Broadcast video has always been one of the classic no-brainers of mobile content. Can't be home to watch the big game? Watch it on the go. The concept sells itself, right?
Well, not exactly.
To be sure, there's a lot of appeal in the idea of live video on a portable device. Korea and Japan pioneered the idea five years ago with the launch of services like TU Media and 1Seg, respectively. By the start of 2006, a half dozen technical standards for broadcast-based digital mobile TV - the top contenders being DMB, DVB-H and MediaFLO - were primed for battle as vendors pitched the concept to cellcos keen on getting their ARPUs up via video services without overloading their 3.G network capacity. And by most expectations, 2008 was primed to be a banner year for mobile TV as trials led to more trials and commercial launches.
It wasn't.
Which isn't to say it was a complete disaster for mobile TV either. Trials are ongoing, initial takeup is "encouraging", and various consumer surveys insist that mobile users do watch video. The trouble is, they're not just watching it on broadcast-based networks. They're watching sideloaded video on PSPs, or streaming YouTube videos on iPhones. And when they're watching live video on, say, CNN, Cartoon Network and the Discovery Channel, they're likely watching it streamed over a 3.5G network, rather than via technologies like DMB, DVB-H or MediaFLO.
Meanwhile, where broadcast-based mobile TV has gone commercial, results are mixed. Qualcomm's MediaFLO network in the US has paying subscribers, but coverage is limited, and only a handful of operators in other markets like Japan, Hong Kong, Taiwan and Malaysia are trialing the technology. DVB-H is trialing in a number of markets in Asia, and while it's seen commercial launches in Europe, it's also been held back by complex rules and regulations, prompting the European Commission to devise new guidelines issued near the end of 2008 in an attempt to streamline the authorization process for rollouts. The move may be too late for Germany, where Mobile 3.0 handed its DVB-H spectrum back to the government last year, prompting analyst firm Rethink Research to declare in November that DVB-H was "clearly, demonstrably, and totally shot as a technology", and that "[the] continued failure of Europeans to launch DVB-H will lead to greater and greater disillusion with the technology, and better and better alternatives."
That's probably a little strong. But there's little doubt that mobile TV is due for a rethink (so to speak). Many of the factors holding up deployment are technology-neutral, such as regulatory issues and difficulties in securing content. But the real challenge, as always, is money. The evidence is mounting that while users may like the idea of mobile TV, most of them aren't willing to pay for it.
Hard sell
Sam Sheng, CTO and co-founder of chip-maker Telegent, says it stands to reason that mobile pay-TV is a hard sell.
"You're asking the consumer to make a fundamental behavior shift, and you're asking them to do that at premium prices," he says. "If you're going to do that, the user experience has to be worth what they're paying."
Olivier Coste, chairman of Alcatel-Lucent Mobile Broadcast, cites three factors that have hindered mobile pay-TV services to date: coverage, device range and channel selection.
"In Korea, for example, they are not just selling handsets - you have portable media devices, GPS devices and cars with mobile TV capability," he says. "Also, it's important to have a wide selection of channels, because if you only have five to ten channels, that's not really enough to get people to pay."
That's not to say that people aren't paying for mobile TV now, he adds, pointing to 3 Italia's H3G service.
"They have a million paying mobile TV customers who are generating 60% more ARPU than their other customers."
Qualcomm is also upbeat about its US MediaFLO operation, which is subscription-only. "Verizon Wireless and AT&T haven't issued subscriber numbers yet, but we're happy with the numbers they've given us," says Omar Javaid, VP of business development for Qualcomm MediaFLO Technologies. "Around 25% of MediaFLO-capable handsets are subscribed to the service. They're watching about 20 minutes a day, and that number has gone up for events like the US presidential election. So the metrics are exciting for us."
Free TV
However, it's already clear that if you really want to drive broadcast mobile TV usage, the most effective route is to offer it for free. In South Korea, for example, TU Media's subscription-based S-DMB service claims 1.8 million users. Its six rivals, who offer T-DMB-based free-to-air mobile TV, have over 7 million users. And while neither service is currently profitable, there's little doubt that free TV is a big draw.
"Free-to-air broadcast, particularly in the current climate, is still the best way of getting people hooked on the idea, because it's free and it's familiar content," says Anke Gill, VP of marketing for Broadband Network Systems (BNS).
