Correct. It is all re-encoded and compressed and then sent out. In fact, the much lauded--but often not so great--PQ quality of OTA is in fact the result of a number of re-encodes and compression all along the chain: Jay Leno show encoded and compressed for uplink to sat for NBC stations; after down-linked at station, decoded, and then re-encoded and sent via microwave link to transmitter, and then re-encoded and compressed again for final stage to be muxed at resolution and bit rate of choice by local broadcaster (meaning lower than 1920-- as used by Dish--is accepted HDTV standard, and then the bit rate to accommodate other "sub-channels), and then finally received by your OTA or the FiOS headend. Then Fios (and cable) de-codes, then re-encodes and compresses, but full resolution, most likely, and at, again most likely, the highest bit rate compared to all other MVPD's, but compression is quite necessary for efficient use of bandwidth. As stated in an earlier post, FiOS superior PQ is due to Verizon FiOS not being bandwidth starved that they can RE-ENCODE and COMPRESS in full resolution and very high bit rate. If the original resolution is maintained and at a very high bit rate all along the chain, you would have a very hard time seeing much difference from what is sent out to stations and what you see on your TV. The problem today is that a lot of broadcasters sending out OTA suffer from the same cable and sat bandwidth starved problems because they have multiple channels on the same usable 19MHz bandwidth using MPEG 2. OUCH! Some even cram 2 HD channels on the OTA. But, they all suffer a noticeable loss with the common us of only 10MHz for the main HD channel, and at any of the 9 HDTV standard resolutions and at a considerable bit rate loss.
Also, FiOS is Fiber to the Home (FTTH or FTTP for Fiber to the Premises), and upon arrival at the home, it is then "converted" (the closest word for time constraints) to QAM for distribution throughout the home, but preserves the outstanding PQ. On the other hand, it is AT&T Uverse that is Fiber to the Node, then using the more bandwidth limited copper to the home that would be inferior PQ compared to FiOS which more approximates Harshness's response about "jams it through" to refer to the process getting it to your home, but that is closer to the AT&T Uverse approach, not FiOS.
Yes, Verizon PQ can't be beat among MVPD's. In my case, the bundled service would cost me MORE, not less. I do like Dish a lot, but Verizon is the only service I could gladly move to.