Verizon Buys A Chunk of Intel

April 1, 2014
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Now that Christmas and the Super Bowl are done, NCAA March Madness looms and the close of the European soccer season in May and then the World Cup in July. In between are gaps. Time enough to do your comparison shopping for a new HDTV and its various accouterments, or, if you’re a media big shot, take that cable money that’s burning a hole in your giant pockets and purchase a digital TV division, or two, or three.

Verizon, which already offers cable television subscriptions through its FiOS Service, has diverted its hungry eagle eye toward a number of hardware offerings. First comes the purchase of Intel’s digital TV division, Intel Media. Included in this humane takeover are job-offer letters to every single one of the unit’s 350 employees.

Lowell McAdam
Lowell McAdam at Fortune Brainstorm TECH 201. Image by Stuart Isett/Fortune Brainstorm TECH

“Why so ‘humane’?” Many techno pundits are asking. Well, actually it’s pretty logical because of the meeting of minds that’s been going on between Verizon‘s CEO Lowell McAdam and Intel’s chairman-in-waiting, Brian Krzanich, the inventor of the X86 microprocessors found in most personal computers. Intel Corporation combines advanced chip design capability with a leading-edge manufacturing proficiency that is the envy of the industry. Although Intel was originally known to, primarily, engineers and technologists, its “Intel Inside” advertising campaign of the 1990s made its Pentium processors a household name.

Over the short term, in their current broadband package, Verizon-branded set-top boxes – like Apple’s Apple TV, or the new Roku box – are part and parcel of their FiOS subscription and the public have already signed up and are ready and waiting for more/better service. The department Verizon acquires is responsible for Intel Media’s OnCue, a forthcoming service/set-top box combination which bundles together live TV and premium content like on-demand films. The early word is that the broadband speed and ease of use of its channel guide will enable the company to go toe-to-toe with the likes of Comcast and possibly eviscerate A.T.&T‘s Universe division. More to the point, the Intel purchase gives them a big lift in hardware development.

Verizon Wireless provides mobile phone, text messages, and data services for phones, tablets, and computers, as well as numerous Hotspot wireless devices.

According to the Christian Science Monitor, they had 101.2m wireless connections, and its 4G LTE network covered over 303m people in a September 2013 survey. Credited for having the highest network quality amongst national providers across all six geographic regions of the U.S., Verizon then announced their purchase of the remaining stake they had yet to purchase from the former European broadcasting heavyweight Vodafone for US$130bn. The third largest corporate deal ever signed. Consequently, Verizon’s FiOS Service provides fiber optic cable, Internet, television, and phone services to an area where 18m possible subscribers live, with 14.6m service-ready.

Subsequently, Verizon announced that FiOS TV subscribers could watch television channels live on their mobile devices. Troubling to those who are paranoid about media monopolies, however, is that in areas where Verizon has installed FiOS service, the copper wires, which are more expensive to maintain, are removed, preventing unhappy customers who have switched to FiOS from switching back to DSL services.

Love him or hate him for being a monopolist oligarch, Verizon’s CEO, Lowell McAdam, has been a mover and shaker in communications since he began working as a customer service representative at Pacific Bell in 1983. McAdam has a vision.

“Fifty-six percent of American adults have smartphones that give them access to mobile broadband data video,” McAdam wrote in an op-ed piece for the New York Times. “Our country is the center of a booming mobile ecosystem in which new devices and applications are being used to do everything from personal health monitoring and e-commerce to tracking deliveries and saving energy. The United States built its lead (Over Europe and Asia) because companies invested nearly $1.2 trillion, over 17 years, to deploy next-generation broadband networks.”

Verizon, it seems, is here to stay. Until the next takeover.

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