I assume you have a Motorola NIM -- typically a small black box -- which you received with your FiOS data install?
I believe he wanted to install the updated firmware on the D-Link for QoS services. As you probably know, Verizon uses an IPTV system for VOD. They also use IP for the guide information. The data for these services is retrieved from your ethernet connection, via your router. It works something like this:
1) The TV STB or DVR requests guide information or a VOD program stream.
2) This request goes out over coax to the Motorola NIM.
3) At the NIM, the request is "converted" into a network request over CAT5 and is sent to your D-Link router.
4) The Motorola STB and DVR is a device on your network; it gets assigned an IP address by your D-Link router.
5) Your D-Link router sends the data for the guide or VOD program stream to the NIM, which puts it back on the coax line to the Motorola STB / DVR.
Without QoS services on the router, the VOD program stream could be affected by other network activity, such as P2P. Imagine if a customer were transferring a number of large files on their PC, and VOD playback on their TV became jerky as a result? The customer wouldn't like that very much. I don't think this TV data eats into your bandwidth, but it certainly does consume some processing power on your router. If you were using all of your router's available connections or processing power on P2P (lots of PC connections/downloads), you wouldn't get guide information quickly and VOD wouldn't work very well.
Because you have that Motorola NIM, you can use any router you want. You probably got that NIM when they previously installed FiOS Internet service. New FiOS installs in most areas do not include a Motorola NIM; instead, they use a specially designed router from Actiontec. This Actiontec router includes the NIM referenced above. Obviously, you cannot replace the Actiontec if you don't have a a separate NIM installed because then you would have no way to get program information or VOD.
Later this year, Verizon will begin upgrading its system from BPON to GPON , increasing its downstream to 2.4Gbps and upstream to 1.2Gbps, up from the current 622Mbps shared by 32 users. When they upgrade a customer to use the new GPON network, they will install a new ONT outside your home that can communicate in both directions with the Actiontec router, which has built-in MoCA (networking over Coax cable). With this future setup, Verizon will no longer have to run a line of CAT5 (Ethernet) into customer's homes -- only one coax run to the Actiontec router will be needed.
Why do you care? Well, one of the services slated for this new GPON network is HDTV VOD. Think all HBO VOD, Cinemax VOD, etc replaced with high-def versions. That's what the upgrade to the GPON network will enable. The Actiontec router I referenced earlier includes an Intel 450Mhz processor and robust QoS capability to provide for ~20Mbps HD VOD streams, a significant increase from the ~4MBps VOD streams now. Such HD VOD streams would probably bring many current consumer routers to their knees, but the Actiontec is built to handle it.
Has anyone run into the same situation? Is your On Demand working with FiOS TV on none D-Link or Actiontech router? Are there any Linksys firmwares that address this issue?
To summarize, the router you use doesn't matter so long as they didn't remove your Motorola NIM (a small black box) when installing TV service. The firmware upgrade isn't a big deal, just recognize that you could potentially have playback issues on SD VOD if you are stressing your router with file transfers at the same time. I wouldn't worry about HD VOD, because Verizon will upgrade the ONT outside and install an Actiontec router when that is available.