Qualcomm Inc (QCOM)

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Wireless: Carving up big market for tiny televisions
Eric Sylvers International Herald Tribune

MONDAY, MARCH 20, 2006

http://www.iht.com/articles/2006/03/20/business/wireless21.php

MILAN Live television on mobile phones is just getting out of the starting blocks, but a battle is already raging over which of the three main competing technologies will become the dominant standard - if any.

But unlike with the competing DVD standards hitting retail shelves this year, consumers will probably not have to worry about making the wrong choice. A single standard will probably be adopted for most geographic areas, with phone makers, broadcasters and mobile carriers in a region agreeing to use the same technologies, according to several industry experts.

Today, mobile TV is commercially available only in South Korea, where the government is subsidizing the development of a technology called Digital Multimedia Broadcasting, or DMB. While that gives DMB the early lead, many industry experts say that a technology backed by Nokia, the world's largest cellphone maker, is the long- term favorite. Nokia's support all but ensures that Digital Video Broadcasting-Handheld, or DVB-H, will become the standard in Europe and large parts of Asia outside of South Korea and Japan, according to analysts.

"We see DVB-H winning out over all, but there will also be limited space for some of the other technologies," said Adrian Drozd, a London-based senior analyst with Datamonitor. "DMB has a head start, but from 2007 onward DVB-H should get momentum and become the dominant technology."

DVB-H trials are under way by mobile phone networks in Spain, Germany, Britain, Italy, France, Singapore, Malaysia, Australia, the United States and other countries. The first commercial rollouts, including one by Hutchison Whampoa's 3 Italia, are scheduled to coincide with soccer's World Cup in June in Germany.

Qualcomm of San Diego has developed another standard called MediaFLO that will take a large slice of the U.S. market, and Japan has a fourth standard that is unlikely to expand much beyond its borders, according to a report by Datamonitor.

The consumer appetite for tiny- screen TV is a big unknown, but many industry analysts say that it will become popular. By 2009, according to a conservative estimate by Datamonitor, 69 million people worldwide will subscribe to mobile television services generating total revenue of $5.5 billion.

Datamonitor forecast that in 2009, 90 million DVB-H phones will be shipped by manufacturers, compared with 28 million DMB, 30 million MediaFLO and 18 million with the Japanese standard.

Some favor DVB-H because it can be used while a viewer is in motion in cars and trains. Like DMB, it makes use of existing TV infrastructure, holding down costs. But most important, DVB-H uses less battery power than DMB and can handle higher bandwidth and thus potentially more channels - about 50, compared with about five on DMB.

"DMB is likely to have problems competing with DVB-H because DMB uses much lower bandwidth," said Eino Kivisaari, a researcher with the Helsinki University of Technology.

DVB-H saves power by sending transmissions in bursts, which lets the tuner switch off between bursts. This reduces power consumption by as much as 95 percent, Datamonitor says. But DVB-H takes longer to change channels, almost 20 seconds in some trials. Though that will improve with time, analysts say it will not go much below five seconds.

DMB can change channels in a few seconds, and it has the advantage that it can be broadcast on frequencies that have already been allocated by most governments, according to the Datamonitor report. But this advantage will be disappear as DVB-H frequencies are allocated.

MediaFLO offers the bandwidth of DVB-H with faster channel changing, though it requires largely new and expensive infrastructure. Qualcomm's investment in the technology means it will likely dominate the U.S. market, industry experts say, but the large infrastructure requirements are likely to reduce its appeal in other countries. MediaFlo has almost been completely written off for the European market because of Nokia's support of DVB-H, said Drozd of Datamonitor.

With the standards battle slowly taking shape and with each technology carving out its share of the market, it will be up to mobile phone companies and television companies to work out mundane matters like how to split up the revenue.