The CES show in January in the US has been a platform to launch statements about the future of mobile TV for as long as we can remember, but the statements made this year pretty much promised that action will be taken by the end of this year, and mobile TV in one form or another will emerge in the US by the end of 2009.
While we have waited, since the birthing pangs of DVB-H and the belated response by Qualcomm with MediaFLO a few years ago, the rest of the world has shown that the business case for mobile TV is far from straightforward. While the biggest DVB-H installation in Italy is still unprofitable despite being close to three years old, the bigger installations in Japan and Korea have shown that the only way to scale mobile TV is to make it a free service. But even there no-one has worked out how to turn that scale into profit.
And although this is a fate which AT&T and Verizon are anxious to avoid in the US, the CES show demonstrated that it’s not only their decision, as a cluster of 63 TV stations which use a transmitted broadcast signal in ATSC, all confirmed at the show that they are going ahead and making a mobile TV signal available this year. The TV signals will reach 35% of all US citizens and already AT&T has come out at the show and said the magic words ‘there may be room for local TV stations’ in the AT&T strategy, but then soured it with words that we believe are pure bravado, ‘if there’s a business model that can be worked out?’ These comments were attributed at the show to Ralph de la Vega, AT&T’s president and chief executive of Mobility and Consumer Markets, in an interview given to US newspapers at the CES show.
Here’s why we see it as bravado ‘ First in Korea the penetration of mobile TV devices is rapidly approaching 30% of the population, but there some 65% of these devices are NOT handsets. And that means that with a FREE TV signal which can reach low powered battery devices such as MP3 players, portable DVD players, laptops and in car players, a handset is NOT essential. In Japan, where the handset vendors came along for the ride, 65% of the devices there now ship WITH mobile TV chips in them after just 3.5 years of service.
And the TV they show in both countries is the exact same TV which is shown on the broadcast services ‘ or at least it is a subset of the channels. So with this amount of coverage committed to already in the US, and with more coverage likely to join as plans are solidified and as the horizon becomes clear, free mobile TV using ATSC M/H is going to happen with or without AT&T, with or without Verizon and perhaps more importantly with or without Qualcomm, the owner of MediaFLO. And each of these companies can choose to be ‘for it’ or ‘against it.’
We can tell you that the MVNOs such as Virgin Mobile or Leap Wireless, will be for it, and so will T-Mobile and that eventually Sprint should join in on the act. It would be very dangerous for the two leaders to put mobile TV handsets in the hands of a group that only holds around 10% of the US mobile handset market. That happened in Italy with 3 Italia, against the vast incumbents of Vodafone and Telecom Italia ‘ and since it was launched, they have lost customers in droves to 3 Italia.
Such an entrenched position would be almost good enough to reverse all the wins that AT&T has made with the iPhone, in terms of losses and churn increases in favor of anyone who adopts ATSC M/H in their handsets or other non-handset devices.
At the show LG, one of the companies which has brought ATSC Mobile Handheld (M/H) to life, showed dongles for laptops, handsets with the chips in, and in-car devices. It also showed an in-car player from Kenwood working with the signal. LG and Samsung between them bring all that knowledge of the Korean experience to mobile TV in the US. They KNOW what kind of edge free to air has over paid. In Korea a paid service launched first and has around 1.8 million customers, while the later launched free to air service has picked up 14 million viewers.
Even if AT&T and Verizon decided NOT to support the ATSC M/H service it is a fairly trivial task to produce a phone dongle, a device which plucks TV out of the air, and feeds it into a variety of handsets in a video format they can handle, including as a Wi-Fi signal. NextWave’s PacketVideo has already demonstrated versions of this with other mobile TV technologies and the shift to ATSC M/H would be fairly trivial to engineer and other companies have said they are keen to follow.
