When we see sweeping proclamations on mobile TV by research companies it is inclined to make our blood boil. Arthur D Little this week tells us that there are four ways to improve broadcast mobile TV and goes on to list its findings.
We are all these days doing ‘free’ white papers about Mobile TV because the market for paid research in this sector has dried up as the fiction, not the reality, of mobile TV is touted constantly by the press. It’s a failure, that pretty much sums up every word that has been written about Mobile TV, mostly from dominant US publications, one of which look outside the US.
First off what are the four advice points of Arthur D Little (ADL)
The first one is that regulators need to set up tenders to ensure co-operation in otherwise competing mobile operators and broadcasters. In Japan and Korea (where only handset vendors make any money from mobile TV) that’s exactly what they did, result ~: disaster for operators.
In Italy, where 3 Italia has stolen half a million new customers from Vodafone and Telecom Italia there was no regulator involvement.
In France the regulator told them what programs to put on the service, and in Germany and France they have spent three years trying to get all sides to agree, only to see service launched delayed. So much for point one.
The next point is that users will not accept paying even €5 to €10 to get just 10-15 mobile TV channels. Well there are a million in Italy doing it, and then Austria and the Netherlands have both reached 90,000 customers within 6 months of launch. In a way we agree, that mass market deployment happens when you have some free channels, and then sell premium on top. KPN in the Netherlands has done that, and it works. However mass deployment of handsets only makes the handset makers rich. And in a subsidized economy (handsets are not subsidized in Korea or Japan) that enrichment is out of the pockets of the operators. Rapid mass market deployment of DVB-H phones would cost the operators a fortune and they should ONLY do it if it buys them customers, like 3 Italia. They MUST not do it if all operators have the same advantages. Because then all consumers (who loe mobile TV by the way) will ditch their handsets as soon as possible to get a DVB-H or other Mobile TV phone. You can slow this down by only putting it in key bundles that are higher up the range, and making contract customers upgrade slightly.
Was ADL giving this advice ‘ no sorry it was not there, instead it says they should push for lower costs.
When the handset transition is accelerated DVB-H phones will come out at low prices and the CPE is the most expensive part of any network. So they could just wait until India drives the creation of low cost DVB-H phones, or get a cheap ODM to build one for exclusive use.
ADL says the operator must improve the service quality with superior outdoor and indoor network coverage ‘ more cost. A clever network will put the channels to broadcast in urban centers and then shift them to streamed in rural environments at first to lower the cost impact of building the network. That’s what the regulator, if it gets involved at all, should facilitate.
And the key to this are things like ADL statements such as there being 18 million ISDB-T handsets in Japan, when there are in fat 40 million receivers operational there, or that Austria and the Netherlands have only sold a handful of devices, when 90,000 have shipped from one vendor in Austria and KPN in the Netherlands told us that it had shipped 45,000 in the first three months and that given that was 3 months ago, it has probably also reached 90,000 subs there.
If people can’t even add up statements made on press releases then they should not be in the prediction business and should keep away from Mobile TV.
So much so that we thought we would update Faultline customers on how the Mobile TV industry is doing, but not from the point of view of the US press that can only view MediaFLO as a failure and which have yet to see mass market uptake from systems like ATSC M/H, destined to hit the US market in early 2010. At least Faultline customers won’t then have to go out and acquire the ADL report or others like it.
In fact most observers in 2008 quietly wrote off the prospects for Mobile TV, and yet it is only local issues with business models, and the fact that in certain parts of the globe, Mobile Network Operators (MNOs) have other issues at the forefront of their agendas, which hold it back.
Inexorably broadcast Mobile TV is developing, and during 2008 we saw the cumulative delivery of specialist Mobile TV handsets leap to 59 million, where those handsets had to be specially built to receive a separate video signal. There is also a considerable resurgence of cellular streaming, as systems have upgraded to the H.264 codec, producing better video quality for any given bandwidth, and as bandwidth has broadened with the implementation of HSDPA layers around the UMTS world, and EV-DO among CDMA customers.
