Under intense pressure in one of its two key businesses, licensing, Qualcomm needs to create new revenue and growth streams. These could help cushion the blow of potential decline in IPR fees, or even an enforced spin-off of the licensing business. One of its brightest hopes lies in its MediaFLO mobile television arm, but to have a meaningful impact on Qualcomm’s future revenues, rather than being primarily a way to drive uptake of Qualcomm technologies, it needs to broaden its horizons rapidly. Seemingly aware of this, the unit is examining new and more flexible business models that could be replicated around the world, and is moving towards a hybrid broadcast/on-demand business, starting in Asia.
MediaFLO has the US market all but sewn up, having secured the contracts to supply mobile television services to both Verizon Wireless and AT&T, the largest cellcos. Although winning a non-traditional customer, the GSM/UMTS-based AT&T, was a significant endorsement for Qualcomm’s move beyond its CDMA space, outside its home territory, it faces far greater challenges to establish MediaFLO and fight off rival mobile TV standards such as DVB-H. In particular, it suffered a blow recently when the European Union stated its preference for DVB-H, a Nokia-driven standard, and said it would be prepared to mandate this technology.
Outside North America, east Asia has been the scene of previous Qualcomm triumphs, and it is looking to that region again, with new deals in Taiwan and Malaysia. However, the company will be hard pressed to copy its US model on a wide basis ‘ at home, it has acquired national 700MHz spectrum and built its own MediaFLO network, which it uses to run services on behalf of its customers. But this is a capital intensive approach, and dependent on the availability of vacant spectrum. In other countries, it is more likely to form partnerships with existing operators or spectrum owners, which would then run MediaFLO on its behalf.
Speaking at a conference in Taiwan last month, Qualcomm executives called for the creation of a new MediaFLO service operator (MFSO) in the country, and in others, that would be ‘directly responsible for acquiring spectrum, working with regulatory agencies, wireless operators and content providers to launch a nationwide MediaFLO service’. However, the company admitted this could be a joint venture or even an independent entity, with no direct Qualcomm financing, but licensing the brand and technology. All these models have been used in the past by the CDMA giant, for instance in the CDMA450 market.
MediaFLO spokespeople told journalists at RCRnews last week that they were looking for local partnerships, starting in Taiwan. ‘Rather than purchasing spectrum and establishing a subsidiary like MediaFLO in the United States, we are looking to partner with local companies in Taiwan who are in the best position to deploy mobile TV services based on MediaFLO.’ On a wider geographical basis, concentrating on the technology and leaving partners to sort out the business model, content alliances and pricing will enable MediaFLO to expand more rapidly, and compensate for any shortage of understanding of local market variations.
Taiwan is currently seen by the company as the blueprint for other regions, although MediaFLO also scored success in Malaysia, with a deal with Maxis Communications and Astrol All Asia Networks to conduct a technical trial of MediaFLO in capital Kuala Lumpur, featuring 25 live content channels provided by Astro and delivered in an 8MHz UHF channel. The trial will also include clipcasts. Maxis already offers 20 channels of 3G-based television and has been the focus of DVB-H trials in the region. This will be a straight fight between DVB-H and MediaFLO and if it overcomes DVB-H trials, it would be a first win in a country that is committed to offering DVB-T digital terrestrial TV services and a huge set back in the region for Nokia’s ambition, which had threatened a clean sweep here.
The DVB-H trial, which also involved Astro as well as Maxis, was run on Rohde and Schwarz transmitters an offered just 4 TV channels. But it has access to an 8MHz signal (rather than the 6MHz signal in the US) and that means that more like 25 channels are possible in both DVB-H and MediaFLO. It is noticeable that Qualcomm buddies Samsung and LG Electronics were the providers of the handsets for the DVB-H trial and as prominent members of the FLO Forum could easily have influenced the potential switch in technology.
The accelerated moves to broaden MediaFLO’s footprint, geographically and in service terms, is being supported by a change of management. Less than six months after commercial launch, the public face of the mobile TV company, Dan Novak, VP of programming and advertising, has left to take up a corporate marketing role in the parent company. His role has been a vital one, since he managed content and advertising deals with programmers and TV networks, as well as being the main public exponent of the MediaFLO message in the run-up to launch. His change of role seems to reinforce the idea that, outside the US, MediaFLO will pursue a very different business model that will be less reliant on negotiating content and other alliances itself.