Formats Issues Threaten to Hold Back Mobile TV
Mobile TV is seen as one of the great new market opportunities for satellite players. With users demonstrating a seemingly insatiable desire for video and wanting content on demand, the mobile TV market could be a lucrative one.
However, issues with standards and formats, as well as working out the correct business models mean this market is not necessarily a sure thing. The demise of satellite-based mobile TV provider Mobile Broadcasting Corp. (MBC) in Japan serves as a warning sign to others that plenty of obstacles remain in terms of tapping into this market.
Blizzard of Acronyms
The market at the moment is a blizzard of acronyms in terms of formats: DVB (Digital Video Broadcasting–Handheld), DVB–SH (Digital Video Broadcasting-Satellite services to Handhelds), T-DMB (Terrestrial–Digital Multimedia Broadcasting), S–DMB (Satellite–Digital Multimedia Broadcasting), MediaFLO, etc., but which of these different technologies and formats will win out? Steve Maine, CEO of Solaris Mobile, the mobile services joint venture created by SES Astra and Eutelsat, says the format issue is holding the mobile TV industry back. “That situation cannot continue, because as long as it continues, the market will never gain traction. It is inevitable that at this early stage of the development of a new market, there should be a need for competing formats. I think it is worth stepping back a little and asking why we have got them. I think part of the reason is that this is an area of convergence. You have got people coming to this market from different platform perspectives.” Maine says the sector is at the “evolution stage” in working out these issues. “I do think we will start to see some clarity emerge over the next 12 months. Speaking from my own perspective, we have our own satellite under manufacture. It will be launched in the first quarter of next year. That is a really strong motivator for getting people focused on getting workable solutions. We intend to be a catalyst in this process of coalescing views. This is not something we can do by ourselves.”
In terms of how Maine expects the situation to resolve itself, “One of the possible solutions is that you will have multiple platforms so what you will need in the market are handsets that support multiple system standards. I personally think that is unlikely to happen. I think it is unlikely that politicians are going to choose a standard which might then win out, which is another solution that has been touted in the market. These kind of things tend to sort themselves out.”
ICO intends to be one of the pioneers in offering mobile TV services in the United States. In terms of whether one mobile TV format will win out over another, Tim Bryan, ICO CEO, says, “I think it is hard to say that will only ever be one format, although that would be a relatively good outcome. There maybe a couple of different formats. The formats themselves are not hugely different one from the other. That is, the S-DMB, DVB-SH, ETSI-SDR, etc.; they are all relatively simple. We chose DVB-SH early on because we are trying to drive standardization as much as possible. We want the ecosystem around mobile TV to be as big as humanly possible. That is why we went with DVB-SH. That is why we think it is the right standard. Certainly there is maneuverability for others to develop, but the more that gets collected around one, the bigger the ecosystem gets and the better off we all are.”
Bryan does not believe the current situation is holding the industry back. “We haven’t seen it. We have obviously done a lot of work DVB-SH. There are obviously quite a lot of handheld devices around DVB-H. There will be a few DVB-SH devices out there. At this point, I have not seen the technology holding it back. My own personal view is what is holding mobile TV back is that it seems to be that mobile TV being offered by wireless carriers needs to be something different. It needs to be something more that ICO has to offer. That is more of a market issue, rather than a technology issue,” he says.
Rich Redmond, director, strategic marketing, Harris Corp., broadcast communications, says, “While it is simpler to only deal with one standard rather than many, we will continue to see device suppliers make multi-standard devices. Several chip manufacturers have announced multi-standard chips for mobile TV, including DVB-T, DVB-H, ISDBT, FLO, DMB and DAB-IP, to name a few. By having this set of multi-standard chips, a handset manufacturer can make a truly software-defined handset that sells in the right market with the right set of features but is one manufacturing effort, much like multi-language support. The real effort is turning on networks with the content people want to consume. People will not buy receivers in hopes that there will be content or a network. The network must come first along with compelling content.”
