from: Xchange Magazine [1]

Verizon Details FiOS Local Programming Plans

By Bob Wallace
Posted on: 04/18/2007

Verizon executives detailed at NAB 2007 the company’s strategy for providing local programming as part of its FiOS triple-play bundle, just weeks after it launched its first channel in Washington, D.C.

While a clear-cut ROI-based business model for its local programming is not clear and wasn’t part of the discussion, the IPTV pioneer sees local programming as a differentiating feature, that when done correctly can increase customers’ loyalty to the evolving FiOS offering.

The company plans to add local channels in an unspecified number of metro DMAs throughout 2007 and 2008, but would not say where. FiOS 1 in Washington launched March 31.

“It’s not a local news channel as has been reported, but a local content channel that we developed to help reduce customer churn,” said Michelle Webb, executive producer and general manager for FiOS 1 Local Channel for Verizon Services. “It’s a mix of regional traffic and weather, original programming, local sports coverage and local news.”

Verizon’s strategy here was to partner with Rosenbloom & Associates to recruit and train citizen journalists on Sony cameras and editing software to produce a required 22 minutes of content a day which Verizon has final editorial oversight on, explained Webb. “We’re not in the business of staffing up local TV stations,” she said.

Questions did arise from the audiences as to whether Verizon’s local effort would overlap and or compete with current local TV programming.

“We will enter markets where we believe our effort will not be duplicative,” said Joseph Ambeault, director of interactive applications for FiOS at Verizon. “It’s not in our plan to become content producers as a core business.” However, the company believes the Washington, D.C., market was underserved with local content.

In response, Verizon cut a deal with Georgetown University to show its athletic events and also plans to show area high school sports, including football games. The original programming will include human interest stories, video following amateur athletes before and after their games and staying longer after important events than, say, a “Primetime” or “60 Minutes,” which Webb worked for before Verizon.

While many service providers are investing in local ad insertion technology with local content in an effort to give small businesses an affordable means to advertise to a focused audience, Verizon launched FiOS 1 without it and has no immediate plans to add it, according to the two execs.

Asked to comment on the business case, or lack thereof, for local content through FiOS 1 channels, Ambeault replied: “We’re not making any special, specific efforts to FiOS,” he said of advertising. “You have to remember though, that this local content has a dramatically lower cost structure as traditional programming. It’s dramatically lower and it’s a way for citizens to have a voice in local television.”

Whether local network affiliates of broadcasters’ networks raise issues with this innovative effort remains to be seen. It may not be a flashpoint as long as local FiOS advertising stays on the sideline. But launching local channels for IPTV service programming is no easy proposition, according to Webb, who said the company has encountered heavy competition from regional sports networks in trying to land rights for college sports programming in Washington and with a project in process in Florida.

After watching a promotional video of FiOS 1 programming, Kurt Scherf, vice-president and principal analyst with Parks Associates, a market research and analysis firm, said, “Local content has come a long way from ‘Wayne’s World.’”

Given the value of local content, some are betting that it will fast find its way to service providers’ video-on-demand libraries.

“VoD is viewed as a differentiator, one that first and foremost moves forward personalized TV,” said Tom Rosenstein, vice-president of business development for SeaChange International Inc., a maker of VoD systems for telcos and cable operators.

Rosenstein sees VoD as a means for Verizon to cash in on revenue opportunities from local programming. “I see a reported $5 billion in local advertising morphing from linear to targeted ads on VoD,” he said.

Webb said Verizon plans to take this programming across three screens, adding wireless devices and PCs but did not say when this platform flexibility would be rolled out to FiOS TV subscribers.

Verizon Communications Inc. www.verizon.com