FIOS just installed a few days ago. Local channels appear full screen, but most don't, such as ESPN. Even with 16:9 ratio turned OFF, the top and bottom 2 inches of the tv screen are blacked out. This makes the picture quite small. This didn't happen with Comcast cable, from whom I switched. The installer couldn't figure it out - he said it was probably the tv. That seems unlikely to me.
Any ideas on how to remedy this?
In the Menu under Settings, TV. HD Overide, there are additional settings. Verizon provides the picture as recieved. If it is letterbox, that is what you will see. Even if you have 4:3 set for your screen size. You may still need to make some other adjustments. I had the same TV as you at 34" in size. I believe it is stretch, or Pan and scan you are looking for. If you adjust these settings, remember you will be croping the sides if it is widescreen content. Perhaps others can add more.
If you try to watch an HD channel on an SD TV, you will get the letterbox style image as the box downsizes the image to allow a 720p/1080i image to fit on a 480i resolution. Make sure you are watching the SD version of any channels and see if that changes the behavior (SD channels are typically those below channel 500 on the box).
Since this was installed two days ago and Verizon doesn't distribute SD STB's anymore -- everything's HD except for the terminal adapters, are we sure about that?
OP ... are you running with one of the small terminal adapters (no menu or guide available, etc.) or a standard STB? What is the model number of the STB you have?