Mazen Chmaytelli, senior director of business development, Americas, and head of global technical marketing for Qualcomm MediaFLO Technologies, says multiple mobile TV standards would benefit the customer. “The worldwide mobile TV market is still evolving, and no one mobile TV standard has been deployed worldwide. Qualcomm believes multiple mobile TV standards can coexist and that it is beneficial to have alternative technologies in the market place to help drive adoption of mobile TV services in the long run. We believe that market competition attracts investment and the development of innovative technologies, services and attractive products, and we support the principle of technology neutrality for the mobile broadcast market worldwide. Furthermore, Qualcomm anticipates that both free- and pay-TV services offered via different mobile TV standards may be supported in tandem on the same platform. For example, Qualcomm’s Universal Broadcast Modem chipset currently supports three mobile TV standards: MediaFLO, DVB-H and ISDB-T.”
Olivier Coste, chairman of Alcatel-Lucent’s mobile broadcast activities, believes the DVB family of formats will ultimately win out. “We continue to believe the best way to develop a large market opportunity is to base the technology development on open standards, and this is why we have been very active in DVB-H and DVB-SH in the recent past. You have to know that DVB-SH is probably the most efficient broadcast technology for mobile conditions today when you compare it to all of the existing technologies around the world. DVB is also a family of standards which has many advantages. You have chipsets that can combine within one chipset, DVB-T, DVB-SH and DVB-H, for example. This makes possible use of various DVB technologies within one single terminal. Apart from some regions which have chosen specific technologies such as Korea, Japan and China, we believe the DVB family will prevail worldwide in the coming years, with the combination of DVB-T, DVB-H and DVB-SH for mobile TV.”
DVB-H has the broadest support amongst handset makers such as Nokia and likely will be the dominate standard with GSM operators, says Anna Maxbauer, a research analyst at IMS Research. “New T-DMB deployments should be rare, and new ISDB-T deployments depend wholly on developing less-than-transparent political situations throughout South America. MediaFLO hopes to find its way in as a pay tier layered above free-to-air tiers based on DVB-T, ATSC-M/H or ISDB-T. ATSC-M/H is very likely to see significant deployment from U.S. broadcasters, but timing is very much up in the air as it is a chicken-and-egg problem. MediaFLO is looking at opportunities wherever they have tested, including Japan, the United Kingdom (with Sky) and Malaysia (with Astro). Having learned the content acquisition lesson, MediaFLO has been very good about seeking out some of the very best satellite or other pay TV operators as their partners.”
Over the next year, Coste says he does not expect “major changes in the standards community. DVB-H has been standardized in 2004. DVB-SH has been standardized in 2007 and comes now to industrial maturity. We expect that we will have significant mobile TV deployments next year thanks to the combinations of technologies I have mentioned. I am not saying that they will be exclusively DVB-SH deployments. I would bet on combinations in Europe of DVB-T, DVB-SH and DVB-H. In the United States there will be a combination of ATSC- MH and DVB-SH in order to provide the wider choice of channels and the best possible coverage to the consumers.”
Role of Satellite
In terms of the role for satellite players in this nascent industry, “I would see the role of satellite operators is key in the value chain for several reasons,” says Coste. “Satellite is a very efficient way to provide TV services in mobile conditions, particularly to cars on motorways or in rural areas. We also see a hybrid satellite-terrestrial infrastructure on satellite spectrum as a very efficient way to provide good quality solutions to the consumers. This is due to the regulatory evolution in United States and Europe, and coming in other parts of the world, allowing both satellite and terrestrial deployments on satellite spectrum. A third element is that satellite is a natural coverage complement to many other pipes such as 3G networks, or broadcast networks in UHF spectrum.”
Redmond is certain satellite technology will be used to distribute content to terrestrial networks for systems such as MediaFLO and DVB-H. “The use in a direct-to-consumer situation will depend on the geography one needs to cover. Systems such as DVB-SH allow for wide area coverage from satellite, and they offer a good way to cover a large area of relatively open terrain. Such a network will need terrestrial boosters in cities and towns to allow in-building usage and in the streets that are shadowed by large buildings. In such a case, terrestrial and satellite are complementary. Launching a satellite, however, is a large investment, and some find launching a terrestrial-only network to target the largest population areas first is a more cost-effective way to launch a network for mobile TV. In either case, many viewers will be consuming content delivered over some terrestrial transmitters.”