Of course, free-to-air mobile TV can be a double-edged sword for cellcos, not least because it can pit them directly against broadcasters. Japan's 1seg utilizes the existing digital TV standard ISDB-T used by broadcasters. In the US, ATSC M/H is a subset of the ATSC digital TV standard that will serve the same purpose as 1seg (and will also be free of charge).
TV signals don't even have to be optimized for mobile. Vendors like Siano make DVB-T chipsets for mobile phones that are already in use in markets like Germany (which some observers have partly blamed for DVB-H's woes there). Even analog TV is mobile these days - chip-maker Telegent makes chips with analog (PAL/NTSC/SECAM) TV chipsets that are already integrated into handsets in China by local manufacturers like ZTE and Tianyu. (Telegent also just launched a hybrid chipset in January that supports both analog and DVB-T signals.)
"The best way to get users to try mobile TV is to give them a way to access TV they're already familiar with in a device they're already familiar with," says Telegent's Sheng. "They can access the same broadcast infrastructure that's been there for 50 years, and they know when their favorite show is on."
Analog mobile TV handsets have purportedly caught on in China in southeast Asia, with Telegent claiming some 5 million users in China alone using handsets to watch analog TV (compared to 1.2 million handsets using China's homegrown CMMB mobile TV technology, according to November figures from the State Administration of Radio, Film And Television). Analysts put the global figure of analog TV handsets at around 34 million.
Free-to-air handsets do have their shortcomings, however. Common complaints include shoddy indoor reception, non-existent reception inside fast-moving vehicles and poor battery life, although Sheng of Telegent argues that power consumption in analog TV handsets is far better than earlier attempts from other manufacturers five or seven years ago, and in any case the real battery-drain comes from screen back-lights that eat up 400mW of power no matter what the handset is connected to at the time.
Delivering eyeballs
But they are building up what technologies like DVB-H, MediaFLO and S-DMB haven't quite yet managed - a relatively large audience.
That's important for a couple of reasons. One, says Javaid of Qualcomm, is that free mobile TV is a stepping stone to premium services.
"Free services will rope people in and get them to try it, and then they'll start to look at premium services that give them something of value."
Potentially more important is free-to-air's ability to generate an audience big enough to attract advertiser dollars, says Coste of Alcatel-Lucent.
"The technology to do personalized advertising on mobile TV is there, but you really need a large number of users before the advertisers become interested," he says.
Admittedly, the challenge is that it's a classic chicken-egg scenario, Javaid adds. "Operators want advertisers to fund their rollout, but advertisers are only interested if there's scale."
The other issue is that advertisers don't know how long it will take for mobile TV to develop a business model, scale and viewing metrics that they're comfortable with. "It took the Web a decade to do that," Javaid says.
Gill of BNS notes that the mobile TV advertising paradigm is riddled with plenty of unknown factors that aren't being addressed.
"For example, if you have free-to-air TV on your handset, how does that impact the advertisers who paid the original broadcaster for the air time? Do mobiles count as part of the audience, and can broadcasters charge advertisers more money based on a certain percentage of viewers tuning in from handsets? And how do you measure that anyway? These kinds of things have to be worked out, but no one's really propelling that forward right now," she says.
Budget crunch
Assuming that free-to-air services do build a big enough audience to impress advertisers, whose audience is it?
In the case of analog mobile TV and digital standards like 1seg, DVB-T and ATSC M/H, it's mainly the broadcasters raking in the eyeballs. That's not a bad thing, as it creates a trained base of mobile TV viewers that cellcos can woo with more advanced mobile TV services. They need not even be mutually exclusive, as far as handsets go - Siano offers dual-mode DVB-T/DVB-H chipsets, while Telegent has a chipset supporting both analog TV and CMMB for the China market, and Qualcomm has demonstrated a multimode handset running both MediaFLO and ISDB-T.
The catch is that while free-to-air mobile TV builds up the audience, cellcos are losing the incentive to invest in dedicated networks, according to Dr Windsor Holden, analyst at Juniper Research, who says that less that 14% of the 330 million broadcast TV-enabled handsets by 2013 will opt for pay-TV services.
"The development of terrestrial TV-capable receivers with comparatively low power consumption, and the availability of these receivers in mass market handsets, throws into question the business case for the deployment of a dedicated network in many markets," he says.
Industry experts differ on how big a factor the global economic recession will be in this. In-Stat analyst Gerry Kaufhold said in a recent report that despite the economic turmoil, "consumer interest in mobile video is growing, and service providers must build infrastructure to be in position when consumer demand recovers."
