Last week we took a look at the detailed paper written by Executive Director of the BMCO forum, Professor Claus Sattler on mobile TV business models, and this week we got a chance to talk to Professor Sattler, who gave a full frank update on the state of Mobile TV business models across Europe.
Whereas the mobile TV French authorities are running scared of even announcing their business model, Sattler was prepared to speculate and give an inkling of what he knows and the changes that are likely to happen in the yet to be announced French DVB-H operation. As well as talking about Italy which is about to opened up to more devices. Not to mention being clear about the reasons why the German DVB-H situation is so fraught and the attractions of DVB-T in both Germany and Austria.
The most interesting aspect is perhaps his contention that 3 Italia is about to open up its network to Nokia devices. RRD, the company which helped 3 Italia build the network, has always said to us that Nokia devices wouldn’t work on the network, and that this was because they were non-standard, but Sattler disagrees. ‘It was the network that was non-standard, because it developed very early, it was before everything was standardized within the IPDC standard. Also the conditional access uses the DVB Open Security Framework, and Nokia will not support that.’ In fact at the time Nokia was pushing yet another conditional access/DRM system of its own, as a standard called 18Crypt, which it has now virtually dropped, because it was effectively an attempt to lock customers onto Nokia devices.
‘I believe 3 Italia will run Simulcast, we have shown over two years ago that a mobile TV service can run Simulcast (support two conditional access systems at the same time). It has a minor cost in that the EPG has to be sent twice and two sets of keys need to be streamed, but that’s just a few percent of the bandwidth,’ said Sattler. So it looks as if 3 Italia will add OMA BCAST, which is a broadcast version of the OMA DRM, which comes in two versions, one that supports renewability of device keys over a cellular link and one which uses a smart card to make encryption keys more secure on an unattached device.
‘France we believe will also announce its service with Simulcast DRMs to supporting a more open and flexible model, supporting OMA BCAST, which Orange wants to use and OSF which SFR and Bouygues are likely to support. They will also offer non-handset devices in a bundle where part of the sale price pays for a device lifetime TV subscription,’ he said.
This is analogous to Nokia’s ‘Comes with Music’ business model, and might end up being called ‘Comes with TV.’ The same model could be offered for retail handsets, used in the pre-pay market, but more likely this will have a monthly fee for TV services. Post paid cellular subscribers in France will be offered numerous bundles which will completely hide what they are paying for DVB-H Mobile TV, says Sattler.
He also said that yet another DRM would be offered from the DVB camp, a version of the OSF system, which supports existing conditional access systems from companies like Nagravision, NDS, Irdeto and Viaccess. Up until now the SIM card has replaced the smart card that is usually found in set tops, for additional security. Now this will be extended to a MicroSD card. This could give rise to new business models including temporary and pre-pay subscriptions, but a DVB-H device will still need to be acquired somehow.
Both of these outcomes, along with recent wins for Nokia finally getting to build out some infrastructure for mobile TV in Europe, means that suddenly Nokia devices will be able to support most European mobile TV networks, which is perhaps why the company has finally taken its N Series and put DVB-H support into one of the mainstream devices, the N96. This handset will be the big smart phone seller in Europe this year for Nokia, with the possible exception of the Tube device which is expected to be released this week, as Nokia’s first major touch screen iPhone-alike.
Previously Nokia has not felt confident enough to put a DVB-H chip into its devices, except as a special order. Now with France about to launch, Italy suddenly about to begin accommodating its devices, and the Netherlands, Switzerland and Austria all with live DVB-H networks, there should be some payback for putting the chip into a mainstream device. A year ago Nokia could only target trials, tiny Finland or those countries in South East Asia where Nokia had supplied devices with 18Crypt and other software options, which were not right for Europe.
The other thing that Sattler was happy to open up on was the situation in Germany, where DVB-T handsets are now being offered by the leading operators, T-Mobile and Vodafone. We have always thought this was pure hubris on the part of the operators, which were unhappy at their consortia being passed over by the regulator for control and ownership of the German DVB-H network, but Sattler tells the story a different way.
Mobile 3.0 has the Germany DVB-H license and is owned by south African media conglomerate Naspers, through its subsidiary Mobiles Fernsehen Deutschland (MFD) in a joint venture with publishing houses Burda and Holtzbrinck.
‘Mobile 3.0 did not approach operators to wholesale its proposition. It made no approach at all to Vodafone there and only one low level approach to T-Mobile,’ said Sattler, which made us incredulous. MFD had already had one disaster in mobile TV when it got involved in offering Mobile TV in Germany using T-DMB and only captured 3,000 customers by going direct to consumers. If Sattler is right, it repeated all those same mistakes, deciding on its bouquet without consulting anyone, and then trying to bypass the operators in a market dominated by devices which they subsidize. Faultline finds it hard to believe that anybody would be that stupid, so we suspect there is more to the story.
Sattler continued, ‘Vodafone showed a DVB-T device at Cebit in January and wanted a proposal, but when no-one contacted them they decided to launch it.’ This allows people to watch digital terrestrial TV on their handsets and pay nothing for the privilege.
The reason that this was possible in Germany and not possible anywhere else in Europe (except Austria) is because of the way the Germans built their DVB-T digital terrestrial network. Transmitters are allowed to belt out a huge 50 kW ERP in Berlin and 20kW elsewhere, and the network is coded in 16QAM instead of the more usual 64QAM or QPSK which would have less penetration, but which would mean each multiplex (piece of spectrum) would deliver more data. The network was designed in this way because in Germany there is huge pay TV penetration, mostly through cable and only 5% of homes were considered likely to take free to air digital TV. The aim was that the DVB-T network would target in-car reception and as a byproduct, the network has better in-building penetration than it has any right to. The same has happened in Austria, but no-where else in Europe. The penalty has been that each multiplex, instead of carrying 6 or more TV channels, carries just 4 channels per multiplex of 8MHz. There are 6 urban multiplexes which means these handsets can pick up 24 channels, and only three in rural areas, so just 12 channels.
By comparison so far Sattler says there are only DVB-H transmitters in 4 cities ‘ Hamburg, Hanover, Frankfurt and Munich. It is still possible, he believes, for the DVB-H bouquet of channels to be offered to the operators, and seemed unaware of reports that Mobile 3.0 is on the verge of folding, with its parents talking openly during August about pulling any future funding.
‘If that’s true the operators will not buy Mobile 3.0. There was a time when they were prepared to invest in Mobile TV, but that time has come and gone, and they would not buy the service out,’ he said.
The BMCO has 110 members, most of the players in European mobile TV plus some US operations, and is an organization which is trying to enable the mobile broadcast technologies per se. Sattler was clear that it is not pro-DVB-H and has members that are pushing DVB-SH and MediaFLO and other technologies. ‘The challenge isn’t all about technology,’ said Sattler, ‘It’s about network design, link budget, bundles and regulatory issues – not just technology.’ The BMCO’s next papers will be in the area of mobile advertising and interactive broadcasting.