If the output was wi-fi carried video, then it could be viewed on an iPhone, and that means that AT&T will not be able to stop ATSC M/H being viewed on the platform it is most proud of. Of course Apple could refuse to work with any dongle producer and do its utmost, in support of AT&T, to prevent it happening, for instance banning the sale of the such a system through its App store. On the other hand that might strand the iPhone by the end of the year as the ONLY multimedia handset which DOESN’T support ATSC M/H, not a position it would be comfortable with for very long. That would play into Google Android’s hands, which would certainly embrace ATSC M/H.
Going back to those comments from AT&T about finding a business model, let’s just remind ourselves of the type of model it might mean. The iPhone is a business model which costs consumers a lot, and where AT&T has to contribute significantly to the cost, and all of this is paid for by a tendency to spend more time on the internet. So that results in huge up front costs but long term increases in either flat rate broadband sign ups or data charges. It also brings new customers.
AT&T hinted that a deal with ATSC or more specifically the Open Mobile Video Coalition (OMVC), the alliance of US broadcasters which is pushing ATSC M/H, might include shared advertising revenues. That’s insane and it’s an opening gambit. US broadcasters face a declining market and an advertising recession, and this is the one chance to open up their advertising routes to people in transit or currently away from their TVs. None of them are planning to entirely replace the advertising in their existing channels, though many of them will introduce local channels and add some more advertising there.
But AT&T and Verizon could become a student of what’s happened around the world in mobile TV and for once gain an advantage from coming to a market late rather than early. There already exist systems for showing cellular sold adverts as overlays to broadcast TV, or to have pop up items at the bottom of the screen, which offer advertising or m-commerce opportunities which relate to the content shown. In Korea there is a lot of work in product placement and in Japan the ability to buy the products in a piece of video is now well established, through a cellular network m-commerce system. Ringtones which are TV program theme tunes, DVDs which are the entire previous series now showing on TV, are just some of the examples of things operators have sold in this way. Advertising on the channel change period is another.
But the most appealing business model is two fold 1) Don’t lose customers to someone else offering this TV connectivity, and 2) Create a subset of people used to the quality of broadcast mobile TV, and then sell them more video, including MediaFLO paid services.
A far simple model is that the US cellular giants can offer ATSC M/H only on devices which it sanctions, which comes with bundles which are slightly more profitable than similar bundles on other devices.
All of these business models are really down to initiatives by the cellular operators themselves and require little on the part of OMVC. The US cellular companies could even simply charge an extra $3 or $5 a month to contract customers who opted for ATSC M/H devices, and leave pre-paid customers to pay full price, although that would slow down adoption.
And each of these opportunities are better than those represented by the iPhone. For a start the Mobile TV traffic is not carried on the AT&T or Verizon networks, so no outages like the ones caused by recently excessive use of the iPhone, can happen.
And phone dongles, laptops dongles, as well as the phones themselves could be retail propositions ‘ which would turn out to be cheaper than the iPhone. Most handset vendors could behave in a sensible fashion if tempted with an AT&T or Verizon deal. So unlike Nokia which has brought DVB-H mobile TV to countries around the world, and then charged enormous amounts for subsidized handsets, the other handset makers might offer the same models with ATSC M/H at close to or the same prices as without. The benefit to Samsung and LG would be that they gain market share in the US by doing this well and being first with ATSC M/H. That way taking on ATSC M/H could cost AT&T and Verizon nothing. That’s a business model based on being sure that their customers won’t suddenly churn to someone else who makes this offer.
And it’s quite important that Nokia has said that it will not support any mobile TV technology other than DVB-H, because that means that at a time when wants to negotiate to put Symbian at the heart of AT&T’s network, it will be at a disadvantage. Even though Motorola is in tatters, and rumored to be announcing massive layoffs, it would be the work of but a moment to embrace ATSC M/H as a way to hold US market share. The question is where would the chips come from to manage such a thing.
