Widgets promise to be an increasingly hot area for service providers offering advanced video services. These customized applications have been bringing personalized content such as local traffic and weather to the television screens of AT&T U-verse and Verizon FiOS customers for several years. But today’s largely text-based applications are just the beginning. More sophisticated applications are coming soon—and not just from the two telecom giants.

Samsung already has launched a stand-alone television set that supports several widgets based on a new software platform from a partnership between Yahoo and Intel. Among other things, the product provides customized news, weather, and financial information, as well as enabling end users to view photographs on their television screens using the Flickr platform.

“Things that are personalized to you can be carried forward by your Yahoo ID,” explained Russ Schaefer, Yahoo’s senior director of product marketing for Connected TV. Users also can follow their eBay watch lists from the television screen, he said.

The platform can support profiles for as many as eight different family members, and each person can select 15 widgets for easy control through the remote control. A key role for Yahoo will be to host and manage a widget gallery, from which end users can select widgets and view new widgets.

At a price of around $2000, the Samsung product won’t be hitting the mainstream overnight. But as with any consumer electronics product, prices eventually should come down and when they do, it raises the question of whether consumers really need a video service provider.

A look at the impressive list of partners that Yahoo/Intel has assembled provides a hint of things to come. Partners include everyone from Amazon to CBS to Netflix, all of whom are presumably developing additional widget functionality. Service providers aren’t out of the picture yet, though. Cable operator Comcast also has joined the partnership.

“Their chief technology officer said this is a platform that allows for rapid development and deployment of services that might take a long time for a cable company to develop,” noted Schaefer. Comcast expects to begin testing a widget offering in 2009.

Meanwhile, widget pioneers continue to expand their lineup. Verizon soon expects to launch a widget that enables end users to search for video content from the service provider’s content library and from the Internet for display on their FiOS screens. The company declined to provide details about the service, but it most likely pulls content only from certain Internet sites, thereby avoiding material that many viewers would consider inappropriate.

The widget holds the promise of enabling end users to, at any time, find something they would enjoy watching. Recently a surprising number of Verizon customers testing the software used it to bring a recent Bollywood awards show from India to their FiOS screens. The event was not broadcast on any cable channels in the U.S. But thanks to Verizon’s widget, customers were able to find the awards show on the Internet and view it with their friends or family from the comfort of their couch or recliner.

Verizon recently began testing two new widgets that interface with popular Twitter and Facebook web sites with a limited group of customers. The Facebook application enables users to view content friends have posted, including photos, on the television screen. The Twitter application displays user feeds during a television show so viewers can see friends’ commentary about the show.

The application is somewhat limited in its functionality, in part because the remote control has no easy way to type messages. As Joe Ambeault, Verizon’ s director of product development for consumer TV, explained, “It’s a read-only experience. You can only send your status.” In other words, friends will know you’re watching, and you can see what they’re saying, but you can’t share comments of your own.

Eventually Ambeault envisions what he calls a “two-swim lane road map” that would include a more sophisticated remote control as an option. “We’re hard at work looking at free space, accelerometer type of experiences,” he said.

But he doesn’t believe everyone will want those options. For “some time,” the company expects to offer a remote control with four arrows and an “OK” button. The goal, he said, “is to navigate the entire [application] without looking down if you keep your hands on ‘OK’ and the arrows.”

Customers already are using Verizon widgets “millions of times a day,” said Ambeault. “The most heavy traffic time is right before morning rush hour and right after evening rush hour,” he said—an unsurprising result, considering the company’s current emphasis on traffic, weather and news.

Moving forward, Verizon—like the Intel/Yahoo partnership—hopes to rely more on partners to develop widget functionality. “We want to turn a handful of widgets into thousands,” Ambeault said.

In April, Verizon invited what Ambeault called “Ring Two FiOS TV partners—companies that we have existing commercial relationships with” to develop widgets based on Verizon’s platform. In the future, he expects to see more widgets coming from that community of developers.

As for the Intel/Yahoo partnership and the threat of video cord cutting, Ambeault said, “We’re leaning forward and being very aggressive and making sure customers don’t need those other capabilities because they’re already getting them through FiOS.”

He also expects Verizon to differentiate its offering based on the quality of the connection. “Bringing fiber to the home positions us better than anyone else,” he said. “We’re bringing the Internet and television experience together in a sensible way. Our goal would be that all you see is more content. It’s not degraded because you moved off traditional TV and into the Internet domain. We don’t have an hourglass or a ‘please wait.’ Everything responds within milliseconds to customers’ requests. We believe that’s going to be the differentiator. One thing we know is that the consumer would rather have ugly and fast than slow and pretty.”

Connectivity within the Internet also can contribute to the quality of FiOS connections, Ambeault said. “In a lot of cases, content provider web sites have peering points in the same room that FiOS runs through,” he explained. “By eliminating hops, there are less hops from your server. Those are the kinds of things we will do behind the scenes. It’s good network engineering.”

The threat from widget-equipped stand-alone televisions could be coming sooner than many would expect, according to The Diffusion Group, a research firm that has a focus on interactive television. Widgets could be standard on mid-range television sets by the holiday season of 2011, said Michael Greeson, president of The Diffusion Group.

Greeson believes the Intel/Yahoo partnership may have an edge over service providers like Verizon in generating new widget applications. “Verizon doesn’t have the developer relationships that Yahoo does,” said Greeson. As a result, he believes Verizon ultimately may opt to open FiOS to the Intel/Yahoo platform.

The Diffusion Group also has another prediction that could be good news for service providers. Although widgets to date have been free of charge, he believes that could change—for the most compelling applications, at least. “If you give people the applications they want, they will pay for it,” said Greeson. “Operators could make money with the right widget.”