Verizon to buy Intel Media, Intel's start-up internet service

Verizon Communications yesterday confirmed reports that it would buy Intel's struggling start-up internet TV service, Intel Media, in a bid to deliver video over both its Fios bundled fibre-optic home broadband service and its 4G wireless.

The announcement of the deal came as Verizon, the second-largest US telecommunications group announced fourth-quarter results that exceeded expectations, driven by the continued growth of its mobile operations, as it continued to expand its subscriber base even against fierce competition.

The company also announced that its $130-billion acquisition of the 45-per cent stake in Verizon Wireless that it did not already own, from the UK's Vodafone group, would close on 21 February, potentially clearing the decks for rival AT&T to bid for the remaining Vodafone assets.

Though the actual value of the transaction in the Intel Media deal was not disclosed Financial Times quoted people close to the negotiations over the purchase, which includes the OnCue Cloud TV technology developed by Intel Media, as indicating that it could be worth up to about $500 million.

The chipmaker had earlier announced plans to launch a ''competitively priced'' internet-based TV service by the end of 2013, but ran into problems with agreements it needed with content providers. Verizon, however, already has extensive video content relationships through its FiOS TV operations.

Telecommunications operators around the world are looking at new revenue streams with traditional income sources, including voice calls, have coming under intense pressure IDG News Service reports.

The growth of online video seems to have appealed to Verizon, as this was the third related acquisition since the middle of November, the report said.

Though the terms of the deal were not disclosed, according to Verizon it was expected to close early in the first quarter.

With the deal, Verizon would get the intellectual property rights and other assets that powered Intel's OnCue Cloud TV platform, IDG News Service reports. The deal also includes about 350 employees and once the transaction was concluded Verizon would integrate IP-based TV services with FiOS video, it said.

Verizon's ultimate goal is to allow subscribers to watch content on any type of device over both fixed and mobile networks. Verizon added, that it also wanted to improve search and delivery features.

The telecom operator had in December acquired EdgeCast Networks and the assets of upLynk in November.

With the EdgeCast acquisition, Verizon gets a content delivery network, a global network of servers that can be deployed to handle traffic spikes, stream content to thousands of viewers concurrently, or secure websites from attacks, according to EdgeCast.

According to Verizon, the technology from upLynk simplifies the process of uploading and encoding live, linear and on-demand video content, according to Verizon.