Faultline: “Free to air mobile TV has won – the war is over” -- MobiTV Nov 7, 2007 – Rethink Research
“Japan is signing up mobile TV customers at a rate of 2 million a month,”
said Alan Moskowitz, a senior MobiTV executive in a catch up with the company
this week. Alan is director, Office of the CTO, at MobiTV, having previously
been in charge of Alliances at the leading mobile video platform player.
But his mind, and the mind of the company, are clearly no longer solely
considering the 3 million customers MobiTV has managed to carve out in
partnership with customers like AT&T and Sprint, offering an aggregation
of TV channels, using cellular streaming technology.
Instead it is firmly on the problem with how to make the same thing happen in
the US and the rest of the world, as has happened in Japan, and we spent the
next 40 minutes talking about little else.
The Japan Electronics and Information Technology Industries Association
(JEITA), published data in July that said that the month of July alone had
witnessed the shipment of 1.6 million devices, but quarterly average is
closer to around 1.3 million. The total back in July was 11.7 million 1 Seg
ISDB-T handsets, and at that rate (assuming no acceleration and no inventory
build up – either of which is possible) Japan will have over 15 million
devices in circulation today and perhaps 18 million by year’s end.
In our own report published at the beginning of the year when there were just
3.4 million 1 Seg devices out there, we were projecting that Japan would be
on just 6 million devices by now, under half the actual figure.
That’s more handsets shipped in 3 months than MobiTV has signed in
subscriptions since it first offered a Java downloaded video player, and
began signing up mobile video customers back in 2003.
We can see MobiTV is excited because it hopes to be an arms dealer both in
terms of technology and the content, and the Free to air approach that has
been pioneered in Japan and Korea, would mean many more mobile TV units
shipped, and more fees for Moskowitz’s company.
“The ATSC M/H standard will be the US equivalent of 1 seg, and it sits on top
of the 8VSB (Vestigial Side Band) modulation method used in ATSC. The
standard should be in place in time for technology suppliers to build
products and ship them to use with the 700 MHz channels that the US will
auction next year, for use in 2009,” said Moskowitz, but he admitted there
was still a lot of work to get through.
“Japan has proved the business model. The war is over. It’s now up to
companies like us to start convincing operators to go down that route. We
know that Nokia has 6 of its top guys on the ATSC M/H (Mobile handheld)
standards committee, and they have pushed for the intermediate stack to be
DVB-H compliant. And why wouldn’t it be? That way the same software client
could manage a DVB-H network, ATSC M/H channels and DVB-SH satellite
channels.”
His view is that paid TV services just cannot prop up mobile TV. There needs
to be a free component, as there was in broadcast free to air TV, to drag the
audiences to the concept, and then 10% to 20% of services will go paid. “If
any handset you bought already had mobile TV on it, and you didn’t have to
pay to use it, you’d use it. Then the cellular operators would have a base to
upsell premium with services.”
But how will any of the broadcasters convince US cellular operators that it
is in their interests to go along with this when there is no ARPU in it,
especially as both Verizon and AT&T have already chosen to back MediaFLO
as their mobile TV standard? That’s 50% of the handset population of the US
already spoken for isn’t it?
What the idea needs is a pebble, or better still a rolling boulder, to start
the avalanche. “We think that will come from the MVNO community in the US.
Virgin Mobile has 5 million subscribers, and if suddenly they were all
walking around watching TV it would be enough to start a landslide. Or the
2.7 million at Leap Wireless might do the trick. Virgin is certainly media
oriented and unlike the big US cellcos, they aren’t going to build anything
of their own, so they might jump at a chance to get into mobile TV through a
different route.”
Moskowitz pictures 300 million Americans virtually overnight having access to
existing broadcast networks, and then cellular operators providing the
equivalent of cable TV on top with another technology. But is it really that
simple? The same experience was gone through in Korea, where the government
mandated a free to air business model for T-DMB for new spectrum that it
offered. Meanwhile a private consortium went and built a satellite technology
(called S-DMB), which went and got almost a half a million subscriber head
start and which today boasts over 1 million customers. But because it was
free to air the T-DMB service has rocketed to 5 million customers by mid
2007.
