Qualcomm Inc (QCOM)

[khemara_qc]

TV Phones Prep for Prime Time
DECEMBER 1, 2004
NEWS ANALYSIS
By Olga Kharif

http://yahoo.businessweek.com/technology/content/dec2004/tc2004121_1328_tc119.htm

Mobile TV is coming to a cell phone near you -- and it could leave hot offerings like ringtones and text messaging in the dust


Two years ago, Blake Krikorian had to travel on business just as his favorite baseball team, the San Francisco Giants, unexpectedly earned a place in the World Series for the first time in 13 years. Krikorian desperately wanted to watch the games but had few options. At the time, he wished he could watch it on his cell phone. But no such service was available.

Sensing a business opportunity, Krikorian began to investigate the concept, and in June of this year he launched Sling Media. The San Mateo (Calif.)-based company's first product, due out in the first quarter of 2005, will stream video content to handheld devices.

Krikorian has some serious believers in his corner: Backers include venerable venture-capital firm Mobius Venture Capital, and among his partners are the likes of Microsoft (MSFT ) and cell-phone chip vendor Texas Instruments (TXN ). Only one in a slew of upcoming technologies and gadgets designed to keep TV junkies plugged in, Sling Media offers a glimpse of mobile TV, expected to become one of the brighter stars in telecommunications over the next couple of years.

READY AND WAITING? Mobile TV is a promising frontier in the handheld industry. The ranks of subscribers could jump from 273,000 by yearend to 1.2 million in 2005, and revenues could grow from $32.8 million in 2004 to $47.5 million in 2005 –- and $1.9 billion in 2008, figures Clint Wheelock, an analyst with tech consultancy In-Stat.

Eventually, mobile TV might far outshine the markets for popular wireless data services such as ringtones and short text messaging. An In-Stat survey of 1,009 people done in February showed that Americans are far more excited about mobile TV than about any other data application offered so far.

With good reason, perhaps, skeptics abound. But user surveys conducted by Digital Video Recorder (DVR) company TiVo (TIVO ) indicate that Americans spend only two to five hours a week watching feature-length movies. The bulk of their 20-plus TV viewing hours each week goes to watching shorter programs, such as news footage or music videos.

EARLY ADOPTER. Such clips might be perfect for viewing on a cell phone -- say, while you're stuck on a train on the way to work. Many industry watchers believe the handset will turn into the third TV screen in our lives, behind the home TV and the PC. "This is really a service with mass appeal," Wheelock says.

And though the U.S. has lagged behind Asia and Europe in wireless services in the past, it should move into mobile TV at the same pace –- or even faster –- than many other countries, predicts Bill Plummer, vice-president for external affairs at cell-phone maker Nokia (NOK ) in New York.

Lots of companies see the profit potential in mobile TV. By mid-2005, U.S. wireless providers like Verizon Wireless will have built out special, high-speed wireless data networks, allowing for video streaming and on-demand video services. Following in their footsteps are wireless equipment and components suppliers such as Qualcomm (QCOM ), device makers like TiVo, cell-tower operators such as Crown Castle, and cable and satellite service providers and telcos.

NEW NETWORKS. Service providers such as Sprint (FON ) already offer video-related services. It rolled out a slide-show-quality mobile-TV service, called MobiTV, a year ago and followed it with a faster video-streaming service, Sprint TV, this August. The services offer news clips from the likes of CNN and Discovery Channel for $9.99 and as little as $15 a month, respectively.

Sprint is mum on enrollment figures, but "we've been very pleased with the results we've gotten so far," says Jeff Hallock, vice-president for product marketing and strategy at Sprint.

Sprint is so enthusiastic about enrollment that it just unveiled its second video phone, the Sanyo MM-7400, for a highly subsidized price of $229.99 after rebate. "It's very important for us to encourage use," Hallock says.

Rivals are also ramping up testing and trials. In November, Qualcomm announced it would build a nationwide wireless video-and-audio network. Due to come online in 2006, it would be separate from the carrier's networks used for voice and other data services. But it will offer TV-quality video speeds of 30 frames per second –- twice the frame count on Sprint TV -- and up to 100 channels of content. Qualcomm is planning to start trials in the second half of 2005.

CABLE READY? Nokia, the world's largest cell-phone maker, has already begun testing a different mobile video network in Pittsburgh. Its U.S. partner, Crown Castle, has mounted special gear onto its wireless towers to broadcast video to the Nokia 7700, a device with an integrated video camera and video-streaming capabilities. Nokia plans to offer more advanced devices able to use such a network in early 2006, says Plummer. "You have a brand-new opportunity for a whole new business model," he says.

Cable outfits, too, are investigating wireless delivery. "Mobile TV is a lot closer to cable companies' comfort zone [than a lot of other services]," says Larry Schwartz, executive vice-president for global operations at Convergys (CVG ), which provides billing services to the likes of Comcast (CMCSA ) and Cox (COX ). "They're expert at procuring unique content and packaging it," Schwartz adds.

The cable companies are mum on their plans. But a Cox spokesperson says the company is actively evaluating the possibility of offering a wireless video service.

LIMITED RANGE. What's more, many consumers will undoubtedly want to watch something beyond news clips on their cell phones, says Rene Link, a vice-president at wireless consultancy InCode Telecom in San Diego. To meet that demand, Sling Media's device can be attached to a standard DVR or a satellite set-top box. Called Slingbox, it optimizes the video stream from a DVR and sends it on, when requested, to a handheld device or wireless laptop. In theory, you could watch that episode of Frasier you recorded two days ago on your way to work.

For now, though, perfect-picture quality requires a wireless connection with speed of at least 100 kilobits per second. So, streaming devices may be confined to areas equipped with wireless high-speed Internet access technology called Wi-Fi (wireless fidelity), such as Starbucks outlets.

TiVo has a different idea. In the next month, it will unveil free software for its subscribers. Once downloaded onto a home PC, it allows users to upload video from a DVR onto a home laptop via a wireless home network (such capabilities exist today, but uploading can be mind-bending for the less geeky crowd). Called TiVo To Go, the software could eventually allow users to upload shows onto their cell phones and personal digital assistants (PDAs).

Of course, wireless networks have a long way to go in terms of quality and speed before such services will be able to take on the TV. Cell phones' memory would have to grow dramatically, and their battery life would need to make a major leap. Still, mobile TV could be the new horizon in wireless handhelds.


Kharif is a reporter for BusinessWeek Online in Portland, Ore.
Edited by Beth Belton