Verizon (NYSE: VZ) is aggressively moving forward with a streaming pay-TV service targeted to younger mobile video enthusiasts. This service will leverage the wireless giant's 4G cellular network, and Verizon will have to remove data caps from what it classifies as a "managed service" in order for its customers to use the offering.
The question: Can Verizon legitimately classify such a video product as managed service without running afoul of new Federal Communications Commission mandates?
"It would be a very provocative move," analyst Craig Moffett told Investors Business Daily. "I don't think the FCC would be pleased."
If the FCC were to have issues with Verizon's strategy, the wireless giant would seem to have company, with AT&T (NYSE: T) also preparing a streaming service that will rely heavily on its cellular network.
For its part, AT&T is building its service around an app-based sponsored-data model, whereby data charges are billed to a sponsoring company and not the customer. Analysts say this strategy appears to have less risk of running afoul of the FCC.
Verizon has hinted at a summer release for the new video service, which will target younger, mobile consumers with short-form video.
The company has been quiet about its programming deals for the new offering, but did announce a deal in March with DreamWorks Animation-owned AwesomenessTV, whereby the YouTube multichannel network will supply Verizon with 200 hours a year of short-form live-action and animated video content.
Last week, Verizon CFO Fran Shammo said the new video product might rely heavily on advertising.
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