DVB-H mobile TV in Germany may be about to make a comeback, with incumbent Deutsche Telekom talking to the regulator about somehow using the existing license to deliver the soccer rights to T-Mobile handsets. German newspapers have quoted Deutsche executives this week talking openly for the first time about the possibility.
Back in October last year the German regulator moved to take back the DVB-H license it had issued to Mobile 3.0, after the joint venture, ultimately owned, between German publishing interests and South African’s Naspers, had been unable to attract any cellular operators to offer the service. Mobile 3.0 was owned by South African media conglomerate Naspers, through its subsidiary Mobiles Fernsehen Deutschland (MFD) in a joint venture with publishing houses Burda and Holtzbrinck. It is said to have failed to understand what was required of it, in terms of both building out the DVB-H transmitter network, as well as building sales relationships with the operators or other marketing partners.
The regulator had bizarrely offered Mobile 3.0 the German DVB-H franchise despite a joint venture from the two leading cellular operators, T-Mobile and Vodafone Germany, having also bid. The contract was awarded without any guarantees in place that any cellular operator would be involved, and both T-Mobile and Vodafone promptly began to offer DVB-T handsets in Germany in competition. This was possible because of a peculiarity of the power and robust modulation of broadcast transmitters in both Germany and Austria, with the DVB-T network there aimed more at in-car service than home service. However they still only managed to shift a few tens of thousands.
We have heard both opinions that the winning DVB-H license winner snubbed T-Mobile and Vodafone and hardly called them to discuss distribution and contrarily that the cellcos refused to speak to the joint venture.
The offer of DVB-T handsets was seen as a stark rebellion against the regulator who has now had to go back to them, cap in hand, to re-establish their interest in DVB-H. But the truth is that despite the strong local DVB-T signal, the technology was never meant for street level, device sized antenna and the signal is understood to be poor to non-existent indoors, and a big drain on battery.
Local German newspapers put the change of heart at T-Mobile down to a problem in delivering a streamed version of its Bundesliga soccer rights, The company landed the soccer rights initially to drive its new T-Entertain IPTV service, and it has been doing this very nicely, with sales up considerably in the last two quarters.
It currently has a free offer of the soccer rights to those who will take an iPhone, but this has to be delivered streamed over cellular and the cellular delivery is causing huge network strain local newspapers say.
T-Mobile is thought to have merely enquired about the DVB-H rights and had them virtually thrown at the company, if only it will build out more transmitters. Mobile 3.0 had only built out DVB-H transmitters in 4 cities ‘ Hamburg, Hanover, Frankfurt and Munich.
Since Mobile 3.0 stepped down, the German authorities have put on offer a ten year license to replace the three year one it had, but if it went entirely to T-Mobile it would cause a lot of consternation regarding privileged and potentially monopoly access for the incumbent telco. Vodafone has never said anything nice about DVB-H, but in other markets, such as Italy, where rivals have offered a DVB-H bouquet of channels, it has stepped in and matched the service, just to keep churn at bay.
We think it will do the same here if T-Mobile gets its way, and the likely outcome will be that T-Mobile’s bidding unit for the soccer rights Constantin Media, will instead take the rights and offer them openly to other cellular operators, in return for a promise to build out the network. Given that the Italian network cost some $200 million to build out, Germany could easily cost $300 million given the larger surface area to build over. All of that might depend upon how many channels were offered, how it was modulated and what power limits are placed on the transmitters there and the regulator coverage obligation. It could cost far less with the right conditions, and Deutsche Telekom right now is not ready to tell its shareholders that it will spend that type of money on its own, on a technology that it openly criticized in the marketplace.
Better to get Vodafone and perhaps E-Plus to put their hands in their pockets, but the only way to do that is to offer a bouquet that includes the soccer rights ‘ and Vodafone may be disinclined to accept those terms, unless it can also have the rights for its ailing Arcor IPTV service.
But there is perhaps a way that T-Mobile can almost afford this deal on its own, or even without paying hardly any money and it just requires negotiation and an enlightened view from the freshly chastised German regulator.
In France Telediffusion de France (TDF) offered to built the network and take on the costs of doing so, as long as the French regulator would only insist on the build out of the top 6 cities and thereafter build it out at its own pace. It was turned down. But TDF, in 2008 also bought the T-Systems subsidiary Media and Broadcast, which built out the four cities so far in Germany. A similar offer there might also mean that it could offer different bouquets to T-Mobile and to Vodafone and others, where T-Mobile could pay per subscriber carried, out of revenues it received from soccer sign ups.
Interestingly TDF already owns Digita, the Finnish broadcast operator which won the contract for delivering a DVB-H multiplex across Finland. TDF continues to be a front runner in the bidding to build out the French DVB-H network, when that happens (if it ever does) next year.
Yet another attempt at setting up a mobile TV service in Germany, using T-DMB was also closed after launching in 2005, having amassed only a few 1,000 customers in 30 months, so the regulator will be punch drunk with the efforts to get mobile TV off the ground and may agree to almost anything.
The iPhone deal will do T-Mobile no good if DVB-H delivery comes along, because there is no native DVB-H likely on the iPhone, and instead T-Mobile might find it has to offer mostly Nokia devices such as the N96 and N97 to pick up the games. However a mobile dongle, taking DVB-H in and outputting streamlined wi-fi to the iPhone would work pretty well, and something similar has been set up in Japan.
Powerful interests are at work here trying to find a clear DVB-H success formula in Europe (more widespread than distribution in Italy, the Netherlands and Austria), in order to trigger mobile TV across the continent. Nokia is one of the companies here with the most to benefit, and has pushed the ideas behind DVB-H since 2001, perhaps T-Mobile could visit Espoo to ask for some help.