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Is There A Future for Mobile TV? Maybe with DVB-H If The Phones Are Cheap Enough, But It Doesn’t Look Good For 3G

No doubt the fact that Italy won the World Cup had a lot to do with it, but 3 Italia’s DVB-H Mobile TV service (digital over the air via TV transmitters) launched for the tournament’s start attracted 111,000 customers and the company expects 500,000 by year-end.

NokiaCompare that with Vodaphone, the world’s largest mobile phone operator, that has paid in the past six years some €27 billion in various countries for 3G licenses that would allow it to send video services using mobile phone connections, and it now admits the subsidies paid to retailers to sell 3G phones doesn’t justify the intake from 3G services, and it is cutting back.

Add to that new research in the UK by BMRB that seven out of 10 3G users said they had never made a video call, or had made just one, that more than half never watched a video clip or downloaded music, and 75% said they unwilling to pay even £5 a month for mobile TV services.

And yet there are two new international research reports that claim that global mobile revenues from broadcast television will reach $11.7 billion by 2011 (Juniper Research) and that the number of global mobile television broadcast subscribers will total 102 million by 2010 (In-Stat).

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With So Many Programmers Making Plans for Mobile Phone Television Is That What Users Actually Want? Well, Actually, No – What They Really Want Are Maps
Ask Americans the one feature they would like on their mobile phone and the answer is not video, music, audio or the like. What they really want, according to a recent survey, are maps. Not exactly what Hollywood and other program makers wanted to hear.

With Global Sales of Mobile Phones Set to Reach 1 Billion This Year, and 3G Carriers Fighting It Out To Launch Their TV Services First With World Cup Coverage, Is This The Year We Really Use the Phone for More Than Just to Say Hello?
Deals are beginning to be signed In Europe for mobile phone operators to enter the TV business in a big way. In the UK, Virgin Mobile has signed up for BT’s Movio system with the hope one of the five terrestrial TV stations on offer will have World Cup coverage. But Deutsche Telekom’s T-Mobile, a World Cup sponsor, is in talks with FIFA to see if it can show England games live, or at the very least highlights.

Will We Use Our Mobile Phones To Watch Enough Television To Make It A Viable Financial Proposition? Various UK trials and Tests Indicates the Answer is Yes, No, and Maybe
Since November Sky Television has provided more than 5 million live-TV streams in its Vodaphone 3G service, so there certainly is an interest in using mobile phones to watch some television. But in a just concluded trial by BT with Virgin Mobile users said they preferred listening to digital radio on their phones than watching TV and they were not wiling to pay as much as operators wanted. And in yet another trial, this one by O2, 78% of users said they would buy a TV service.

In Switzerland You Can Already Watch 21 Television Stations on Mobile Phones. Almost Daily, Television Networks and Producers Throughout Europe Announce New Mobile Video Projects. The Mobile Phone Is The Marketer’s Dream Come True!
Swisscom Mobile now offers 21 television stations in four languages to its Vodafone Live mobile phone subscribers in Switzerland. Need a news fix --- watch CNN; sports – then its Eurosport, and if it’s the latest music hits there’s always MTV. Add the six national Swiss stations in the three main official languages (two each in Swiss German, Italian, and French) plus other stations from France, Italy, and Germany and with coverage available in 99.8% of the country – not bad considering the Alps – and there’s no reason why anyone should be out of touch.

In Europe Mobile Phone Penetration is Approaching Saturation But, Like Japan, Users Are Mostly Interested In Communicating With One Another and Not Downloading Premium Services
The really good news is that mobile phones usage in Europe Is around 80% with the UK and Italy at saturation point. The bad news for media vendors and phone operators is that customers don’t seem very interested in the premium services on offer. What they really want their phones for are to, well, talk and communicate with one another.


Click here for more on DVB-H

So what is really going on here? The answer seems to be that there could be a bright future for DVB-H, but 3G may be one of the largest financial black holes – some €100 billion -- the financial world has ever seen. It may just be too expensive to develop that platform to make money with video and mobile TV transmissions.

The 3 Italia DVB-H launch is worth looking at in some detail. Whereas Vodaphone cannot get people to pay even £5 a month on 3G, 3 Italia is charging its customers through the nose for DVB-H.  For one day it was €3 (£2), a week cost €12 (£8) and a month cost €29 (£19). The full monthly service – mobile TV, one hour of calls daily, and 1GB of Internet downloads cost €49 (£33).

ftm wrote last December what a masterstroke it was for Hong Kong based Hutchinson Whampoa, operator of the 3G 3 Italia service, to hedge its bets on TV transmission protocols by buying Italian regional broadcaster Canale 7 for some €35 million – not much when compared to the €9 billion it had already invested in the Italian 3g UMTS network since winning the Italian license in 2000.

Canale 7 hardly showed on the national TV ratings, but it had a hidden wealth that 3 Italia desperately needed if it was to make its DVB-H service a success – it owned a national digital terrestrial TV license which was absolutely perfect for mobile TV over-the-air transmissions.

Thus with about 1,000 transmitters that cover around 2,000 Italian towns the company, offering nine channels, can already reach 40 million residents (Italy has around 58 million). The company is using LGU900 and Samsung Stealth phones.

Italy, of course, is one of the world’s great mobile phone using countries. Attend a meeting in Italy and unless phones are ordered off they are ringing almost without interruption, not necessarily with phone calls but also with news bulletins, SMS and the like.

Choosing to launch the DVB-H service with the start of the World Cup, and of course with the eventual outcome of the tournament, was a virtual marketing masterstroke. But because mobile phone use is so advanced in Italy, companies in other countries must be careful not to fall into the trap of what works there will work elsewhere.

The prices charged by 3 Italia were high, but then salaries are high and prices are high and Italians have shown a mentality to spend money on various mobile phone services that is more than is usually found elsewhere per capita. And how special was the World Cup coverage to football-crazy Italians? One should not assume the 3 Italia pricing will travel well to other countries.

Vodaphone is not alone is suffering the 3G blues. Companies in other European countries are all suffering the same fate. The apparent real 3G winners were the various governments that used the billions they earned in 3G license fees to pay down their own debt as the debt of the mobile operators went sky-high.

But the real question remains what is the proper business plan to get people to pay for mobile TV services. Certainly there are performance benefits for DVB-H – as many people that are in range of a TV transmitter can receive services whereas with 3G if there are too many users at one time (such as when goals are scored and replayed in a World Cup game) then performance seriously deteriorates.

Is the norm the UK where people say they won’t even pay £5 a month for TV service, or is the Italian experience of being able to charge more than €1 a day? Obviously sporting events can bring in the crowds, but what about other times? That’s why it will be interesting to see if 3 Italia achieves the growth it is forecasting for the rest of the year.

It should not go unnoticed, incidentally that News International in the UK has just appointed its first head of mobile strategy, charged with ensuring mobile phone services become an integral platform for its newspapers to earn money. The Sun and the News of the World, for instance, are already making available video highlights of British Premier League football gamesas part of a three-year deal between News Group Newspapers and sister company Sky Sports.

The vendors are out there waiting to sell their multitude of video services. The big question is whether the public at large is willing to pay, and if so, how much?

Once Vodaphone stopped subsidizing the cost of 3G phones those sales went way down. So the real question for DVB-H operators is how cheaply can they offer those phones? The right answer may well be the key to success.



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