Digital Media

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.

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."

Verizon Communications reached a deal with labor unions representing 65,000 employees, averting a strike that could have disrupted its operations across its Northeastern and Mid-Atlantic territories.

The company on Sunday reached tentative agreements with the Communications Workers of America, which represents some 50,000 Verizon technicians and the Electrical Workers union, which represents about 15,000 of Verizon's affected workers.

The new contracts, which have been shortened from five years to three years, include wage increases that total 10.5 percent over the next three years. As part of the deal, Verizon will transfer more than 600 positions in its business division to the landline group, and it will make 900 temporary workers permanent workers in the landline group. The changes will result in more than 2,500 Verizon employees now becoming union members, The Wall Street Journal reported.

The deal must now be ratified by the unions' membership.

One of the major stumbling blocks of the negotiations was over health care costs. The unions and Verizon agreed to change the way they pay for future retirees who start working at the company after August 2. Verizon agreed to continue paying premiums for active and already retired employees. But the company will contribute a fixed dollar amount for workers hired after August 2, depending on how long they've worked for the company.

The unions had threatened to strike Monday at 12:01 a.m. Talks were extended last weekend after the workers' five-year contract had expired. A strike could have affected the deployment of Verizon's Fios, fiber-to-the-home network.

The broadband war between cable and phone companies could get bloodier as these companies aggressively try to steal customers from each other.

Comcast, the largest cable operator in the U.S., said Wednesday that it is still adding new subscribers for its high speed Internet and telephony services, but that growth is slowing as broadband penetration levels plateau and economic concerns ripple through its business.

Judging from the earnings announcements from Comcast, Verizon and AT&T, adding new broadband customers is getting more tough as many people already subscribe to either cable or DSL. As a result, cable operators and phone companies are battling each other head to head to steal customers from one another.

In the second quarter, Comcast may have edged out slightly ahead of its phone competitors. During the second quarter, Comcast added 278,000 high-speed Internet subscribers and 555,000 new phone customers. This is good news considering that Verizon only added 54,000 new DSL customers and AT&T added only 46,000 DSL subscribers.

Comcast officials said on the company's conference call that about two-thirds of its new broadband customers had switched from DSL. And about one-fifth of these customers are signing up for the triple play bundle.

But some of this good news is tainted by the fact that its adding fewer customers than it did a year ago. For example, in the second quarter Comcast added about 18 percent fewer broadband customers than it did a year ago. And it added 21 percent fewer telephony subscribers compared to year ago.

What's more, Verizon and AT&T are making headway with their TV services. Verizon reported it added 187,000 new Fios Internet customers in the second quarter and 176,000 Fios TV customers. AT&T added 170,000 U-Verse TV subscribers, but it didn't break out the number of U-Verse broadband additions.

Meanwhile, Comcast lost 138,000 basic video subscribers during the quarter. But it added 320,000 digital cable subscribers. So subtracting out the 138,000 basic video subscribers it lost, Comcast had a net video addition of 182,000 subscribers.

So it appears that Comcast is neck-in-neck with its telephone rivals when it comes to video. And Verizon appears to be making significant headway in the broadband market with its Fios service. But with the economy in trouble and 90 percent of active Internet users connecting via broadband, these companies are going to rely more heavily on promotional pricing to entice customers to switch.

As a consumer, this is great. We benefit from good deals offered by the different operators. But it's also frustrating. I recently asked representatives from Verizon to give me a sense of what I could expect if I signed up for the triple play Fios package in New York City after the $95 a month promotion ends in a year. Currently, I pay about $150 a month for Time Warner Cable TV and Internet service and Vonage voice service. And if the Verizon package jumps to the same price, I'd likely consider switching back to Time Warner if I could get a better deal.

But when I asked the Verizon representative about this, he was evasive in answering my question. I'm hoping that living in a competitive market like New York City will mean that prices from both cable and phone providers will continue to come down.