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Crown Castle Plans To Bring TV Service To Cell Phone Users
BY REINHARDT KRAUSE

INVESTOR'S BUSINESS DAILY

http://www.investors.com/editorial/tech.asp?v=7/6

Crown Castle International (CCI) is looking for a partner to finance an ambitious project to beam digital TV to mobile phones — and now's as good a time as any to find one.

New York-based investment bank Allen & Co. is Crown Castle's adviser in its search for a financial backer. And this week, Allen & Co. hosts its annual media and tech conference in Sun Valley, Idaho.

The event always attracts many honchos from Hollywood to Wall Street, making it an ideal place for Allen to find a partner for Crown Castle.

Whether this week or later, Crown Castle has a good chance of hooking up with a media company or cable TV partner, some analysts speculate. Finding a partner is vital to Crown Castle.

The company has told Wall Street analysts that it won't fund its network build-out internally.

The mobile TV network envisioned by Crown Castle could cost up to $1 billion to build, UBS Investment Research says.

Qualcomm A Competitor

"It could (link up with) one of the content kings that sees wireless as another way to distribute their products, or maybe a cable company wants to get involved," said Richard Prentiss, an analyst at Raymond James Associates.

Allen & Co. Managing Director Richard Fields didn't return phone calls seeking comment. Houston-based Crown Castle couldn't be reached for comment.

Crown Castle has competition when it comes to building a mobile TV network. Qualcomm (QCOM) also has said it plans to build a network to deliver TV to mobile devices.

Qualcomm says it will fund most of the estimated $800 million price tag for its "MediaFlo" project. Like Crown Castle, though, it's looking for distribution partners.

"We have had numerous discussions with top-tier content providers about aggregating and distributing their content over the Flo network, but haven't made any public announcements," Qualcomm spokeswoman Patty Goodwin said in an e-mail.

Crown Castle plans to build TV transmission towers similar to the large radio antennas used by wireless phone companies. Its technology partners include mobile phone maker Nokia (NOK) and chipmaker Texas Instruments. (TXN)

Crown Castle owns more than 10,000 wireless towers used by carriers. Growing wireless use has boosted demand for such towers. Crown Castle shares are up 22% this year and trade near 20.

In 2003, the firm paid only $12.6 million at a government auction for a block of radio spectrum in the 1.6 GHz band. And in March, Crown Castle formed a mobile media unit.

The spectrum and new subsidiary are for its mobile TV effort.

For its TV service, the company plans to use digital video broadcast technology developed in Europe. Crown Castle and Nokia have been testing the DVB technology in the Pittsburgh area since October.

The companies plan a second trial, in New York, but haven't said when that will start.

Nokia hasn't provided any funding for a network build-out, says Steven Knuff, a Nokia spokesman.

But analysts say Allen will spread a wide net at the Idaho powwow.

"I'd imagine that Allen & Co. isn't excluding anyone," said Anthony Klarman, a Deutsche Bank analyst.

Minimal Risk

Crown Castle's foray into digital TV doesn't hold a lot of risk for shareholders, at least not yet, says Klarman. "Crown isn't committing a lot of their own funding to it," he pointed out. "They're looking at external capital."

Media giants such as Viacom, (VIA) Walt Disney (DIS) and Time Warner (TWX) loom as possible funding partners because their TV audiences have been shrinking.

Wireless networks would offer a new way to distribute TV content.

But some analysts say media firms might prefer to stay neutral in the wireless TV battle between Crown Castle and Qualcomm.

Crown Castle and Qualcomm are in talks with wireless phone companies as well.

Current wireless phone networks aren't well-suited for delivering live TV content to large numbers of subscribers, analysts say.

Speedy wireless data networks, though, already deliver short video clips and "mobi-sodes" — TV shows designed for wireless phones.

Sprint PCS (FON) and Cingular offer privately held Idetic's MobiTV service to subscribers, and Verizon launched its Vcast service early this year.

Qualcomm hopes to sign up Verizon, owned by Verizon Communications (VZ) and the U.K.'s Vodafone, (VOD) and Sprint as customers for Media-Flo-based services since both carriers use its CDMA technology for their voice and data services.

Qualcomm bought radio spectrum in the 700 MHz band for its Media-Flo project in 2003.