However this is all about government mandates. Japan and Korea’s regulators
made a ruling, and their control over their cellcos is perhaps stronger than
the FCCs control over US operators. We could not imagine the FCC on the one
hand selling 700 MHz spectrum with open access clauses, and at the same time
dictating not just a technology, but a business model for some of the other
spectrum, and getting away with it.
If MobiTV and companies like Harris, LG Electronics and Samsung convince
broadcasting operators to make the relatively conservative investment of a
few $100,000 to upgrade their transmitters to the new standard (a figure we
got from Harris) then they are in a classic chicken and egg argument. If they
put out a mobile TV signal within their market area, then who will make the
device to receive that signal? Or an MVNO like Virgin might decide to invest
in some devices, and find that their customers can only use them in 20 or 30
of the 210 US Designated Market Areas (areas where the same signal is
broadcast). This is somewhat like the roll out of HD radio in the US, which
has been a painful, lengthy process. Perhaps such an outcome could be avoided
if a company like Nokia underwrote the upgrades for a key number of US TV
markets, or promised to make handsets available. It might be just the type of
move that Nokia needs to build its market share in handsets in the US.
Perhaps a major like Sprint might merge the idea with its forthcoming WiMAX
network and offer two levels of TV, a broadcast version using ATSC M/H and a
WiMAX unicast, on the same devices.
But no-one in the WIMAX community has given much thought to how best to offer
video across a WiMAX network, and most of them feel that for the first 18
months of any network, a unicast TV signal, one which is competing with voice
for spectrum, is all that is needed. Sprint has certainly not said how it
plans to go about offering mobile TV, only that it will. MobiTV must know
those plans since it is the software and content supplier for Sprint, but
Moskowitz chose not to share those plans with us.
When we were speaking at TelcoTV a few weeks back our own Faultline principal
analyst had been asked to answer the question “Is mobile TV a sprint or a
marathon,” and we pointed out that no-one has yet seen the ATSC mobile
technologies because they are being built especially for the US, nor the
DVB-T2 specification, expected later this year, which is likely to be adopted
in some 70 or so countries in the next three to four years. Both should
accommodate a second mobile TV signal although the DVB-T2 technology has not
yet been selected.
If either of those technologies take off, we are in not only in for a
marathon battle between mobile TV standards, but we are likely to be seeing
the birth of one of the most convoluted, and intricate entertainment markets
ever conceived, with multiple layers of competing technology all on the same
device.
First off we must understand that mobile TV has around 13 technologies
currently chasing the space, not counting cellular streaming, which is the
basis of the MobiTV products to date, and streaming over an open internet
model, which is where everyone hopes this business may one day end up. Both
of those approaches detract from voice usage, and require too much cellular
bandwidth and therefore cannot dominate until the creation of 4G networks and
perhaps not even then.
All the other technologies fall into four main areas, they either posit that
1) someone has to build an entirely new radio network and put an extra radio
in any receiver, or 2) they aim to take some limited part of the cellular
spectrum and devote it to delivering video in a broadcast or multicast sent
from existing base stations; or 3) they take an existing network like digital
radio or satellite radio networks and piggy back a video signal on the
existing network or 4) they anticipate existing TV broadcasters will add a
mobile signal in with their existing Standard Definition TV broadcasts.
DVB-H and MediaFLO (and DVB-SH a satellite version of DVB-H) are all examples
of the first category and all of the news focus has been on these to date,
but the price of entry into this type of market is high and US build out will
be in the order of $500 million for MediaFLO on top of around $300 million
getting the technology to market. The DVB-H effort is substantially behind
this in the US, though launched elsewhere, with similar costs and only
AT&T now has spectrum for another thrust at DVB-H, since it bought two
6MHz channels from Aloha Partners for $2.5 billion a few weeks back.
Against a backdrop of apathy towards mobile TV in the US (though clearly not
elsewhere), with unconfirmed reports that the Verizon MediaFLO service, VCast
TV, has only shipped in the low tens of thousands, this all seems to invite
the other approaches to the party.