The reason for the impression that Mobile TV is ailing is because the US press can see no break in sight on their home soil, while in Europe there has been a catalog of disasters. Italy has long been held up as the European leader, and has been joined by a successful launch in the Netherlands and Austria ad less effective introductions in Switzerland and Finland (the Finnish system has been ready for years, but had copyright legal issues). Elsewhere in Europe the UK is stymied by the spectrum situation; France has a full scale war between MNOs and broadcasters over which is the correct business model to proceed with, while German operators initially lost interest in DVB-H after the license there was given to the broadcast based Mobile 3.0 and then returned to the regulator. We hear rumors that the German interest is being revisited, but will believe it when one of the cellular operators makes a bid for the spectrum. Right now we thig they may go the Arthur D Little route, do it co-operatively and end up with bo differentiation. Spain has also put off allocating available 700 MHz spectrum while after minor delays in Poland a license has been issued this week. There are other delays in other parts of central Europe and in south Africa after waiting for two years for the regulator to issue broadcasting spectrum for DVB-H, the regulator pulled the auction days prior to initial application deadlines for an indeterminate period, saying that digital switchover spectrum must be allocated first.
In the US MediaFLO has attracted perhaps 100,000 customers, perhaps 150,000, while waiting for its network to go national, which will bring it the full backing of both AT&T and Verizon Wireless marketing programs. MediaFLO is also planning to add more content we know this, but it is expensive content which requires up front payments, and it cannot do this until it is ready to trigger the full backing of the major MNOs. This is now delayed since Barack Obama’s administration put a 120 day moratorium on bidders taking up their spectrum rights after the recent US 700 MHz auctions.
This will set the stage for the US ATSC M/H standard to be completed, and for local broadcasters to begin transmitting free to air services and to ready early handsets and give a chance for the other parts of the broadcasting community’s Mobile TV eco-system to bear fruit. Both a renewed MediaFLO and the new ATSC M/H systems are likely to emerge in the US during 2009 (ATSC M/H is likely to be early 2010 ‘ and we expect as many as 500,000 ATSC M/H devices to ship inside the year), alongside other US operations including the in-car seat back services of ICO Communications (already launched), Sirius Satellite video services (launched last August but no numbers yet) and EchoStar, which plans to launch its own services during 2009. By year end the US might have 5 or 6 broadcast Mobile TV efforts, and even stronger cellular streaming packages than it has today. (See PDF version for full graphics).
But across the rest of the world, initially led by the 2005 and 2006 launches in Japan and Korea, broadcast Mobile TV has flourished, and from a base of 40 million handsets a year ago, it has reached 59 million and rising (See table). During the course of 2009 accumulated specialist handsets (and non-handset receiver) shipments for broadcast digital Mobile TV should reach almost 90 million devices as more countries turn on their various different broadcast technologies and begin recruiting customers. Around 30 million specialists devices should ship during 2009 alone. Not ba for a technology in decline that no-one believes in.
Japan has led this charge, and will still lead the bulk of this effort, with an anticipated further 20 million devices shipped during 2009, taking its ISDB-T handset penetration to 60 million devices. Today around 65% of high end handsets come with ISDB-T 1 seg tuners bundled (the mobile broadcast system is broadcast in one segment out of the 13 segments in a TV signal). Usage figures per viewer in Japan are already over 62 minutes a day and are still rising.
As such, the Japanese model is one that everyone is trying to emulate. However few companies can claim to have made any profit out of this system, despite its eco-system ‘ including advertising, and interactive m-commerce being substantially ahead of the rest of the world.
Broadcaster NHK is behind much of the original effort there, and now all other broadcasters, as well as all the MNOs, support 1 seg. The system there runs alongside a very high penetration level of existing streamed video over cellular, with both now using H.264 codecs, having started on less efficient compression.
There is no conditional access system on this service as it is free to air, and the TV channels mirror the local TV franchises, a little like the US with 47 local legal jurisdictions. Tokyo leads this with channels from the dominant NHK (Japanese Broadcasting Corporation) which is funded across Japan by a public TV license, with additional TV channels from NTV, MX TV, he Japan News Network, the Fuji News Network, TV Asahi and TV Tokyo Network.
In 2000 Japan authorized digital TV by satellite and then began laying out ISDB-T terrestrial systems thee years later which took until the end of 2006 to be nationwide. In April 2006 1-seg programming was retrofitted to the service, and the built-in Broadcast Mark Up Language is used as a data-transmission technology to allow text to be displayed on a 1seg TV screen. This means that external links from the TV screen to promote interactive m-commerce is possible. Japan is at the stage now that if a viewer sees someone on TV wearing something they like, the chances are they can buy it from their phone.
