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Verizon dangles mobile video as hook for its cable deal

The carrier is hoping the promise of better video content on its mobile phones will get regulators to approve its pending spectrum and cross-selling deal with cable providers.

Lowell McAdam at an event last year. The Verizon CEO is making the case for regulators to approve the company's deal with cable providers.
Sarah Tew/CNET

Verizon's new argument to regulators on its cable deal: give us the OK and we'll start offering better mobile video.

CEO Lowell McAdam is eager to win regulatory approval for Verizon's cross-selling and spectrum deal with several cable providers. One such benefit would be pay-TV subscribers getting access to more mobile video, the Wall Street Journal reported. Lowell said the integrated service would be available to cable subscribers or customers of its own Fios TV service.

Verizon and the cable companies are in the midst of defending a $3.9 billion deal that would send a valuable swath of spectrum to the telecommunications company. As part of the deal, Verizon has agreed to sell services from Comcast, Time Warner Cable, Bright House Networks, and Cox Communications. As with the attempted merger between AT&T and T-Mobile, the partnership faces scrutiny from consumer advocacy groups and regulators who fear it is anticompetitive.

In defending the deal recently, Verizon and Comcast noted that Verizon wasn't giving up on its home TV service and that the partnership signaled no merger. Verizon has also said the spectrum will be badly needed, as the telco warned that it would face capacity issues next year.

If the deal is approved, McAdam said a service could be launched by the end of the year.

What's unclear is how Verizon's integrated service would work or differentiate itself from some of the services already out in the market. Apps such as HBOGo and MaxGo are already available for smartphones and tablets. While the apps are free to use, they require a pay-TV subscription to use.

But mobile video remains in its infancy, and a deeper partnership between the cable providers and Verizon could jump-start the area.

McAdam even talked about the notion of customers picking and choosing video content, rather than paying for expensive bundles, which is largely what the cable TV model is built upon. Still, cable companies and their content partners have long preferred to stick with the bundling strategy, which generates the most revenue and demand from consumers.