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TV on cellphones? Funny but profitable
Gregg Moss 9NEWS Business Reporter

Created: 9/28/2005 8:36 AM MDT - Updated: 9/28/2005 8:36 AM MDT

http://9news.com/acm_news.aspx?OSGNAME=KUSA&IKOBJECTID=9d29e507-0abe-421a-0093-217b613d9ceb&...

LOS ANGELES (USA Today) - Brainstorming about how to take their company to the next level back in 2003, three guys in Berkeley, Calif., came up with a crazy notion that a cellphone was powerful enough to display television images.

On little 1- and 2-inch screens. And that people would actually pay to watch it.

Potential partners laughed at first. But in November 2003, Sprint became the first wireless carrier to offer Paul Scanlan, Phillip Alvelda and Jeff Annison's MobiTV to consumers. Last week, Sprint and MobiTV received a special Emmy award for their efforts. The $10-a-month service, now also offered by Cingular, has attracted 500,000 subscribers.

"I would never bet against the American love affair with television," says Scanlan, MobiTV's chief operating officer. "It spans all ages and all demographics. The logical next step is to be able to watch TV anywhere."

In a wireless world of nearly 200 million cellphone subscribers, half a million customers is a drop in the bucket. But it is about on par with the total audience for some cable networks. For instance, The Discovery Channel, which is carried on MobiTV, averages 445,000 daily viewers on TV sets.

MobiTV has "built a consumer experience that people understand and accept, which is a rarity in technology," says Mark Donovan, an analyst at research firm M:Metrics. "Now their challenge is to grow and keep competitors at bay."

As entertainment and cellphones converge, companies of all sizes are scrambling to compete. Start-ups such as GoTV, PacketVideo and SmartVideo are, like MobiTV, bringing video content to phones. San Diego-based Qualcomm, which makes chips for phones, is testing a system to transmit TV signals from broadcast towers directly to handsets.

This week, wireless industry heavy hitters are in San Francisco for the Cellular Telecommunications & Internet Association (CTIA) convention. That's where MobiTV announced that it plans to expand beyond TV with MobiRadio - 50 satellite music channels - as a separate subscription.

Music has exploded into the world of portable devices, but radio on cellphones is currently very limited. "People want their local traffic, and local radio. This is the first step. We'll get there," says Alvelda, MobiTV's CEO.

Anytime, anywhere

British research firm Informa Telecoms and Media predicts that in just five years, there will be more users of broadcast mobile TV worldwide - 124.8 million - than there are U.S. TV homes (110 million).

"Our goal is to bring ABC to them anytime, anywhere and on any device," says Bernard Gershon, senior vice president of ABC News' digital group.

ABC News Now is one of many channels included with MobiTV's service, which also includes MSNBC, ESPN and Fox Sports.

MobiTV can work with lesser phones, but the images are jerkier. Sprint's multimedia phones start at $79.99 for the Sanyo MM-8300. Sprint charges $20 monthly on top of phone charges for a combo plan that includes MobiTV, Internet access and wireless picture-sharing.
MobiTV is offered by Sprint in three varieties, MobiTV (which has 27 channels of real-time TV, including MSNBC, CNBC and ABC News), Sprint TV (fewer channels) and Sprint TV Live (slightly different channel lineups).

Cingular offers MobiTV on 10 phones, including entry-level free handsets - but for best quality, look at the $269.99 Nokia 6682 or $399 palmOne Treo 650 smart phone. Kick in another $9.95 for MobiTV and $20 for an unlimited data plan.

With the Treo you can watch MobiTV via Sprint, Cingular or even Verizon, which doesn't carry the service. Directions for how to do this at www.mobitv.com.

MobiTV (which is marketed to some Sprint subscribers as Sprint TV) differs from Verizon's vCast video-clip service in that it is real-time TV. The service works best with large-screen or color-multimedia phones that range from $100 to $400 from Sprint and Cingular.

Because wireless networks and handsets are constantly improving, the quality of the MobiTV image has grown from a glorified slide show just a few months ago, to "a real video picture now," says Brian Seth Hurst, a MobiTV user and big-time booster. "It's much faster now."

Boston Web designer Matthew C. Smith began subscribing to MobiTV a few weeks ago and has written enthusiastically about it on his blog. "I signed up for the 'wow' factor," he says. "I show it to my friends, and they're blown away. The product itself is outstanding. The user interface is clear, a lot clearer than I expected it to be."

You won't find hits such as Lost or Desperate Housewives on MobiTV. Prime-time network programming has rights issues that have yet to be tackled, so news is the primary motivator for sign-ups. "We live in a society today where live breaking news is a common occurrence and people want to know what's going on right now," Scanlan says.

Building on buzz

What became MobiTV began when Scanlan, then working for a marketing firm, and Alvelda met playing ice hockey in Oakland in 1998 and became friends. They agreed to start a business. Alvelda, then a top executive at MicroDisplay working on displays for handsets, brought in his friend Annison.

They formed a company the following year, aimed at merging entertainment and personal devices. As Idetic, they cut a deal with phone manufacturer Siemens to license software for connecting the phone to the Internet wirelessly.

They gained experience sending large packets of information to phones at a time when U.S. phone carriers weren't delivering high-bandwidth data to their users. So the founders decided to show the carriers that it could be done - with live TV.

They nabbed a meeting with Sprint to show their prototype - at the time, silent video with closed captioning. Sprint said it would be interested - but only if the video had audio. "They were very responsive," says Dale Knoop, general manager of Sprint's multimedia services division. "They had it all worked out in a matter of days."

Sprint took a chance on the young company because the MobiTV application "was easy to use, and the guys were, and continue to be, easy to work with."

Cingular, which signed up a year after Sprint, likes MobiTV because "it changes people's expectations of what a phone can do," executive director Rob Hyatt says. "When we tell people about a ring tone, they don't get it until they hear it. But with TV on a phone, they immediately understand it."

MobiTV has grown to 115 employees from 15 and has plans to move from Berkeley to bigger surroundings nearby. It is expanding at a time when mobile media has become a buzzword in the wireless industry, and many companies are looking to compete.

"We have a tremendous advantage," says co-founder Annison, MobiTV's vice president of engineering. "We have a head start and know how to efficiently run a global TV network. There's still a lot of room for innovation, as we figure out how users want to interact with mobile video. That's our challenge over the coming years."