Originally all content on 1 seg was simulcast with the local TV channels but this restriction has now been lifted by the regulator an new programs are now appearing specifically for 1 seg.
Around the rest of the world there are two main types of transmission technology and two main types of TV bouquets and business models.
The transmission technology either requires an entirely new network, such as DVB-H or MediaFLO or it uses the existing digital transmission of the TV stations, and squeezes a Mobile TV broadcast into the spectrum, such as ISDB-T or ATSC M/H. There are others which are satellite terrestrial hybrids such as the Chinese CMMB STiMi system, which actually delivers the signal in two spectrum slices ‘ one from a satellite in 2.6 GHz and one in the usual TV spectrum around 700 MHz. Alcatel has its own system which works similar to this but targets a single frequency network both from the satellite and terrestrial repeaters.
More important is the choice of business model, and the big launch during 2008 was China, and this will ramp in 2009 to what the Chinese authorities hope will be 10 million viewers, but which we have projected as 5 million, because chip shipments suggest that the figure will be closer to this especially the more recession ravaged that China gets.
We also think the Chinese Mobile TV satellite will go up late and that uptake of video handsets will be confused by the fact that there are already 3 million video handsets in China offering analog TV on a handset. We also think that prices will not come down fast enough because too few non-Chinese companies had anticipated this system being a success, and have failed to position themselves to enter this market. However in the medium term China will overtake Japan and become the biggest global market in broadcast digital Mobile TV, just ahead of India.
The Indian market will see spectrum auctioned this year for both terrestrial and satellite Mobile TV systems, but we think it is unlikely that any devices will be on the market before the last quarter. The bulk shipments will come in 2010. There is a very good chance that India will use a combination of DVB-H and a satellite system, either DVB-SH from Alcatel or the Chinese system. The incumbent broadcaster Doordarshan already has 8 MHz of spectrum and will try to launch using DVB-H before new spectrum owners. However don’t be too surprised if this is delayed, as India can be slow getting things started.
After Japan, Korea is the next fastest growing Mobile TV market, and it already has over 17 million customers. There are two systems there, a satellite service launched in 2005 which uses a pay TV approach called S-DMB, and a free to air terrestrial system called T-DMB.
Total subscribers to the two combined Korean Mobile TV systems have now reached 17.25 million as at the end of 2008. T-DMB has reached 15.4 million, up around 70% on a year ago and S-DMB has begun climbing again after a relatively static period, and has reached 1.85 million. The Beijing Olympics was key to accelerating these numbers. This represents a 35% penetration for Mobile TV devices in 3 years, peculiarly many of the T-DMB systems are not handsets but specially built TVs, MP3 players, laptops and GPS systems.
We expect the Korean market to add another 2.25 million devices during 2009 and then begin to saturate. Korea only has around 49 million people and a similar penetration rate in the US to either Japan or Korea would mean it would have to sell something over 100 million broadcast Mobile TV devices in the next 3 years ‘ which would be very hard to believe and it may be that the US and Western Europe, tied as most TV efforts are to a pay TV model, will develop far slower. ATSC M/H is the one exception here and we expect it to rocket to half a million customers in its first full year at the very least, but that year is likely to be 2010, not 2009.
Less sophisticated countries, in some instances will grow faster than highly developed countries, because they may not currently have TVs widely installed, and may opt for either low cost portable players or PC dongles to distribute many of the TV experiences to areas which have mobile coverage, but where there are low densities of TV sets. This may well be the case in both South Africa, expected to have its licenses allocated sometime this year, and in Brazil, where there has been a very slow uptake to mobile TV, because the networks there which are using a variant of ISDB-T from Japan, have very few devices for people to choose from. All ISDB-T devices in Brazil incur an 85% import duty unless they are manufactured there, and this is holding down device affordability, which in turn is holding down the rate at which broadcasters are adding a digital signal. We expect this deadlock to begin to break in Brazil at the end of 2009.
Russia appears to have a haphazard approach to Mobile TV, and has mostly opted for DVB-H, when much of its terrain would have better suited a satellite based set up. However Moscow should have multiple services available this year, and up to 17 other major cities have been promised to be readied this year by Sistema Mass Media. This is one of three separate Mobile TV efforts there, and eventually devices will begin shipping in volume, though we have only anticipated minimal penetration at first.
