Mobile television is one of the most discussed topics in the telecoms industry today and destined to provide new opportunities for many organisations within the sector. The technology promises to provide a brand new platform for media companies that want to extend their content into the mobile space, and new revenue for operators faced with falling voice ARPU. Kamil Grajski discusses the issues in developing mobile television, and provides an overview of regulatory, technical and economic challenges in bringing this opportunity to market
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The catalyst for this new market is a thriving mobile communications sector. Third generation (3G) mobile technology is taking off, with new subscriptions now outstripping second generation (2G) technology in many European markets. This, in turn, has generated a rapid increase in consumer expectations of services and functionality from the mobile phone. Meanwhile, content owners and broadcasters see an exciting opportunity to extend their brands into the mobile space, reaching new consumers and pushing content to a far-reaching platform. Yet there are challenges faced by those developing the technology in delivering a high-quality product, making the business model work, and standardising.
The opportunity is born of the inherent popularity of television – almost everyone in European markets owns a set. Moreover, around 1bn mobile handsets will be sold globally in the next 12 months, which illustrates the huge potential for mobile TV to become a truly mass-market technology.
Mobile operators, however, need to deliver mobile television without the prohibitive costs associated with transporting data over 3G networks, which is inherently ‘success limited’ for the mass market. Broadcast overlay technologies such as FLO – and competing standards like DVB-H, ISDB-T and DMB – support the delivery of high quality streaming live video and audio to the mass market at a low cost per user per bit. FLO, for example, enables, in a typical 8mhz UHF European channel, more than 30 QVGA linear video channels, 10 high quality audio channels and hundreds of minutes of ‘Clipcast’ (file-based) short format cached content per day.
Mobile TV business model
DVB-H, DMB and ISDB-T also envision an overlay network for multimedia broadcasting services, but the FLO advantage lies, in part, in the support for advanced multiplexing schemes that promise greater coverage with fewer transmitters and a broader service package. The real market advantage is the successful pay TV model that can be followed closely with a ‘large channel’ package, made up of a base-level service and premium channels that earn the broadcaster a higher margin on their content. For a network operator, lower capex and more capacity means a greater channel package to offer to customers, generating a higher rate of return. As a financial model this is the difference between profitability or not.
Technology is only one part of this picture – one of the key debates in the past year has been the establishment of a sustainable business model for mobile TV. In Korea, for example, during 2006, the T-DMB free-to-air platform saw more than two million devices sold. While raw user numbers point to successful deployment, advertising revenues from T-DMB broadcasts are below initially forecasted levels. Moreover, network build out costs for T-DBM have been a drain on the resources of free-to-air broadcasters and handset OEMs, with return on investment now in doubt.
There have been other issues with deployments too. In Finland, home of one of the major proponents of DVB-H technology, Nokia, the promised live commercial mobile TV service is yet to materialise. Issues with rights for content have stalled a fully commercial service, with further delays likely. The problem: a free-to-air business model that disincentivises too many of the key players and hinders the development of innovative and compelling services.
Meanwhile, in Japan the deployment of One-Seg, launched in April 2006, has encountered a number of teething problems. The service, which is based on ISDB-T technology, is currently offered to consumers on a free-to-air basis with a mobile contract. The free-to-air nature of the service initially led consumers to sign up, but to cancel the phone contract, thus obtaining TV on their phones for free. If mobile TV is to be the revenue generator that many operators anticipate it to be, then such anomalies must be ironed out.
There is, however, a positive case study in the United States where Verizon Wireless launched its pay TV V-CAST mobile TV service on March 1, 2007 in approximately 25 selected markets. The service, priced at $15 and initially offering eight live channels of content, is operated on the MediaFLO USA broadcast network. FLO Forum member MediaFLO USA promises to create the world’s largest TV market. This is an argument that was underscored by the announcement in March 2007 that the country’s largest operator – AT&T Wireless – will deploy a MediaFLO-based mobile TV service in late 2007. The incentives created by a paid-for, premium content mobile TV service means that all members of the value chain – technology providers, network operators, content owners and broadcasters – stand to benefit.
Technology licensing remains a crucial question to be answered in the coming months. In some cases licensing terms for mobile television technologies remain unclear. Indeed, a number of industry players have questioned how much they will be called upon to pay DVB-H essential patent holders for the technology. There is yet to be a definitive proposal and the exact terms of the negotiations are not known, which has caused a number of major broadcasting players in Europe to express concern about the risk of “patent ambush” – where technology is deployed and the cost is only known at a later date. It is this uncertainty surrounding licensing for mobile television that could delay the commercial implementation of networks in Europe.
FLO, on the other hand, is licensed under a broad-based licensing program that enables the development, manufacture and sale of FLO-enabled handsets. The program is designed to encourage existing CDMA chip licensees to develop and market CDMA/FLO multi-mode chips without increase in the standard royalty rate for CDMA-based handsets. CDMA includes CDMA2000 and/or WCDMA/UMTS.
Standardisation and spectrum
Standardisation is another important consideration for industry. The FLO Forum, which now boasts 80 members from all parts of the mobile TV value chain, has moved rapidly towards global technology standardisation. In August 2006 the Air Interface Specification was published by the Telecommunications Industry Association (TIA) as TIA-1099. There then followed TIA-1102, 1103, 1104 and 1120 which cover minimum performance standards for transmitters and handsets, and the FLO transport layer. In parallel, the ITU-R Study Group 6, in a recently approved New Recommendation relating to broadcast multimedia services and applications, included FLO as a referenced technology with the designation ITU-R Multimedia System M. Last, ETSI has undertaken initial efforts in the area of FLO standardization with the recent approval of a New Work Item in the ETSI Broadcast Committee.
Standardisation of mobile television technology is important for global and European markets, in particular, because it drives down both component and development costs, speeds up time to market for devices and ensures that carriers’ requirements are obtained first-hand. Standardisation also ensures interoperability and lowers operational costs for FLO-related products and services.
The nationwide 700mhz spectrum footprint acquired by Qualcomm at FCC auction 49 in 2003 in the United States ultimately led to the launch of a full commercial FLO-based mobile TV service in the US in 2007. In Europe the picture is different and the availability of spectrum will play a pivotal role in the rollout of services. A number of regulators across the continent are predicting analogue switchover as late as 2012 – and only then freeing up UHF spectrum for new broadcast services. However, in certain markets there appears to be a realistic path to commercialisation over the next 18 months. There are, for example, ‘L band’ spectrum auctions planned in UK and other European territories may follow suit in the next year. It is the harmonisation of UHF spectrum that will prove to be the catalyst for widespread deployment of mobile television technologies.
Yet there are technical and commercial challenges to be met by all those engaged in the business of broadcast mobile television services. While the many competing technologies are now at either commercial or pre-commercial stages of deployment, market forces will select the winners. The prevailing view is that there will not be a single dominant global standard for mobile broadcast. Each global region will present a unique combination of regulatory, technology, business and legislative conditions. Today, FLO Forum member companies are planning accordingly. Indeed, many FLO Forum member companies that have previously announced support for other mobile broadcast technologies have publicly announced support for FLO technology as well.
2007 and beyond is a critical period for mobile television – one in which commercial deployments will grow and mass market subscription services offered over the first truly large-scale nationwide network in the United States will be closely scrutinised. The market is set to absorb copious amounts of data relating to how consumers use mobile television, what content is most compelling and what further challenges lay ahead. One thing is certain– mobile television will remain at the forefront of debate in our industry for the foreseeable future.