The early hype for mobile tv may now have died away, but Kamil Grajski is certain that successful mobile broadcast is on its way
The mobile TV hype is over. Aggressive projections regarding consumer adoption, and revenue (whether via advertising or subscription) have not come to pass. Chief among the more creative aspirations was that by the opening ceremonies for the 2008 Summer Olympics, aided by a European Commission sponsored DVB-H technology mandate, the European Union would be well along the road to rapid adoption of mobile TV and mobile broadcast services. Worse, news has emerged in recent days that due in part to lack of mobile network operator engagement, the Mobile 3.0 consortium that had won a license in Germany with plans to use DVB-H for its mobile TV service may be on the verge of collapse. In parallel, it was announced last week that Norwegian broadcasters NRK, TV 2 and MTG had banded together to launch a free-to-air T-DMB-based mobile TV service.
All of this is not to pick exclusively on DVB-H. Not at all.
The reality is that there are challenges aplenty across the whole mobile TV technology spectrum. For example, operators in Korea have launched services using the T-DMB standard, which sports more than sixty device-types and more than 8M subscribers. But even with that size of audience, advertising revenue is running behind expectations. In the USA, which recently managed to air a live, dedicated mobile TV Olympics coverage channel via FLO-powered AT&T and Verizon services, uptake of mobile TV has been slower than many expected. Qualcomm's CEO Paul Jacobs, who's company supports the FLO broadcast standard as well as other technologies, has publicly expressed a desire to see greater mobile network operator marketing and promotion of mobile TV services.
But despite the march of seemingly apparent bad news, the underlying trends for mobile TV still register strong positives. In a word, the hype is gone merely to be replaced by the harsh realities of establishing a new global consumer mass market medium. Although TV is seen as a mature medium, transferring the broadcast model that appears on cable, satellite and terrestrial networks is a massive undertaking. Despite some early teething troubles mobile broadcast TV has launched commercially in a number of closely followed markets around the world including Japan, Korea, Europe (Italy) and the United States. Other on-air or planned launches include Austria, Finland, Netherlands, among several others. So the commitment from operators and the industry is there.
So what has been learned so far? For those operators that launched with a free-to-air model (and lots of devices), such as in Japan and Korea, initial consumer adoption is not the major issue - the services are in fact proving extremely popular. What remains unclear is revenue and profitability growth, as operators try to move consumers over to the more lucrative subscription channels that feature premium content. Conversely, operators that launched with only a pay-TV model have seen adoption as the greater issue. And even then, long term revenue and profitability growth are yet to be fully tested.
In Europe, 3 Italy, which was first to market with a mobile DVB/H-powered pay TV service, recently announced the addition of a free-to-air bouquet as a way of boosting adoption. Similarly, MediaFLO USA has added a free-to-air promotional channel aimed at giving consumers an easy way to sample and subscribe. Thus, in response to market realities, the launched mobile broadcast market is implementing and testing the proposition that a hybrid free-to-air and pay-TV model may be optimal to drive adoption and fuel business growth.
Looking at forthcoming deployments, the medium- and long-term trends remain positive. In the medium-term, the realization that capacity (spectral efficiency) is pivotal to broadcast TV's success has seen a review of the different technologies on offer. Capacity is important for two reasons: firstly, the ability to deliver more channels over the same service means that operators can deliver a greater mix of paid and free content as they seek to drive uptake. Secondly, the capacity has an effect on the amount of spectrum needed to deliver TV services. This is of critical importance in Europe, where there is much greater pressure on the amount of spectrum available from country to country. This is one of the advantages of the FLO air interface, as it supports ~1.5X-2X the number of video channels as any other mobile broadcast technology. Such capacity gives excellent flexibility in adjusting bandwidth between free-to-air and subscription-based programming.
For example, while it is early to define it as a widespread trend, we've observed regulators (France and the UAE among others) implement must-carry free-to-air requirements on mobile broadcast licensees. The number of such free-to-air channels varies, but can be as high as 5-10 channels. MediaFLO operating in an 8MHz channel can deliver 30+ channels streaming video (25+ frames per second; QVGA; AAC+ stereo audio). Thus a 10 channel free-to-air requirement still leaves up to 20 channels to power a subscription-based service, or other allocation to include such services as multimedia file delivery (Clipcast), IP datacast services and mobile interactive TV.
Also in the medium term we can expect action to result from recently concluded spectrum auctions, including those in the United States and the United Kingdom.
Two key long-term trends signal continued positive momentum. First, mobile broadcast related regulatory consultations have recently concluded or are in progress in India, Singapore, Taiwan, Ireland and the United Arab Emirates. In Europe there is steady progress relating to the Digital Dividend and spectrum harmonization primarily via the CEPT ECC Task Group 4 operating under mandate from the European Commission. Second, 3G-based mobile TV continues to build momentum. In key high-growth markets, such as throughout the Middle East and North Africa, 3G-based mobile TV has created spirited competition between operators.
Ultimately, as 3G-based mobile TV and related services drive adoption and simultaneous use grows, the low-cost bearer economics of mobile broadcast in general and capacity performance of MediaFLO in particular will drive adoption.
Back to today. While the mobile industry still works out the details of how best to create a robust mobile TV business, consumers are still getting to grips with even basic multimedia content. But there is optimism in the air: as people get used to browsing the web and consuming video and music on their mobile devices, they set the stage for TV and other richer content in the future. So despite the death of all the early hype, it's certainly a question of ‘when' and not ‘if' for mobile broadcast TV. Nobody said that changing habits was easy, but done right the effect can be amazing. Just ask Apple; not for what it has achieved for itself, but rather for the catalytic effect the iPhone has had on the whole industry. The work we do today prepares the ground for the services we enjoy tomorrow.
Kamil Grajski is President of the FLO Forum