The announcement that Verizon would buy Intel's Media unit was a surprise to no one. The telecom giant had been rumored to be interested in the acquisition for some time after Intel started quietly looking for a new home for the 2-year-old unit that it built, but never used.
The sale gets one more distraction out of Intel's way, allowing the chip giant to focus on hardware, while also giving Verizon the means to distribute the vast quantities of content that it has available for its FiOS network.
FiOS is Verizon's bundle of Internet access, television and telephone services that is analogous to AT&T's U-verse package. The deal means that Verizon gets the intellectual property and technology for Intel's OnCue service, as well as the 350 employees now working for Intel.
The OnCue system enables "Over the Top" program distribution, which allows customers to see the content anywhere, not just in Verizon's service area, according to a statement by Intel CEO Brian Krzanich that the company released with the announcement.
When it gets access to the technology, Verizon will have the network capacity and content access it needs to rapidly scale up OnCue. This as well as other recent Verizon acquisitions will allow Verizon to jump into television content delivery quickly—far more quickly than Intel could have accomplished on its own.
Perhaps equally important, the OnCue acquisition gives Verizon a way to work its way out of the pricing wars instigated by T-Mobile over the past few weeks. The other two major carriers are struggling to keep up with the fourth largest carrier in the United States as T-Mobile delivers on its "uncarrier" promise by lowering rates and increasing service flexibility. Both AT&T and Sprint have begun offering plans that compete directly with T-Mobile, but it's the latter that's growing the fastest.
Verizon has clearly decided not to fight that battle in the wireless wars. While Verizon does offer some low-cost and prepaid plans, the company has not gone after T-Mobile. But by sticking with its existing plans, Verizon has increased the monthly revenue per customer. Continuing to improve the revenue picture requires that Verizon provide extra value, and the OnCue television service is just the sort of value that fits into Verizon's plans.
Verizon appears to be making an end run around the T-Mobile-inspired race to the bottom of the pricing structure. While the scrappy No. 4 is getting all of the attention, Verizon is quietly moving to play its own game.