The Wall Street Journal yesterday reported that Verizon could create and deploy a digital video service that could rival Netflix or Hulu. Quoting Verizon chief executive officer Lowell McAdam, the Journal reported “the carrier has much of the technology ready to launch the service and is nearing agreements with major content companies, which until recently were more skeptical of licensing content for delivery over the Internet. The need to connect with millennials who want to view TV shows and movies over the Internet is changing the tone of the discussions.”
The Journal also reported that Verizon has been receiving an increasingly warm attitude from content providers to the idea of supplying content for over the Internet consumption.
Content would be delivered from major broadcasters and live sporting events to smartphones via a technology called “multicasting.” Muticasting avoids congesting the network because it allows the carrier to broadcast content over a single stream of airwaves that consumers can tune into.
In addition, the Journal reports that Verizon is open to expanding FiOS into more markets.
Net neutrality advocates may decide to raise red flags and voice concerns about Verizon potentially throttling the speed of a Netflix or Hulu in order to better promote the mobile broadband provider’s own video service.
The view may be buttressed by allegations made earlier this summer that Verizon was throttling Netflix’s speed and that this throttling forced Netflix to enter an agreement with Verizon that ironically provide Netflix’s video service.
Even without rules in place, the Commission may attempt to use the authority it has under section 706 of the Telecommunications Act of 1996 to investigate claims that net neutrality principles were violated.
In the end investors should view this potential regulatory overhang as a speed bump down the road toward competition in the video-over-the-internet market.