After crafting its own success in Italy, as the leading pay mobile TV network in the world, Telecom Italia is planning to begin giving away TV channels on its handsets, with the aim of accelerating uptake.
There have been countless trials and surveys about mobile TV, but the problem for many people in Europe, is that they have no idea what any of the discussion is about. Mobile TV to most Europeans is about brief clips of streamed content, at low resolution, with dubious charging mechanisms, purely for video gimmickry, such as the latest YouTube hand-me-downs. This is called unicast TV and uses up the same bandwidth that we use for speaking. One person watching TV means that roughly 20 people cannot make a phone call.
This has come about primarily because there is no spectrum currently available in parts of Europe including currently the UK, Spain and Poland, to build out the favored European standard for ‘proper’ DVB-H mobile TV, which relies on an extra radio and demodulator in each device and an entirely new country-wide network, at a likely cost of $200 million or more. DVB-H offers about 4 to 5 times the resolution of most Unicast services and just looks a hell of a lot better.
But in Italy 3 Italia has blazed a trail, spending the money needed to build such a network ahead of anyone else in Europe. It has also managed to attract 1 million users to pay fairly high prices initially around 4 Euros a day or 19 Euros a month, for the service which includes a free Live channel, a sports channel, an all day soccer channel, those from public broadcaster RAI and a channel that merges three channels from rival Mediaset, into one. It also has three Sky channels from Sky Italia, two adult channels and one made up of ‘crazy’ short form content like unicast video services.
You’d think it was a huge success, but the company, now that it has 1 million customers, mostly stolen from Vodafone and Telecom Italia, wants things to happen even faster. In Japan and Korea, something like 30% of all new devices are being sold with TV on them and mobile TV customers have reached 25 million and 9 million respectively.
So last week 3 Italia chose to offer a bouquet of 6 TV channels free. The handsets are subsidized and the bundles attractive and now the TV is free, so how does it make any money? Well while the DVB-H technology it uses could be configured for a relatively rapid channel change, 3 Italia uses the 5 to 6 second channel change to show advertising. It also drops adverts into its own channels. Now that it has 1 million customers, there are enough people to advertise to and if it is free, this number will rise rapidly. Also 3 Italia will steal yet more Vodafone and Telecom Italia customers and make its money based on customer additions, churn reduction and advertising combined.
In France, Germany, Finland, Switzerland and Austria similar high quality broadcast services are either already being offered or about to go on sale ‘ the big push is to use sport to sell subscriptions ‘ just as 3 Italia begins to give it away, using the European soccer finals as a sales pull.
In Germany, the cellular operators are so incensed at not being asked to run the mobile TV service that they are trying to offer a handset that will pick up the local digital terrestrial TV signal, but so far it cannot be received inside a building and the battery dies in about 30 minutes, and of course the cellular operator has to order new phones with new chips in them, and gets no revenue at all from this service.
The first taste of mobile TV in the UK is likely to come from Qualcomm which plans to use the UK as its proving ground for its MediaFLO system. It claims that networks can be built a little cheaper and have faster channel change. It has had a trial with BSkyB, and has bought some spectrum in the UK, not the usual UHF spectrum seen used elsewhere for mobile TV, but L-Band, which might just work but will need a more expensive build out. Vodafone meanwhile will look closely at what’s happening in Germany with terrestrial TV and may just copy that, pushing a free, but inferior TV service in the UK as well.
The problem that Sky and Qualcomm will have to get to grips with is that so far, the only company that has made pay mobile TV work in Europe, is now experimenting with free, ad supported mobile TV, which might mean that Sky has to try something along the same lines.
The moral of the story is that the success of mobile TV is likely to be in the business model that is adopted, and is not just down to the technology that underpins it, but either way, after being an innovator in early mobile TV, the UK is likely to be one of the last countries in Europe to have a broadcast mobile TV system, and it could still be five years away, unless it gets a fudged version either from a technology that no-one else uses in Europe, or on the Freeview network, which was never designed to be picked up on handsets or indoors.