Right now the composite internal antennas being worked on by LG and its intimate knowledge of the working of the system means that LG is probably the primary source, with Samsung bringing up the rear. Broadcom has made no move to get into ATSC M/H but acquired an ATSC chip maker last year and is likely to have an M/H version of the chip as soon as volumes emerge. But Qualcomm out of the majors is uniquely placed to work with ATSC M/H. It already has a single chip that can offer MediaFLO, DVB-H and ISDB-T, and would find it easy to either place ATSC M/H into a new version of that chip or to include the demodulation of ATSC M/H signals into another of its SoCs. So chances are, before year end, Motorola would have a basis not only for putting out handsets with ATSC M/H, but also it has the Quantum designed non-handset mobile TV, which it has added in a DVB-H variant from its investment in CE maker Quantum in Italy. Simply dropping an ATSC M/H demodulator into that device would give it an enormous head start in exploiting the US mobile TV market.
And we have to remember that MobiTV, a company which already has the confidence of both Sprint and AT&T in bringing streamed paid mobile TV to their cellular platforms, and who has signed up 5 million video customers, is now behind the ATSC M/H platform. It made loud and enthusiastic comments to us a year ago about the technology, and it added its technology into the mix 6 months back. With MobiTV’s help it would be easy to engineer a single TV service which has streamed video, ATSC M/H as well as embracing paid for MediaFLO, from a single interface.
The OMVC, said that the 63 stations were in 22 markets, and it will provide live, local and national over-the-air digital television. It added that there will be 14 NBC affiliates, nine ABC affiliates, nine CBS affiliates, five FOX affiliates, nine ION Television affiliates, four CW affiliates and four MyNetworkTV affiliates, along with nine additional PBS stations which are in discussions with the OMVC to join the 2009 launch.
Coverage at the Las Vegas CES event showed that CNBC, Fox, CW, ABC, Qubo, Fox News, Cool Music Network, and NBC were live in Las Vegas.
‘Following a very smooth ATSC Mobile DTV standard setting process, broadcasters are on track to deliver local and national broadcast television to mobile audiences,’ said Brandon Burgess, OMVC President and ION Media Networks Chairman and CEO. ‘The collaboration and dedication among TV broadcasters on this project has been gratifying, enabling us to meet our goal of making mobile broadcast DTV a reality in 2009.’
During the standards making process at OMVC, both Qualcomm and Nokia lobbied to make the higher level software layers of the standard similar to their own favorite mobile TV systems ‘ MediaFLO for Qualcomm and DVB-H for Nokia. It is unclear which side won out, but Qualcomm told us at the time that it wouldn’t matter, a single software platform could be produced to combine either with ATSC M/H, if that was seen as desirable.
Qualcomm’s MediaFLO USA, the subsidiary which runs the rival paid for network, also said at the CES show that it can now reach some 200 million consumers across 100 markets in 2009 and plans to open these markets within weeks of the February 17, 2009 digital television (DTV) transition date and continue throughout the year.
It has added Boston, Cleveland, Houston, Miami and San Francisco as spectrum is freed across the country for the delivery mobile TV. The company claims that already the customers it has (it has never said how many, but this number is thought to be 100,000 or so with half each coming from AT&T and Verizon) are spending over 20 minutes a day watching TV on their phones with big viewing increases happening during live events, and especially the presidential election, the Olympics and the open golf championship. Hurricane Ike also drove up viewing figures.
Harris, the US transmitter company said at CES that its finished systems will be going into broadcasters in the next 60 days, by which it means many of the components are already installed and the finishing touches will be finally installed so that they can switch on mobile TV come February or March.
ATSC Mobile DTV was recently elevated to ATSC Candidate Standard status, an official recognition that paves the way for consumer electronics manufacturers to begin developing receiving devices.
Around 95% of capabilities of the standard are already in the demonstration equipment said Harris including its Apex M2X digital exciter and NetVX networking platform. Harris said it is working with Roundbox and Triveni Digital to integrate Electronic Program Guide services into its Mobile TV platform and cited a typical installation costing $226,000 for broadcasters that want to offer two mobile TV channels.