Seybold's Take: Qualcomm should wholesale its MediaFLO network

Andy SeyboldIn 2006, Qualcomm launched what it hoped would be a worldwide Mobile TV downlink system. The FLO system transmits TV and data to mobile devices but has no uplink from mobile devices. It operates in the United States in the 700 MHz band (716.722 MHz, what used to be UHF channel 55) and makes use of very high-powered transmitters to blanket entire cities and most of the country with its signals. And Qualcomm builds a mobile device chipset that can be built into standard commercial mobile devices to enable Mobile TV service.

Verizon Wireless was the first to launch FLO-TV under its V Cast brand and AT&T Mobility followed a year later. Uptake of the service was disappointing and last year Qualcomm worked with some mobile consumer device companies to offer FLO to devices that were designed specifically to receive its signals either in a vehicle or using a handheld receive-only device. FLO was incorporated into Verizon's and AT&T's existing over-the-air TV offerings and their customers used the existing two-way networks to control what content they received from the FLO system. But Qualcomm believed that people would watch full-length TV shows on mobile devices, and this has not proven to be the case.

Now Qualcomm is at a crossroads with the service. It is built out across the country and at the last 700 MHz spectrum auction, Qualcomm bought additional adjacent spectrum (TV channel 56) in many areas. So what do you do with FLO? Do you disband it and sell the spectrum or do you find another way to make it pay its own way and turn a profit? Qualcomm did everything right: its operations center for FLO is in many ways more sophisticated than many broadband network centers, and they can modify HDTV and standard TV feeds on the fly to support mobile devices.

I would like to offer up my own idea for both the service and the spectrum. First, what is the spectrum worth? It is in the coveted 700 MHz band where AT&T, Verizon, and others are launching their LTE systems this year and next, but it is not designed for Frequency Division Duplex (two-way LTE systems using two different portions of the 700-MHz spectrum, one for uplinks and one for downlinks). It would have to be used for Time Division Duplex or TDD, the same type of systems that are being used by Clearwire, Sprint Nextel and others for their WiMAX systems. Qualcomm's new mobile chipsets support both FDD and TDD LTE so you could make the case that network operators that do not have any 700 MHz spectrum would be anxious to purchase this spectrum and deploy their own TD-LTE systems in order to compete with AT&T and Verizon.

So what is the spectrum worth? Well, it is at least 6 MHz of spectrum nationwide with 12 MHz in many major metro areas, and since there is no more 700 MHz spectrum to be had, it could be worth $5 billion or more, which would help Qualcomm recoup its losses and make some money as well.

But I believe this spectrum is worth more to Qualcomm as it exists now. Here is why: Today the content on the wired Internet is close to 50% video and it will see more video in the near future. Most entertainment companies seem to think that the Internet has unlimited capacity so they can keep shoving video over that pipe. Add to that that fact that wireless broadband, even with LTE, is based on a finite resource, and it is shared bandwidth. As the demand for video services and large files continues to grow on wireless broadband systems, network operators will have to find ways to manage their networks.

Given all of that along with the fact that Qualcomm already has its network in place and it can be segregated into several regions (I have been told it could be divided to cover the country as three separate systems), the obvious use for this network, to me, is for Qualcomm to wholesale the capacity to the network operators to help them offload video and large file downloads from their two-way networks. It has already been proven that the two-way networks can be married to the FLO system so the uplink from a wireless device can be used as a command system. If this was implemented, when you wanted to download video and store it on your device (which will be happening more and more), the download could actually be delivered over the FLO network, taking it off the commercial cellular network and freeing up that bandwidth.

How much data can be sent down the FLO pipe? FLO uses encrypted OFDM with QAM modulation. In the 6 MHz of bandwidth, it can deliver 21-23 channels of TV at 30 frames per second in 6 MHz of spectrum. This means network operators could certainly deliver more video feeds and data files quickly and efficiently. In this way, when a video or large file was requested, network operators could determine if they wanted to ship it out over their own network or send it via the FLO system. And since FLO supports one-to-many video and data services, it would make an ideal transmission media to send out materials to a nationwide sales force, for example, updated sales catalogs and pictures and videos that could be stored on their devices and used in their presentations.

I don't know what Qualcomm will do with FLO. I know it is trialing it in other countries, and I know that if it sells the spectrum it will make a onetime profit. If it turns the network into a one-way system that is leased to network operators, as the demand for Internet information increases for wireless broadband, Qualcomm could end up making that much money and more over time. The network is already in place, the system works and delivers high-quality TV even inside buildings. To me it is worth more as it is with a new business model for delivering video and data files than it would be to sell it and have it turned into more two-way networks, each with their own data limitations.

Andrew M. Seybold is an authority on technology and trends shaping the world of wireless mobility. A respected analyst, consultant, commentator, author and active participant in industry trade organizations, his views have influenced strategies and shaped initiatives for telecom, mobile computing and wireless industry leaders worldwide. www.andrewseybold.com

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