The continuing deterioration at Sprint and the sale of the HiWire spectrum to AT&T has caused some considerable consternation in and around the US world of mobile TV.
HiWire owned 2 channels of 6 MHz UHF spectrum, and was the last trial of DVB-H technology remaining in the US, when one of its parents Aloha Partners sold the spectrum to AT&T.
Now if you are T-Mobile US, which continues to be part and parcel of the HiWire DVB-H trial, where exactly does that leave you?
T-Mobile, like any other US cellular operator, has to decide at some stage in the future on a mobile TV strategy. However unlike all the other US cellcos, it has experience in its parent’s country of Germany, with DVB-H, and is pretty happy with that technology, which is why it wanted to be part and parcel of the HiWire trial.
Now whether AT&T uses the spectrum for DVB-H, or for something entirely different – and it may not make that decision overnight, given that AT&T is known for taking its time in these matters ‘ T-Mobile has a problem. T-Mobile is in the middle of building out 3G in the US, and will not even be able to offer unicast cellular streaming TV until it has completed that, and that type of mobile TV is singularly unattractive and does not drive new subscribers ‘ in Europe it has been used as a premium for getting customers to shift to 3G.
Is AT&T likely to emulate Qualcomm and its MediaFLO subsidiary and set up its own DVB-H service, with a separate brand, which can be marketed by other cellular operators? It doesn’t seem likely to us, given AT&T habits of direct confrontation rather than collaboration, in the past. Perhaps the only way that T-Mobile could get access to such a DVB-H service in that spectrum would be if it shared the network development costs with AT&T, which could be considerable and given AT&T’s financial base, pointlessly opening up AT&T spectrum to compete with itself.
Perhaps if AT&T does go ahead and builds out a DVB-H network there will be some spare capacity ‘ the capacity that was planned for AT&T ‘ available on MediaFLO, and perhaps T-Mobile might sign up for that.
But with MediaFLO sign-up numbers shrouded in mystery, and that likely indicating that the service is not taking off, then we could expect all these operators to put mobile TV on the back burner, and wait for the broadcast community to begin pushing mobile TV themselves.
Outside of the US it has been shown, pretty overwhelmingly that mobile TV will take off either with a subsidized handset, as is has in Italy, but where the service charge is considerable ‘ or where it is a free to air services and the handset is purchased or in some cases also subsidized. You can charge for one, or the other it seems, but not both ‘ which is perhaps the lesson that Verizon has to learn in pushing its new MediaFLO based Vcast TV ‘ we can’t be sure just how many people qualify for a subsidized handset on Vcast TV because those figures are not revealed, but you can be pretty sure that either few or none at all is the right number ‘ or else it would have taken off like a rocket.
If that’s true then it automatically means that in markets like the US (and Japan) where handset subsidiary is less often mandated by the extreme competitive pressures that are found in 100% mobile penetrated Europe, that only a free to air service will take off. In the US there is just 78% mobile penetration and in Japan an almost identical 79%, suggesting what’s good for one market might be good for the other.
So if broadcasters manage to take the lead here it will require them to push the mobile TV format bundled into the new US digital broadcasting standard ATSC, called ATSC M/H, for which equipment and software is expected in the early 2009 time frame, in time for new US 700 MHz licenses.
But it was the regulator in Japan that forced the cellular operators to all use the same mobile TV technology, based on a broadcast technology, ISDB-T and similar pressure will not be brought to bear in the US by the FCC. So how might this come about?
We cited MobiTV last week saying that the MVNO community might be the community to underpin this with Virgin Mobile or perhaps Leap Wireless starting the ball rolling with a few million subscribers. How much more impact this might have if T-Mobile, with its 27 million US subscribers, were to back this type of strategy, having found itself without a viable mobile TV technology after the AT&T spectrum purchase.
Sprint on the other hand, now that it has reduced its build out rates for Pivot, which is the main tool by which it was helping four of the leading US cable operators towards a quadruple play, leaves these guys ‘ Comcast, Time Warner Cable, Cox, and Advance/Newhouse ‘ worrying that one of their favorite elements of that deal, to bring cable TV to the handset, must now be considered in jeopardy. They too may need a new strategy.
If it is true that mobile TV will not take off rapidly without either handset subsidies or free to air programming, that too will leave the cable operators completely out of the picture anyway. Cable operators can’t do free to air programming, but neither do they have the stomach for a payout whereby they subsidize handsets, as they have shown in their unwillingness to spend much cash around the Sprint partnership.
As these facts sink in at Comcast and co, it is likely that their reliance on Sprint to add any kind of televisual experience to the Pivot mobile service, may evaporate and with it the importance that Pivot holds within their respective strategies. Without TV on the device, using the incredible amount of content that a cable operator can lay hands on, Pivot has no potential as a differentiator over and above AT&T Mobility or Verizon Wireless cellular services. As such it is being pursued merely as a ‘me too,’ strategy so that the RBOCs cannot claim the high ground in a quad play war. So either Pivot is doomed, or at least it will not become a strategic weapon in the battle between cable and telco.
What cable operators will be thinking as they reach this same conclusion is that they should create portable TV rather than mobile TV ‘ the ability to copy content from their set tops, to sideload into portable devices or to placeshift to remote devices. These capabilities might be designed by their combined technology organization, Cablelabs or be reached in consultation with their conditional access partners, for the most part Motorola, Scientific Atlanta who are also their leading set top vendors, or with the help of a place shifting company like Sling Media, now owned by EchoStar or a combination of the two.
We have always said that whatever the initial take off for mobile TV, it will eventually end up with a combination of fee to air, premium channels, trickle VoD, sideloading and placeshifting and a new revenue model for the cable operators might be to license technology to cellular operators (other than Verizon and AT&T) so they might access its set tops, for legal side loading. If not cable operators will not be able to place their programming on handsets (content owners permitting) until the mobile TV market has stratified into multiple free and paid layers ‘ just as the TV broadcast market was created. But that would leave cable in a weak position against the RBOCs.