Carlos Placido, an analyst at NSR, says the case for satellite broadcast distribution to handsets is complementary to terrestrial services but will remain challenged in the short term. “There are, in our view, multiple aspects to this. The most important one being that satellite-based services are more heavily dependant on subscription revenue than terrestrial services, and the availability of free mobile TV broadcast services enabled by local broadcasters can kill satellites services head start,” he says. “Secondly, in the mobile space, new services and applications have historically developed first in urban areas and then extend into less-dense areas when the business models are proven. Satellite-to-handheld standards will need to be more homogeneous and the standards war is still wide open. Tracking chipset manufacturers’ support for these could be a proxy of how this sector develops.”
While most agree that standards issues are in some way holding the industry back, the key issue at the moment is finding out the best business case that works in this area. Toshiba Corp. plans to shut down MBC, which used the advertising-based revenue model, at the end of March because the business, which began services in October 2004, gained only a fraction of the numbers of subscribers parent company Toshiba Corp. had hoped for. “A free mobile TV service accompanied by advertising is very favorable for developing usage but does not ensure service profitability in the short term,” says Maxime Baudry, a satellite analyst at Idate. “As witnessed in Japan and South Korea, the success of a free mobile TV service does not guarantee its profitability. The only revenues generated are solely from advertising, and these are still largely insufficient to offset the operating costs. There is no true business model for free mobile TV services, at least during the market’s start-up phase.” The alternative is the subscriber-based revenue model, where the strength “clearly is its ability to rely on stable and sizable revenues generated by subscriptions. The capacity to subsidize compatible handsets is also a key factor in this model’s success, encouraging the penetration of each operator’s mobile subscriber base. However, the mobile TV services launched using this model (such as in Italy and the United States) have failed to achieve the desired success. Their disappointing results can be explained particularly by overly high rates, which are out of step with the actual level of mobile TV usage,” he says.
Placido sees the development the advertising-based model as key to the evolution of mobile TV. “However, advertising is a business of scale and, despite the contextual, engaging and targeted advertisement potential in mobile, advertisers need to see a substantial base of end users to shift ad dollars into the new medium,” he says. “We expect that the emergence of enabling platforms that provide an empowering generic service layer that insulates stakeholders from such issues can help dissolve fragmentation problems. This will be needed to make the addressable market for applications and advertisement more homogeneous and hide the underlying fragmentation and complexity.”
Maxbauer also believes the business case is constraining the development of the industry more than broadcasting formats and standards. “A mobile operator simply lacks the leverage with the content providers to be able to acquire the best content at a lucrative price point while still paying the depreciation on a broadcast network,” she says. “Yes, proprietary technologies add cost, and the margins for mobile TV are razor-thin. Therefore, small changes in cost can change the business case quickly.”
The Future Landscape
In terms of how the mobile TV landscape may develop generally within the next 12 months, “You have to consider that mobile TV and mobile video are part of a global offering to consumers. It has to be seen in combination with other offerings such as fixed TV, mobile voice, mobile Internet or navigation,” says Coste. “When you combine these offerings, you can imagine the importance the mobile TV leg will have for service providers in order to attract additional customers, reduce churn, generate advertising revenues and enable personal advertising, in short, to increase the [average revenue per user]. More specifically, mobile TV is one of the three key legs of a mobile offering, together with mobile voice and mobile Internet. From this perspective, mobile TV is a key enabler of service provider revenues in the coming years.”
“There remain regulatory policies to be defined and spectrum to be made available in many countries before mobile TV can be deployed,” says Chmaytelli. “While there have been a few deployments in different parts of the world, many have been on a small scale with limited coverage, programming and support. As a result, these services have had limited success. Qualcomm believes that once fundamental pre-conditions can be met — including valuable content, a satisfying user experience, a robust network and a hybrid free and pay TV business model that supports all players in the ecosystem — mobile TV will gain widespread adoption.”
Maine sees the industry “standing on the threshold of a whole new communications revolution. Twenty years ago, mobile operators invested in new communications infrastructure to bring voice to the market, and then 10 years ago, you had texting and low-speed data,” he says. “I think we are now at the threshold of connecting people to the broadband world wherever they are. That is the significance of what we are doing now. People have become accustomed to always-on services. In a fixed environment, people are effectively always connected to the world. I think the opportunity we now have is to do the same in the mobile world, not just with voice and high-speed data but with the provision of always-on broadband services, so broadband communications infrastructure that will support TV, multiple radio services, broadband data, etc. This is not just an evolution. This is a quantum step in the development of the mobile communications world. I think it is a revolution we are about to embark on.”