Verizon, Comcast team on mobile video in six U.S. markets

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Verizon Wireless (NYSE:VZ) and Comcast will offer each other's communications and entertainment services in six new U.S. markets: Chicago, Atlanta, Colorado, Kansas City, Mo., Minneapolis/St. Paul and Salt Lake City.

Verizon and Comcast began their joint marketing effort in the Portland, Ore., San Francisco and Seattle markets earlier this year. Verizon sells Comcast's Xfinity products in its stores, while Comcast offers Verizon Wireless services through its call centers and online sites. The partnership encompasses video as well as voice, Internet and wireless efforts; the companies also offer a variety of discounts and incentives.

In December Verizon agreed to pay $3.9 billion for the nationwide AWS spectrum licenses held by SpectrumCo, a joint venture of Comcast, Time Warner Cable and Bright House Networks. Separately, Verizon said it will buy Cox Communication's 20 MHz of AWS spectrum covering 28 million POPs for $315 million. The deals include the option of Verizon reselling cable services and cable companies reselling Verizon service. Verizon is awaiting approval of the deal from the FCC and the Department of Justice.

In late March, Verizon Communications CEO Lowell McAdam said the company would launch a new video service enabling cable subscribers to view programming on their mobile devices if regulators approve the spectrum purchase. Speaking to The Wall Street Journal, McAdam said Verizon would offer an "integrated" mobile video service available to its FiOS television subscribers as well as its Verizon Wireless customers and consumers served by the three cable companies. "We could have something out that would be the beginnings of an integrated offering in time for the holidays," McAdam said.

While existing mobile streaming offerings like Comcast's Xfinity TV application enable Apple (NASDAQ:AAPL) iOS and Google (NASDAQ:GOOG) Android device users to view cable programming within the home, McAdam suggests the proposed Verizon service would offer subscribers greater flexibility. "Most content providers realize that the number of channels and the layout that you have within your home may not be appropriate for the mobile environment, and those discussions are just beginning now," he said.

McAdam added that some content providers "have come to us and have said, 'We are willing to do an à la carte approach here.'" Content providers have historically resisted à la carte pricing, arguing that it would kill some cable channels and drive up the costs of more popular networks. McAdam said he believes that as mobile video evolves, "customers will eventually win out," stating that Verizon isn't "the ones" pushing the existing bundles.

Last week, Time Warner Cable COO Rob Marcus told analysts that the company is more focused on innovations that rely on Verizon's wireless network and Time Warner Cable broadband technology than on bundled discounts. Multiscreen video distribution is expected to be a major focus:  In February, Time Warner Cable CEO Glenn Britt won a patent in February for a method for giving viewers "virtual" ownership of movies, eliminating the need for physical media such as DVDs.

Growing user satisfaction with mobile TV consumption on tablets will push the average monthly viewing time to 186 minutes by 2014, according to a recent forecast issued by Juniper Research. The number of users consuming streaming mobile TV services on smartphones is expected to increase 2.8 times between 2011 and 2016.

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