that allows viewers to start a TV show from the beginning if they come into the show late and haven't recorded it.

But the boldest move by the cable companies is about to get off the ground. Leveraging existing relationships with TV programmers, cable is striking deals to put more video content online. The popularity of Web sites such as Hulu.com, which offers mostly broadcast TV shows for free online after they air, along with other free online video programming, has spurred the cable companies into action.

Time Warner Cable has been trialing a service with HBO that allows people in Milwaukee to watch on-demand HBO TV shows and movies on their laptops. And now Comcast and Time Warner, the media conglomerate and former parent company of Time Warner Cable, are working together to test a new authentication system for accessing Turner Broadcasting content from TNT and TBS.

On Wednesday Comcast and Time Warner announced their new plan to provide authentication to securely distribute video online to cable subscribers. The companies highlighted the importance of allowing their viewers to access content, which they've already paid for via a cable subscription, from anywhere, anytime and on any device.

"This a very logical next step in the evolution of TV," said Brian Roberts, CEO of Comcast during a press conference Wednesday in New York. "Comcast alone has had 12 billion on-demand streams. iTunes has had about 6 billion downloads. This is how consumers want to get their content."

Jeff Bewkes, CEO of Time Warner agreed. "Consumers have spoken," he said. Bewkes added that putting video online for viewers to watch anytime they want on any device will greatly expand the audience and actually provide more revenue opportunity for advertisers. He used HBO as a perfect example. He said that when the company decided to add HBO content on demand for free that viewership went up and people were able to follow more shows. He said he is willing to work with any TV provider to make the Time Warner content available elsewhere.

While it's important to give people a choice in where and when they watch something, Bewkes also noted that the most important thing is simply providing access to the content.

"There has been so much focus on broadband," he said. "But don't miss the importance of the video on demand aspect. Whether its over a set top box or broadband, it will have a dramatic increase in audience."

Time Warner Cable took a hit from a weak economy and growing competition from phone companies in the fourth quarter as subscriber growth slowed.

Time Warner Cable, the second largest cable operator in the U.S. behind Comcast, met financial expectations on Wednesday for the fourth quarter, but it added fewer subscribers during the quarter.

CEO Glenn Britt cited a weak economy and growing competition from phone companies AT&T and Verizon Communications.

The cable operator only gained about 49,000 new lines for a total of 34.2 million during the quarter. And basic video subscriptions decreased by 197,000, to 13.1 million. This drop was attributed to customers ending their service, but was also due to the fact that Time Warner Cable sold some properties.

Even though the company saw subscriptions slow and even decline in some areas, it still managed to increase its revenue, mostly due to higher prices. In video, it increased revenue by about 4 percent to $2.65 billion. Revenue for its high-speed data service also increased 11 percent, to $1.08 billion. And voice revenue increased 29 percent, to $435 million.

Meanwhile, Verizon Communications, which competes head-to-head with Time Warner in several markets, including New York City, had its best quarter yet in terms of signing up new Fios broadband and TV subscribers. For the fourth quarter, Verizon added 303,000 Fios TV customers and 282,000 Fios Internet customers. Verizon ended the year with 1.9 million Fios customers, doubling its base in 2008.

AT&T, which also sells broadband and TV service, also had a strong quarter. It added a total of 264,000 new TV subscribers in the fourth quarter, up from 232,000 added in the third quarter of 2008. The company now has more than 1 million subscribers for this service.

AT&T's U-Verse broadband service also helped push growth in the company's IP data services. In total, AT&T grew its consumer IP data revenue, which includes broadband and AT&T U-Verse services, by 21.4 percent.

Time Warner Cable also wrote off a big portion of its investment in the high-speed wireless network being built by Clearwire. The company took a noncash impairment of about $367 million on its $550 million investment. The company expects to roll out wireless service with Clearwire in at least one city in 2009.

Meanwhile, Time Warner Cable's parent company, Time Warner, also reported a loss of $16.03 billion for the fourth quarter of 2008, compared with last year's profit of $1.03 billion. Much of the loss came from $24.2 billion in writedowns, a big portion of which came from the cable operator.