Qualcomm Inc (QCOM)

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Mobile companies now bet on TV
JAN STRUPCZEWSKI & SINEAD CAREW

http://economictimes.indiatimes.com/articleshow/932378.cms

REUTERS[ TUESDAY, NOVEMBER 23, 2004 12:23:15 PM]
STOCKHOLM / NEW YORK: A reality show or soap opera on your mobile phone? This is the vision of top telecom firms as they hope that from 2006 consumers will sign up for new phones that can receive digital television signals.

Some executives predict that full-fledged television could be the biggest mobile hit since voice calls.

"Mobile TV is actually the most important application beyond voice and messaging in phones," said Andrew Cole, a vice president for consultancy AT Kearney.

He believes US users alone will spend $30 billion annually on mobile TV, money that will go to telecom operators, equipment makers and broadcasters.

"The light goes on when you see it. It is very watchable," Cole said of live TV demonstrations on phones in South Korea.

Mobile phone users with high-speed, third generation handsets can already watch some TV channels that are broadcast via a low-quality wireless Internet video stream, provided by Vodafone in its 3G markets at a cost of €12 per hour, rather than the high quality of broadcast typical for TV sets.

Mass market mobile TV will only become possible with a new type of broadcasting and with mobile phones that have separate TV antennae alongside mobile communications aerials to pick up the signal.

The broadcast, formatted for mobile phones in a standard called Digital Video Broadcasting Handheld (DVB-H), could be made over frequencies now used by analogue TV stations, once they vacate them by switching to digital broadcasting.

Users will need to buy a new phone with an additional chipset and an antenna, and operators will have to agree on a revenue-sharing scheme with TV stations.

Users want TV

In countries where most people already have mobile phones, telecom companies are searching for ways to keep growing by trying to make people spend more on services such as Internet surfing, picture swapping and live video calls.

These services have been slow to catch on, and people still mainly use mobiles to make phone calls or send short text messages.

But a trial in Germany by Nokia, the world's biggest mobile phone maker, and Vodafone, the largest mobile operator, showed 80 per cent of people wanted TV on their mobiles and were willing to pay €12 ($15.63) per month for it.

Surveys by smaller rival Sony Ericsson show interest from up to 40 per cent of users.

"Everything points in the same direction – this is one quite promising service," said Bengt Stavenow, a senior Sony Ericsson executive dealing with mobile TV technology.

Cole forecast consumer spending of as much as $20 a month for mobile TV in the United States, where Nokia is also running tests and wireless chip maker Qualcomm plans to build a dedicated network for digital TV services.

Nokia expects handsets to be available in 2006 that can access 20 to 50 TV channels, and Qualcomm expects to begin operating a US network around the same time. Sprint, the No. 3 US mobile provider which now delivers video on demand to phones, has said it is keen to offer live TV.

Research by handset makers shows people would probably watch sitcoms and news or sports programming while commuting.

"On average, people watch three to 15 minutes. It's typically news or music TV. Very rarely do they want a film – there are better receivers for that," said Seppo Sutela, head of Nokia's Rich Media department. "This will become a 'killer application' for the mobile phone."

Hype or reality

The TV programme could also be broadcast by the operator over its own 3G network via a technology called Multimedia Broadcast & Multicast Services, which is expected to be ready in 2006.

Nokia's trial TV phone, used in tests in Germany, Finland, Britain, United States and Australia, is bulkier than normal because of the additional chipset and antenna.

The company promises to produce commercial TV phones that do not differ from today's advanced handsets, which have features such as personal organisers.

Sony Ericsson's Stavenow said the cost of an additional TV chip in phones should be only between $10-15.

But at least one high-level official acknowledges that mobile TV might not be a global success.

"I'm cautiously optimistic on how well that's going to do," said Ron Garriques, who heads the mobile phone unit at Motorola, the world's No. 2 handset maker. "I think it's really important to look at this market by market."

Text messaging is still much more popular among European than US consumers. Asian users have been quicker to embrace advanced phones than the rest of the world.

Multiple technology standards and the availability of digital TV in individual countries could stunt global progress of the market.

Gartner analyst Jason Chapman is conservative about the viability of mobile TV. Operators will feel obliged to follow the crowd in providing the service, he said, like many have with live video calls, which are offered in Europe and Asia but have yet to become popular.

"Mobile TV will go the same route," Chapman said. Only a few percent of US consumers responding to a Yankee Group survey put TV at the top of their list for new mobile features.

"It's certainly far from being proven," said Yankee analyst Keith Mallinson. "But people don't know until they've tried it."