Wireless rivals primed for mobile TV

Olga Kharif
05 Mar 2007

On March 1, Verizon Wireless introduced a service that, for the first time, lets cell-phone users watch programming from the likes of Comedy Central, Fox, and MTV right on their handsets. If TV via handset takes off, wireless carriers and cell-phone makers will win big. But even after years of development and mountains of mobile-TV marketing hype, that's still a very big if.

Verizon Wireless isn't alone in wagering on mobile TV. AT&T (T) will launch its own service later in the year. Modeo, a subsidiary of Crown Castle International (CCI), is carrying out trials of a mobile-TV offering in New York. Samsung, LG Electronics, and HTC have begun delivering mobile-TV phones for the U.S. And chipmaker Qualcomm (QCOM) has invested about $800 million in the technology.

TV Nation

It's natural to assume that a country as addicted to TV as the U.S. will also crave television programming over cell phones. Some 46% of U.S. households own three or more TV sets, according to Nielsen Media Research. The average U.S. family watches almost two hours of prime-time TV a day"”that's up from 10 years ago. And some 6.2 million people already watch video clips on their phones, up from 2.5 million in early 2006, says consulting firm Telephia.

To meet the perceived demand, Verizon Wireless, a joint venture of Verizon Communications (VZ) and Vodafone (VOD), will offer eight broadcast channels, including News Corp.'s (NWS) Fox, Viacom's (VIA) Comedy Central and MTV, and Disney's (DIS) ESPN. Users will later be able to sign up for premium live channels for an additional charge.

Verizon Wireless and AT&T will provide the services over Qualcomm's MediaFLO network. Users in trials were pleased with performance, says Gina Lombardi, president of MediaFLO USA. 'The rate of acceptance was high,' Lombardi says. Video quality was considered 'excellent' by 85% of the more than 4,000 participants, she says. Many participants didn't want to return their phones at the end, she says.

Price Points

It's one thing to elicit praise for a service offered free in a lab setting, but another to entice customers to buy TV-compatible phones and pay a per-month usage fee"”and then get them to use the service. What's more, mobile TV won't offer the same conveniences as those available for the living room set. No TiVo (TIVO) to fast-forward through commercials, for example. AT&T is expected to charge $15 to $20 a month for its broadcast mobile-TV service. Analysts say that's higher than the mass market will bear.

And it's not like mobile TV has taken off in some of the other markets where it's been available for about two years. In Europe, former mobile-TV users outnumber existing users by 19%, according to a recent survey by M:Metrics of 22,000 people in Britain, Germany, and other European countries. Gripes there include high prices, poor service quality, and a limited channel lineup (see BusinessWeek.com, 2/12/07, 'Glitter and New Gizmos at 3GSM').

Carriers are confident they'll avoid those pitfalls on this side of the pond. Consulting firm IDC expects 24 million Americans to use broadcast mobile-TV and video-clip services by 2010, up from 7 million today.

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