Mobile television is a hot topic in Europe and is gathering significant momentum. Mobile operators across Europe are testing technologies which could ultimately shape a new wave of video services to users. Whether the services will be based on technologies such as DVB-H (Digital Video Broadcast – Handheld), third generation wireless technologies (3G) or DAB (Digital Audio Broadcast), this developing market offers satellite pay-TV operators across Europe a significant opportunity to generate new layers of revenues, as well as potentially deepen their relationship with subscribers. Here, we look at different markets, what satellite pay-TV operators are already doing and how the opportunity might develop going forward.

Building Momentum

The mobile phone has become one of the must have devices in the last 10 years. According to U.K.-based research consultancy Ovum, there were close to 1.5 billion wireless connections (users could have more than one connection) at the end of 2004. Ovum predicts by the end of 2006, that number will pass the two billion connections.

And with video services coming online, video could stand alongside the pricing of voice minutes and text messaging as a key differentiator for consumers.

To illustrate the point, one can look at the video content deals being signed. For example, in the United Kingdom, one of the early pioneering deals saw mobile operator 3 sign a deal to broadcast highlights and goals from the English Premier League soccer in August 2003. The introduction of 3G networks, which will open up bandwidth for more video-intensive applications, will only accelerate this.

New Trials

In France and the United Kingdom, there have been a number of recent announcements of new trials and launches for mobile television services.

In the United Kingdom, mobile operator O2, in conjunction with NTL Broadcast, announced it will carry out a trial based on DVB-H technology (SN, May 16). Virgin Mobile announced it will launch a four-month mobile digital television trial based on DAB technology and Orange launched a television service based on 3G.

In France, France Telecom, Bouygues Telecom, Orange and TPS announced they will be testing digital television broadcasting to mobile phones in a six-month trial this year. Other trials are likely to be announced in due course.

In South Africa, satellite pay-TV operator Multichoice announced it will also participate in a mobile television trial based on DVB-H. In Spain, Abertis Telecom, Nokia and Telefonica Moviles Espana announced they are starting a mobile TV pilot using DVB-H technology later this year in Madrid and Barcelona.

Market Updates

In France, both satellite pay-TV operators Canalsat and TPS have stepped up their involvement in the mobile television space. For its DVB-H, TPS created and is broadcasting a package of channels and develop programs and services for mobile users. TPS also will work with other mobile operators to develop interactive applications that can be associated with television programing. The six-month trial started in June.

TPS’s main pay-TV France, Canalsat is also hard at work in this area. In late June, Canalsat signed a deal with mobile operator SFR to launch a comprehensive 17-channel service on SFR’s 3G network that will be available 24 hours a day.

Christian Bombrun, director of marketing and development at the Canal+ Group said this was a key growth area for the company. “We strongly believe that it will happen, not only on mobile phones, but also on other mobile devices,” he said. “This deal with SFR is the first step and we will put Canalsat as a brand behind it and that proves we can be a player, not only in producing channels for the mobile market, but also in packaging channels and marketing channels to the mobile user.”

CanalSat is no longer just pushing its brand on the direct-to-home (DTH) market. It is now pushing its channels on TV over DSL thanks to deals with Neuf Cegetel and France Telecom. Satellite pay-TV operators are becoming multi-faceted in terms of incorporating mobile in their overall pay-TV strategy.

“One plus point is launching services on new interactive platforms,” Bombrun said. “Secondly, we are strong in terms of technology and innovation. When you contact your regular subscribers this proves you are an innovative company that has a strong message to your core subscribers. Thirdly, it is a new subscription. It increases the value of the company and the numbers of subscriptions we have,” noting that subscirbers can come from current Canalsat subscribers who go mobile as well as mobile subscribers who may subscribe to home services after being exposed to the brand in a mobile environment.

But will customers buy it? With premium pay-TV subscriptions running at around 50 euros ($59.6) a month, will consumers want to continue to pay extra monthly charges for a mobile service and could it possibly impact DTH subscriptions?

“I don’t see mobile television as a threat to satellite services at all,” Bombrum said. “I think you don’t target the same usage. The way television is evolving now, you will get bigger screens inside the house and we have launched an HD channel on trial. It is a totally different to the mobile market. I think some people will likely subscribe to one service, but I don’t see that competing at all. People watch a lot of TV so why would they not want to watch it on the move. For Canalsat on mobile, you could subscribe to both.”

United Kingdom

BSkyB, which continues to lead European satellite pay-TV operators in terms of overall subscribers with close to 8 million, also ramped up it activities in this area in recent weeks. The company launched a new service called Sky Mobile, an interactive application with both video and text content, which will be available across different mobile platforms and enable users to have access to news stories and updates from Sky News and Sky Sports. There will be the opportunity for the users to personalize a “My Sports” section to follow the teams of their choice.