Anke Gill of BNS disagrees. "The economic downturn impacts the whole value chain. At the moment, no one's really prepared to invest enough to take mobile TV to another stage," she says.
What 3G cellcos are more likely to do, says Dr Holden of Juniper, is what many have already been doing - leverage their existing networks to offer streaming video over their data networks.
"There will always be a market for some form of premium TV service on the mobile handset, and with broadcast TV in many markets likely to consist simply of the free-to-air terrestrial signals, the gap in the market is likely to be filled by streamed video-on-demand services over the 3G network," he says.
In markets like Hong Kong - where mobile TV spectrum won't go on the auction block until the middle of this year - 3G cellcos have already launched various kinds of video services, including PCCW's mobile version of NOW Broadband TV, SmarTone-Vodafone's FoneTV, 3 Hong Kong's (what else?) 3tv, and - as of January - CSL's Studio on Demand. Live broadcast and VOD figure heavily in each cellco's video services. (For good measure, 3 HK includes Sling Media in its X Series mobile Internet package.)
On the other hand, having 3G-based video hasn't stopped cellcos from trialing broadcast technologies as well. PCCW has trialed both DVB-H and MediaFLO. In Singapore, SingTel, M1 and StarHub - all of whom also sport 3G video services - have also been trialing DVB-H. It's also worth mentioning that both Korea and Japan saw heavy video usage over their respective 3G networks before they started up mobile broadcasting.
Value-add
The selling point of broadcast mobile TV for cellcos remains value-add, according to Coste of Alcatel-Lucent, who says that broadcast is still the most cost-efficient way to deliver live content like sports and news, while 3.5G is better for on-demand video and streaming. He also notes that the Open Mobile Alliance's new Broadcast Services Enabler Suite (BCAST) profile can unify mobile broadcast and 3.5G video in the handset for a better user experience.
"This allows the consumer to go through an EPG to access both broadcast and 3G video," Coste says. "He doesn't know how it's being delivered, and doesn't have to know."
Javaid of Qualcomm agrees. "On-demand, sideloading, and broadcast are not either/or propositions," he says. "It's all complementary. You can have a service layer that marries broadcast with 3G, so you have an EPG and access to other services."
Still, not all operators are convinced that mobile broadcast TV will add that much value - at least not in the near future. A spokesperson for 3 HK said that while it's always looking at plans for future infrastructure expansion, "until the market has built up a certain level of traffic, broadcast-based mobile TV would not add a lot of value to operators in terms of network resources."
Nick Ingelbrecht, research director, consumer services at Gartner, is even less bullish on mobile TV's prospects in Hong Kong or anywhere else in Asia, noting that the rewards for operators who deploy it will be minimal because revenues aren't likely to cover the cost of equipment and content licensing.
"The demand side is still quite uncertain despite trials around the world," he said in a December report on mobile TV. "If people do use it, they tend to want it for free which makes it difficult for the carrier or the broadcaster to make money."
Got spectrum?
Of all the barriers facing mobile broadcast TV, the most common is a familiar one to operators who might be otherwise keen to try it - lack of spectrum.
Regulators worldwide are looking to free up spectrum for a number of new services, chiefly wireless broadband services like Wimax or LTE. Mobile TV is also on the agenda in many markets, but many of them hinge on the transition in the broadcast sector from analog TV to digital TV, which will eliminate the need for guard bands that protect against adjacent interference.
Qualcomm knows this more than most mobile TV players. It spent over $558 million for nationwide spectrum in the 716-722 MHz UHF band last March for its MediaFLO service in the US, but can only use it in markets where the band isn't being used.
Qualcomm has been banking on the US switchover to digital television in February this year to free up the rest of the spectrum and expand MediaFLO's reach into over 100 cities in the US.
That plan was nearly dashed in January when the US Senate approved the new Obama administration's plan to delay the switchover to June 12, as an estimated 6.5 million homes aren't ready.
The delay wasn't official at press time, as the House of Representatives voted against the delay. But even a six-month delay would still put the US ahead of other markets in terms of analog/digital switchovers, says Anke Gill, marketing director for BNS.
"Many mobile operators in Asia are waiting for the analog/digital switchover to free up spectrum for mobile TV, but digital television is barely out of the gate in a lot of Asian markets," she says. "Japan's looking at 2011 before it goes all-digital, Hong Kong will switch over a year later, and China and Malaysia won't switch over until 2015, so it's going to be a long wait in many markets before that spectrum is available for mobile TV."