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The Great White Hope of Mobile TV

Picture the scene. 3GSM 2006 and there's murder on the showfloor. It's the USA's MediaFLO versus Europe's DVB-H in the broadcast mobile TV platform war to end all platform wars. Bloodied and bruised, Qualcomm, in the MediaFLO corner, sure wasn't going to lose another technology holy war to Nokia, on the opposing flank. At least that's how the media reported it. The mobile operators, meanwhile, were set to roll-out mobile TV as the Great White Hope that would save them from the commoditisation of voice and text, and ever falling ARPU.

Amid all the excitement of this intense competition - who had the more profitable business model, clearest picture, most capacity - it is arguable that the industry lost sight of the real difficulties of rolling out broadcast mobile TV. More than three years on and mobile TV has failed to fullfil those outlandish expectations, being commercially deployed in just a smattering of territories globally. Has the experiment failed and what's next for the industry?

Mobile TV isn't new of course - network operators had always envisioned using the extra bandwidth of 3G technology to deliver video. Indeed, companies such as MobiTV and ROK enabled operators worldwide to deliver both excellent programming and high user penetration in the early part of the century. But delivering video to the masses over the cell network comes at a cost - it is expensive per bit to deliver and (potentially) clogs up the network with video traffic. The new concept was to deliver endless live video - or TV - without impacting on network performance, and in a more cost effective way by broadcasting it much in the same way that television has been for a century.

Over the subsequent years a number of rival broadcast technologies were developed to solve this perceived problem. Early solutions, deployed in Japan and South Korea, included ISDB-T and two flavours of DMB. In Asia millions of early adopters took to watching their favourite shows on two inch screens, at average resolution, with patchy reception and unacceptably long buffering while switching channels. And while impressive user penetration rates looked promising at first glance, a deeper dive into the economics of mobile TV showed a loss-making, state subsidised model. Indeed, the story of mobile TV to date is not one of commercially successful, mass market roll outs.

In Europe, the DVB-H project, backed by its principal champion Nokia, launched a wave of user trials across the continent and further afield. DVB-H, which is a hand-held derivation of the commonly used terrestrial 'digital video broadcast' TV standard, seemingly had the backing of the entire industry. The results were positive too - users wanted mobile TV, and they wanted it now, with 72% of trialists saying they'd pay for a commercial service in the next year. It's a pattern that was repeated in three years of user trials.

There were commercial deployments too - first in Italy, where commercia broadcaster Mediaset bought a tranche of spectrum and launched a service with Telecom Italia Mobile (TIM) and Vodafone Italia in 2006. Meanwhile, 3 Italia claims to have signed up more than 600,000 DVB-H users on a part free-to-air, part pay TV model despite anecdotal evidence or poor indoor coverage and a limited range of available handsets.

But there were huge problems. In Finland, home of Nokia, for example, the commercial roll-out of DVB-H was delayed because of arguments about the commercial rights for re-broadcasting TV content on mobile. Not only was the failure an embarrassment on its doorstep, but it was a fatal flaw in the vertical business model developed by Nokia for free-to-air DVB-H based services, according to those in opposition to the Finnish behemoth.

In the USA there was the roll-out of the aforementioned MediaFLO technology from Qualcomm, via its MediaFLO USA (MUI) subsidiary and backed by $800m of the company's money. First Verizon Wireless and then AT&T Mobility launched commercial pay TV services off the back of MUI's wholesale service.

The market for mobile TV in the USA was clarified by regulator FCC's decision to auction spectrum from the 'digital dividend' - where spectrum is released as analogue services convert to digital - for mobile TV in the lower 700MHz UHF band. The 'technology neutral' auction meant that the San Diego chipset giant was able to buy a swathe of nationwide spectrum for just a few million dollars in 2005. The company then doubled its spectrum holding in 2008, for a considerably greater sum, although since more spectrum equals more services, the economics of the purchase would seem to work.

The picture in Europe is far less clear, however, with a fragmented spectrum market no nearer to the pan-European harmonisaiton that many feel is necessary for widespread commercial adoption of mobile TV services. While some regulators, such as OFCOM in the UK, have advocated auctioning digital dividend UHF spectrum (the band which exhibits the best coverage and propagation properties, therefore the most commercially attractive) on a technology neutral basis, others, including the European Commission, have pushed hard for a single Europe-wide technology. Indeed, the Commission's threat to mandate DVB-H was all but carried through when the technology was adopted as the "preferred" choice, seemingly at the behest of Commissioner Viviane Reding. The argument being that the adoption of a single technology would accelerate the development of the mobile TV market by removing fragmentation and lowering costs. But it's a move that would appear to have had little commercial impact to date, with Qualcomm having bought 40Mhz of L-Band spectrum at recent UK auctions anyway. A win that many predict will lead to the roll-out of MediaFLO in the UK in partnership with BSkyB.

Taken as a whole, the global mobile TV market has stagnated, with commercial deployment hampered by arguments over spectrum allocation, technology deployment, regulation and content rights. First it was the 2006 World Cup, then the 2008 Beijing Olympics that were supposed to stimulate the market and drive consumer adoption. It hasn't happened. But while spectrum remains the biggest roadblock in Europe, many in the industry will gather at Mobile World Congress 2009, and and ask whether the Verizon and AT&T deployments have garnered the mass consumer interest that suggests mobile TV is commercially viable in the long term. Cynics might ask why overall user numbers have never been disclosed; the industry is still betting on a hope.

Posted by Ed Barker on September 23, 2008 at 1:03 PM