Dr Windsor Holden, a Senior Analyst with Analysys recently wrote on the future of mobile TV.I have sumarized his arguments,in this article, and on the whole I am inclined to agree with many of his points. Emerging technology dependant upon the penetration of new handsets will take time. New technologies need time to grow and for competition to produce a clear winner (my money is on DVB-H and mediaFlo) and then for the Network operators to actually have the spectrum to provide the service ( Old terrestrial UHF TV Frequencies). It should be clear that the content providers could really do well here as they understand this technology very well indeed, but the wealthier mobile companies will win if it comes to a bid. OFCOM recently stated that it is agnostic to the companies that can bid and will award on merit, not just on price.Mobile broadcast TV is the next big thing, apparently. It is the killer app, the cash cow, the panacea to all mobile ills. Given it time it will eradicate third-world debt, solve the Middle East crisis, colonise Mars and even - though this may be asking a bit too much - expunge the dandelions from my front lawn. You may detect a certain amount of hyberbole in the above but only a little more than has already been put about by Mobile TV adherents. Worried by declining voice ARPU and increasingly twitchy about messaging adoption reaching saturation point, operators are hoping that rich-media services will realise sufficient revenues to ensure that overall ARPU levels pick up once more. And chief amongst these services is television.
Mobile TV is brilliant. Everyone wants it. You want it. The operators have taken to repeating this, like a mantra, possibly in the belief that if they restate it enough times, then the public will start to believe it. Indeed, recent research conducted by O2 and Arqiva would seem to lend some credence to these claims. Following a five-month trial of a mobile TV service using DVB-H technology, 72 per cent of participants said that they would buy the service (if available at any acceptable price) within 12 months; 57 per cent within six. If the adoption rate within the O2 sample demographic (18-44 years) were replicated across the entire UK population, then within six months mobile TV would have around 11 million subscribers, rising to 14 million after a year. At which point the O2 mobile TV team would retire to Barbados. Of course, neither O2 nor Arqiva would be so rash as to make such extrapolations from these trials, which is why they haven't yet bought those West Indian villas: however, in order to recoup investment costs, let alone generate the kind of revenues that will make broadcast TV the saviour of the mobile industry, any service must, fairly rapidly, acquire a subscriber base of several million.
Let us assume that a UK operator finally gains access to UHF spectrum and deploys a DVB-H network. For that the operator is likely to pay at least EUR300m. Let us also assume that the operator has partnered with a broadcast or broadcasters and has managed to put together a compelling package. The operator is then faced with the prospect of selling this bouquet to the consumer. This may well be a problem, as the consumer will probably not have a handset that can receive mobile TV. The crux of the matter is that, for the medium term at least, handsets capable of receiving DVB-H or whichever becomes the de facto, will be specialised, high-end devices. I see no point in buying a specialised handset unless the service for which that handset is specialised has been made available.
Accordingly, the audience at the outset will be zero or fairly close to it. While numbers will climb after the service becomes established, the operators will typically be relying on contract customers, due for a handset upgrade, to pay a premium to move up to the DVB-H-enabled model; for prepaid customers, the initial outlay will be significantly higher still. Suddenly, the research qualification, "at an acceptable price", becomes terribly important. A significant number of customers might be prepared to pay up to £10 pounds a month for a mobile TV bouquet on an existing handset; but how many of those would pay the substantial premium for a high-end handset? Furthermore, before they cough up for this all-ARPU enhancing service, would-be customers would like to be reassured that they will actually receive it.
In the UK, 2G coverage is, according to the networks, at or around 99 per cent of the population. I am increasingly of the opinion that this 99 per cent refers to specific individuals rather than the area in which they live, with myself as part of that ill-fated 1per cent : in various locations where I have found myself over the past few years (Cambridgeshire, Chichester; Network South Central) I have found myself unable to receive a voice call or text message, let alone streamed video. And 3G coverage is considerably less than this, at around 70 per cent . If one is standing still. And outdoors... Generally speaking, subscribers to the UK's BSkyB service receive uninterrupted programme coverage. Let's envisage a scenario whereby the picture became blocky every few minutes, or simply vanished at regular intervals - particularly galling if you were watching a sporting event. You would rapidly tire of this and, after a few well-aimed words at someone in a Livingston call centre, you would cancel your subscription. I would venture to suggest the same might be true of those subscribing to mobile TV.
One of the largest potential audiences for mobile TV are the long-distance commuters, particularly train passengers with nothing better to do for an hour or two. This is a problem for mobile TV solutions providers because, as yet, none of the technologies is demonstrably robust at high speeds. Finally, we must return to the question of how many people are actually prepared to pay for a TV service, and - most pertinently - for content for which many of them already pay? In the UK, around ten million households already subscribe to a pay TV service. Adoption has slowed markedly in recent years, suggesting that further growth potential is limited. People are simply not interested in paying for additional TV channels.
A significant proportion of any wannabee mobile TV operator's user base would therefore be drawn from residents of households which already subscribe to a pay TV service. It also seems likely that the overwhelming majority of channels will replicate the existing content, including premium channels such as Sky Sports and Sky Movies. Our BSkyB subscriber is therefore being asked to pay out an extra £10 to £15 a month on top of the £30 to £40 pounds he's already committed to. This is not going to happen. The model may succeed if existing Sky customers are offered mobile content at a significant discount to the standard price, but this then requires the operator signing up twice as many customers as before just to break even.
So, given these obstacles, what are the prospects? For the much-vaunted DVB-H standard: not good in the short term. For one of the larger Western European countries, such as the UK or France, cumulative national mobile broadcast revenues are unlikely to surpass rollout costs for a single DVB-H network and licensed spectrum until four years of service have elapsed; factor in additional expenses for items such as broadcasting rights and running costs, and the prospects seem slimmer still. Of course, DVB-H is not the only standard. Indeed, the vendors, too, have convinced themselves that there is a ubiquitous desire for pay mobile TV services.
As a result, operators have been faced with a plethora of broadcasting solutions - DVB-H, DAB-IP, T-DMB, ISDB-T, MediaFLO, TDtv, S-Band - with which they will make their billions. But the other standards have their drawbacks: while DAB-IP is cost-effective, it has to share spectrum with existing radio content and as a result can offer only a limited number of TV channels. Similarly, for T-DMB to be cost effective, its launch would have to be synchronised with that of digital radio content across the same network. Other drawbacks are less technological than political: in a standards contest which has echoes of VHS/Betamax video struggle in the early 1980s, vendors, operators and industry groups are championing their own pet solutions. While Nokia, Samsung and LG have lined up handsets for DVB-H, MediaFLO and DMB, European vendors have so far been lukewarm to technologies other than DVB-H. Even Alcatel's S-Band variant of DVB-H, a hybrid satellite/terrestrial repeater solution which has the potential of providing international coverage, reduced network deployment costs (essentially comprising an upgrade to existing 3G networks) and readily available spectrum, has yet to win their full backing.
The worst-case scenario in all this is that operators may fail to reach a joint decision on network standards, or even network sharing, with the result that two competing networks are rolled out, to the financial ruin of all parties involved. In such circumstances, mobile TV will only be the killer app inasmuch as it will be the app that killed its operators.
It could well be that mobile TV turns into a free for all, but what about the alternatives? Streaming over UMTS fr example requires very little technology, its not rocket science and it drives exposure and gains market traction. I think Doctor Holden has missed the fact that the technology to deliver video content is here, and future advances will only add to the user experience.