In Europe we expect Italy, Austria and the Netherlands to add subscribes at a steady pace, while the efforts in, Switzerland and Finland will be in the low thousands. Germany could either continue its forlorn experiment with DVB-T, which may prevent any serious Mobile TV services from being launched there at all, or it will finally get some consensus from MNOs there and launch during 2010. French services will not start until at least 2010 and the UK more like 2012.
The Italian system sold by 3 Italia as ‘Walk TV’ and although Vodafone and Telecom Italia Mobile have working DVB-H systems, they have not pushed them. The Italian experiment gives us a good roadmap on how to push a paid service in a modern, saturated cellular market which is also rich in cellular streaming content.
The service was launched with older LG and Samsung handsets, but has just added the Nokia N96. Before this the LG HB620, LG U960, Samsung F510 and a device from Momodesign called the MD 900 were the only handsets. A non-handset was launched by local supplier Quantum, defined by 3 Italia and later launched as a Motorola product the DH01 and DH02, after Motorola took a stake in Quantum.
The system is protected using a Nagravision DRM based on the DVB Open Framework, but this has been quietly moved to simulcast so it also offers OMA and will later move to the OMA BCAST Smart Card Profile to accommodate the N96. The network covers 75% of the land area although indoor coverage is patchy, and the service cleverly balances live sport (Soccer), adult coverage, local drama and music TV and was launched on the back of World Cup Soccer coverage during 2006.
It offers 6 free TV channels and 11 paid Channels plus Adult content and has what is called a Barker Channel, called La3 Live, which is a free channel about what’s on the other paid channels produced for practically nothing in a one person studio.
3 Italia pushes 3 bundles offering TV plus internet services, plus some talk time for €29, €49 and €79 ($40, $54 and $110) a month. It also ingeniously uses the time between channel changes for advertising, something that no-one else has yet copied.
3 Italia customer numbers have risen from 6.8 million when the service was launched, to 8.45 million, with at least 400,000 of those directly attributable to Mobile TV.
As we look forward to 2010, the US market will begin to speed up, and bulk uptake will begin to occur in India, but it is China that will definitely be getting up to speed in terms of delivery of specialist handsets. The Chinese ministry SARFT (State Administration for Radio, Film and Television) says that it expects 10 million CMMB devices sold in 2009 and around 50 million the following year, but even at the more likely delivery rate of half those numbers, that would still see Chinese Mobile TV handset annual deliveries overtaking Japan as early as 2010.
One wild card that seems to have lost its appeal is the cellular multicasting standard MBMS. This will be enabled in all future mobile base stations and requires a software stack to be loaded at the factory into HSDPA handsets. While we expect MBMS and CDMA multicast services to take off, which will allow something like 6 TV channels to be broadcast to multiple devices over the cellular network, we no longer see this as competitive with broadcast TV services ‘ but complementary and will be used primarily to relieve pressure in existing cellular streaming services. This will probably not emerge until the 2010 time frame (having gone awfully quiet throughout 2008 as the TDD and FDD versions of this technology found a common standard called Integrated Mobile Broadcast (iMB) which is just about completed and this will result in yet another surge of cellular streaming activity.
There are lessons that these launches have shown us and golden rules can be extracted on how to go about launching services. One key element that has tripped up operators is having a sufficiently broad range of devices available, and in some cases handset vendors have simply reneged on deals to deliver devices in time for service launches, because they have other priorities with firmer, larger, orders.
Also virtually no advertising efforts can be incorporated into the service until around 2 years of building customers. Japan and Korea are steadily attacking the advertising opportunity now, which will provide a roadmap for other services, especially the fledgling Chinese service, to follow in years to come.
In order to get people watching mobile TV, an element of the service should be free, on handsets which are subsidized or partially subsidized, depending upon the territory they are launched in. Later paid services can be integrated on same device but this requires planning and that DRM is part and parcel of the initial product offering. It is to be remembered that content owners even on content supplied to free to air services, would rather see it encrypted for piracy protection reasons, if possible. And this step can give greater access to content.
Finally, Mobile TV designed to reach handsets cannot be offered in isolation, to get real momentum, all electronic devices out there should be embraced, with laptops being the most obvious and cheapest to facilitate using cheap dongles, and then other devices such as specialist GPS devices. In Japan Apple has even given permission for the highly protected iPhone to be supplied with an ISDB-T antenna and software.