Mobile broadcast latest: LTE-B remains divisive, MobiTV has a last chance

Mobile TV has had a painful gestation. In the 3G era, it was tough to interest consumers in brief and often poor quality clips and sketches. With 4G, interest rose as users became heavily video-oriented, but they were mainly viewing YouTube, not channels broadcast by a mobile or pay-TV operator.

This drove investment in more optimized technologies to create a differentiated experience, but the process was distracted for years by a battle between several options which all required specialized infrastructure – making it hard for operators to make the business case. Qualcomm’s FLO, DVB-Handheld and others all fell by the wayside, except in isolated markets, but another technology, now called LTE-Broadcast, was emerging with significant advantages – fully standardized, and capable of running over existing 4G infrastructure.

However, LTE-B remains divisive, and among operators which do favor it, the focus is often not on mobile TV but on multicasting for special events or enterprise use cases. So the smartphone TV landscape remains immature and fragmented, and while FLO may have disappeared, other veterans of the field are still battling on, including MobiTV (below).

LTE-B, says Wireless Watch’s sister service Faultline – which specializes in digital video – divides people as much as President Trump. Whenever you find a company which loves it, they are prepared to forgive an extraordinary amount in order to see it as the promised land.

Talking this week to Claude Seyrat, CMO of French firm Expway, known for its sophisticated video software stack, Faultline analysts found some of that religious fervor that some companies reserve for their favorite technology.

The only change in LTE-B status since 2015 that we can find is that a few new operators and one or two vendors, have joined the LTE Broadcast Alliance late last quarter, with Hong Kong Telecom, CSL Mobile (also Hong Kong), Reliance Jio, Indonesian ISP Smartfren, Telecom Italia Mobile and Turkcell all joining long term members Verizon, Telstra, Korea Telecom and the UK’s EE. AT&T is also known to be working with the technology.

Each of those early supporters have had trials for well over a year, with Verizon saying that it has launched LTE-B services – for delivery of two Superbowls and more NFL games over smartphones. But most of those guys had trials of the previous broadcast technology, MBMS, back in the mid noughties, and never launched services.

We asked Seyrat about the Verizon entry. “The stadium apps we always thought were a poor business case,” so his first comment seems to trash the one commercial deployment that LTE-B has.

Once Seyrat warms to the subject he divdes straight in, saying: “There is no one killer app for LTE-B, but once an operator has deployed one application which uses it, they will find many uses for it.”

Public safety is one application on which he focuses. Talking about such public safety standards as APCO P25 and the European Project MESA, there are few clues that they really will rely on video, broadcast or otherwise, in their first implementations. It is true that estimates of $6bn of contracts have been made around P25, but early implementations are mostly about voice and video apps appear to be down the road somewhat.

“Not so,” says Seyrat. “Emergency personnel need to share videos, whether that is security based like nuclear power plants and train stations or drone video used to survey a natural disaster. These will all be mandated as being LTE-B based,” he said.

The use case is certainly there. If you are diagnosing an injured person or dampening a nuclear power reactor, you need multiple copies of the same video – and broadcasting it uses way less bandwidth. We can see that Seyrat MAY be right, but we have met these arguments before. Ericsson told us a decade ago that phones would all have the capability to view MBMS video built into them (the 3G version of Broadcast), and after that it would just be a matter of time before the particular version of 3GPP software was installed that supported it. Ten years on we see no-one using it.

But Seyrat is adamant that lots of operators are “about” to use it. He should know, or at least may know, if he is providing the software stack to control the video, either on device or in the network. “It will be mandatory for public safety networks to support LTE-B,” he proclaimed, not something widely known. “Then it will appear in the connected car” he added confidently. “Not immediately, but it will be the only logical way to send software updates to the connected car. If a car is hijacked or if there are software faults found, you will need these updates to be broadcast. In public safety evacuation maps, emergency alerts, must all be sent as a broadcast.”

The argument back in 2004/5 around multiple mobile TV technologies was that broadcast was the most efficient delivery mechanism, and that by 2010 there would be 100m users of the technology. Well there are probably 100m mobile video broadcaster users in just Japan and Korea, but few outside these areas, and none in those countries using MBMS or eMBMS, which is the basis for LTE-B.

Software updates should be sent this way, but currently they are not. Video should be sent in broadcast mode, but currently it is unicast. And the entire debate around video has been that it will take up 70% plus of all data to the smartphone, and it will choke the airways, so we MUST go to LTE-B. And still operators have not made the move.

So we asked Seyrat for reason behind this reticence on the part of MNOs to use broadcast technology? “We have to wait until the business case becomes mature. It does not have to be about choosing either Broadcast or Unicast. Once the software is installed in the base stations, then as soon as two copies of a video are being unicast across a particular cell, it would be more efficient for these to become multicast.”

Seyrat believes that MNOs will introduce it as a weapon to save bandwidth, and using it dynamically on a cell by cell basis, as and when it is needed. It could be a great way to allow customers zero rated video (see separate survey story in this issue about this) where they do not have to pay for data when video is used on a phone. “The customers don’t even have to be told they are on LTE-Broadcast, and it doesn’t have to be for the entire video transmission.”

His point it that it has taken the fear that their spectrum will be swamped with video to get them to look at this type of solution. What about getting programmatic advertising into broadcast streams? “Push the ads unicast ahead of schedule over network,” he counters, you will still save bandwidth on the video.”

“And what about sending TV services over fixed wireless? We know this will happen on 5G networks, but it is already happening in Mexico and Canada, and it is being tested as a broadcast using LTE-B.” We understand that Telus is one operator in Canada looking at this. But again, still only in testing.