So instead of seeing the whitewash by Qualcomm’s MediaFLO right across the
US, we may see a shift to a free model and a free model is perhaps best
supported by a different technology, though MediaFLO could just as easily go
free to air, but it would need a whole new advertising platform and a way of
extracting advertising revenues in order to do that.
With option 2) Cellcos in the US don’t have a spare 5 or 6 MHz of spectrum
lying around to commit to mobile TV from their existing cellular spectrum,
unlike some European and Asian operators that may bring a multicast to the
market using their allocated one way TDD spectrum.
To try 3) using an existing network, you must be the owner of it, and so we
know that once XM and Sirius merge, they will be ready with advanced video
services, but that these will need a large antenna to be received and this is
really an in-car market in the main.
Which leaves the last approach 4) that of bundling a mobile TV signal in with
the SD signal.
And this is exactly what ISDB-T is, breaking a 6 MHz channel into 13
segments, with enough data throughput to cram a mobile signal in a single
segment, with the terrestrial TV channels taking the rest.
But the key thing is perhaps NOT the technology, it is the business model,
and in the end if the pay TV approach isn’t working, Verizon and AT&T
will have hands on experience of it and find themselves back in the market
for a new approach.
If Nokia indeed wins the fight to blend the upper software layers of DVB-H
into the ATSC standard, it won’t necessarily help unless a DVB-H network
actually gets built in the US, and if those MediaFLO reports of slow uptake
are true, then who is going to risk another $500 million building a network
for DVB-H. We have speculated that AT&T will, based on the Aloha
spectrum, but if MediaFLO is not successful that may undermine that decision.
Perhaps the better marriage here is with DVB-SH. Alcatel is working with
McCaw company ICO Communications to deliver satellite mobile TV from the sky,
but most radio engineers turn their noses up and suggest that this signal
won’t get through walls in when using 2 GHz. But they get through walls when
in a cellular configuration with ground based base stations close together,
and Alcatel has always suggested that with some spectral diversity (multiple
antennas) devices can be built that need a repeater on just 50% of the base
station sites in cities, and that the satellite is fine outside cities.
Another scenario, with a common software stack with ATSC M/H, would be taking
input from two radios, one in 700 MHz and another in 2 GHz and routing them
to the same application thereafter.
We have long suggested that mobile TV will become a blended service with
perhaps a bulk free to air delivery, some premium channels, some VoD cellular
streaming and even a handset DVR, all blended through a single EPG, and a
single service front end, emulating the existing complexity that exists in
the layers of fixed TV services.
But the US market could be far more convoluted than this, with handset
marriages between MediaFLO and ATSC, between DVB-H and ATSC, between EV-DO
delivered unicasts and a WiMAX multicast, between a cellular multicast using
MBMS, some unicast and perhaps DVB-H – all of these combinations and any
others you can think of, working together more or less off the same chips,
with multiple antenna and radios – but appearing to the customer as either a
single TV service or as competing services.
That latter likelihood is much worse. Multiple interfaces, from multiple
suppliers, needing different handsets to watch different qualities of TV
channels, with different levels of advertising – in other words a mess.
Maybe it would be good for Cellcos to avoid all of that and simply abdicate
the mobile TV space after all and let broadcasters make the first move and go
back the Moskowitz vision.
Meanwhile Harris and LG Electronics and its US subsidiary Zenith, which
invented much of the ATSC technology in the first place are pushing their own
version of ATSC MH called MPH in-band mobile digital television at the ATSC
standards setting process as a Candidate Standard but then relying on other
subsystem candidates for compressed audio and surround-sound from AMR-WB+ and
HE-AAC-v2, and video using H.264 MPEG4 and offers different transport layer
options of either the MPEG Transport Stream or pure IP.
Back in June the ATSC received 8 replies to its RFP for the standard, from
Coding Technologies, Coherent Logix, DTS, the Mobile DTV Alliance, Micronas
Semiconductor, Nokia, Thomson and Qualcomm. So far we haven’t heard anything
about what the Qualcomm submission was suggesting, perhaps an alliance
between the ATSC standard and the software stack on MediaFLO?
CourtesyRethink Research, publisher
of Faultline, a weekly feature on technology and innovation.
Faultline: “Free to air mobile TV has won – the war is over” -- MobiTV