“LTE-B could easily be used dynamically to send the top 4 or 5 channels in a cluster of cells, and all others can be sent unicast. It costs just $1,000 to upgrade each eNode B (base station). Think of LTE-B as part of a CDN, or instead of a CDN. If the content provider wants to ensure high quality, they may pay for their channels to be broadcast, and that would be like a CDN charge, around $50 per terabyte, or so.” Seyrat suggested that he knew of trials where this approach was being tried, but could give no operator names. It is interesting that it would be save the operator bandwidth but at the same time it would charge for the service? Isn’t that just a little greedy?

We have seen the reticence towards LTE-B, and references to hidden costs built into it. Perhaps this technology is mature enough to push those costs aside, perhaps not. All we know is that until multiple operators use it for multiple services and talk openly in white papers about the bandwidth and money they have save, the queue to be the pioneers in this market are very short.

MobiTV handed last chance funding to switch its technology:

You may be excused for thinking that MobiTV is a company that had gone into profit many years ago, but although the company keeps trying and to some extent dominates mobile video in the US with deals at Verizon, Sprint, T-Mobile and AT&T, it has had to go for another round of funding. So far it has taken down $163.8m of funding in around 8 rounds since 2001. The last was $16.5m in 2013, involving one of this round’s investors Oak Investment Partners. Before that it had no money since 2008.

This round is for $21m and the cash came from Oak Investment Partners and Ally Corporate Finance and it is saying that funding is to accelerate the expansion of MobiTV Connect.

While Oak Investment is a multi-tiered investor, Ally Corporate Finance tends to do asset backed deals for refinancing and turnarounds – which suggests that this is the last chance saloon for MobiTV and that its current product set is too weak to see it through.

MobiTV Connect was launched in July last year and is an IP video delivery system targeted at helping smaller US cable companies to offer OTT video on smartphones and other portable devices, but also especially to streaming media adaptors deployed already in many US homes. The plan is to help cable operators upgrade video delivery from traditional QAM to IP and blend on-demand, live TV, catch-up TV, network DVR and recommendations.

This suggests at least a name change, as the company’s future no longer rests on mobile TV, but on targeting both mobile and home based platforms. This is because MobiTV is unlikely to retain the four core relationships it has had for years at the tier 1 US MNOs.

When MobiTV was looking to go public in 2012, it filed finances at the SEC, and these showed that in 2010 Sprint and AT&T represented 54% of the company’s revenue and by 2011, Sprint, T-Mobile, AT&T and Verizon represented 42%, 26%, 19% and 10% of its revenue, respectively. That’s 97% of all revenue. If you add the deal that it cut at Deutsche Telekom in Germany that just about brings it up to 100%, and while there have been deals announced since then, MobiTV announced a deal with C Spire, the 6th largest MNO in the US last year, and it claims one at Reliance in India, and one with TV Bank in Japan, with an nPVR deal – but those deals are not plentiful, and mostly with smaller operators or in Reliance’s case companies that pay very little.

Sprint has no coherent strategy for video as yet, but it needs one desperately so its video offering is sure to change organically over the next 12 months or so, and that’s if it is not merged with one of the other US MNOs. But T-Mobile, having signed 100 OTT video suppliers to its Binge-on service, along with the recent launch of DirecTV Now, and the older launch of Verizon Go90, suggests that MobiTV is losing all of its mobile customers, hand over fist and its services there are unlikely to survive.

Deutsche Telekom launched its own OTT service around Huawei technology a year ago, although MobiTV insisted that the Network DVR element of its solution was maintained. In May 2014 MobiTV landed a contract with Reliance in India to deliver its Jio mobile TV service. India is one of a handful of global markets where there are very few broadband lines or WiFi, and a lot of video is delivered directly to phones. This has been a huge success withms of customers coming on board, although Reliance has just made a decision to make this paid for, and that may slow its usage.

We suspect this funding round is tied to a lower valuation, and some share claw-backs through price protection will have occurred, and in the event of failure the company will end up as an asset on the books on these investors by 2018, unless some tier 1 players sign very publicly for MobiTV.

But while MobiTV complacently over-focused on 3GPP streaming, other companies have emerged who have tied up almost all the technology contracts at these majors, with AT&T buying Quickplay Media, and in Verizon’s case, it has acquired multiple technology providers. MobiTV is left with a declining percentage of US MNO customers subscribing to older style services which yield it revenue, which have not changed in years.

The CEO Charlie Nooney remains in charge after the investment, although it is unclear if the founders, such as Paul Scanlan, who used to be CEO is still there in an executive role, although we know that the long-term CTO, Kay Johansson, stood down in 2013.

MobiTV offers almost every step in the technology chain for end to end OTT delivery from CMS, DRM, the Media Player, nDVR, content policy, identity management, billing and authentication and aggregates content too.

In that 2012 filing MobiTV said it has licenses to content from ABC, CBS, Disney, ESPN, Fox, MTV Networks and NBC – in total over 220 channels, including 70 live channels. But it also revealed its numbers for the first time, showing that it never made a profit certainly since 2007 and that its cash burn was around $10m to $11m a year, and that it had just $25m in the bank.

It may well have cut costs since then, but with most of its traditional revenues evaporating, it is likely that this round of funding could last it perhaps 2 years, certainly no more.

This analysis was first published in Faultline Online Reporter, Rethink’s weekly in-depth newsletter about the latest trends in digital video and quad play. Email Simon Thompson on [email protected] for more details and a free trial.