“We are involved in a couple of the mobile television trials that are getting underway shortly,” a spokesman said. “We are providing content in both the trial in Oxford using DVB-H and the BT LiveTime (Virgin Mobile) trial in the London area. We see two rationales for exploring the potential for content delivery over mobile. Firstly, there is a revenue opportunity from using mobile as an alternative platform to distribute content. Secondly, it is means for Sky to deepen the customer relationship with its existing customers. We believe the provision of content on alternative platforms as part of the Sky customers overall service can act as a way to reduce churn.”

Nordic Region

While France and the United Kingdom are leading the way, others will follow suit in due course. Nordic Satellite pay-TV operator Canal Digital already is looking seriously at this opportunity.

Christian Albech, CEO of Canal Digital told Satellite News, “I think that mobile is quite interesting. We recently met up with some people from south Korea and they had just started up with TV on mobile. After two months, they had 40,000 subscribers and at the end of this year, they could have up to 600,000 subscribers. Of course, there will be a market for those kinds of services. I hope we will have a comprehensive Canal Digital offer on mobile within a year, but there are rights issues to be overcome. At the moment, there is not specific launch date.”

Hans-Holger Albrecht, CEO of Modern Times Group, the owners of Viasat Broadcasting who also run a DTH platform in the region said DTH operators had to be more flexible in how they deliver content going forward. He “It’s not just cable and satellite just like the old days,” he said. “It is multiple platforms. You need to be very strong on all pieces of the value chain.”

Germany

Premiere, the German satellite pay-TV operator, has been one of the fastest out of the blocks of HDTV but that does not appear to be the case in terms of mobile TV. “Of course we want to make Premiere available via as many distribution channels as possible. Premiere via mobile phone could be part of this strategy,” a spokesman said. “However, at this point, it’s too early to be any more concrete.”

A Word Of Warning

While satellite pay-TV operators are examining the options in terms of putting bouquets of content on mobile, there are still many issues to be resolved. Frequency issues are prevalent especially concerning DVB-H. In France, this is already a hot topic.

Georges Passet, CTO of Bouygues Telecom, recently told Satellite News‘ sister publication, Inside Digital TV, “This frequency [for the DVB-H trial] is part of the R5 multiplex, one of the six multiplexes, which has been defined for DTT (Digital Terrestrial Television) services. It would provide, with 7 MHz of bandwidth, a bitrate of 5 to 11 megabits per second, allowing the provision of 10 to 30 mobile television channels. For the time being, this multiplex has not been allocated to anybody. There is debate whether it should be allocated to mobile television, local television and/or HDTV.”

While spectrum issues also need to be resolved, one analyst believes the demand for mobile television services may not be as high as some may think.

“Our current estimates suggest that only 6 percent of Western European mobile phone users are very interested in watching live TV or video on their mobile phone, while 57 percent are not interested at all,” Michelle de Lussanet, an analyst at Forrester Research told Satellite News. “Initially, consumer adoption of this service will face significant challenges, including expensive, bulky phones with poor battery performance. In order to get even early adopters on board, providers need to keep charges low – in the range of 2 to 3 euros per month.”

De Lussanet believes that the market could still be a number of years away from developing. “Companies are trialing the technology, but we estimate that commercial services and mass market adoption are still five years away,” De Lussanet said. “In the meantime, operators need to focus on price points, content and handsets. Investment also needs to be made from the media side if this venture is to be successful. Taking this into consideration, mobile TV may have a future, but it certainly won’t take-off in the next year.”

Ken Hyers, a principal analyst at ABI Research takes a slightly different line and believes despite quality of service issues mobile television has proved popular.

“I was kind of shocked to realize there were 400,000 customers in the U.S. market [for video services], which is admittedly a drop in the bucket of 160 million [mobile phone] customers,” Hyers said. “But, they have been actively paying for what is a shoddy quality video service. It is not something I would pay $10 a month for, but 400,000 subscribers are. When Verizon launched its higher speed services, they were around signing 25,000 customers a week for a $15 a month service.”

Final Thought

While the markets may be slow to develop, mobile television offers satellite pay-TV operators a new revenue opportunity as well as a way of strengthening consumer relationships. In many European pay-TV markets, digital subscriber growth is slowing so the focus is now on boosting average revenues per user and reducing churn. Mobile television, while in its infancy, offers a perfect opportunity to do that, although it is likely to take some time before pay-TV operators really reap the benefits of a successful mobile TV strategy.

–Mark Holmes (Ken Hyers, Allied Business Intelligence, Hyers@abiresearch.com; Robert Fraser, BSkyB, Robert.fraser@BSkyB.com; Christel Le Rouge, Bouygues Telecom, CLEROUGE@bouyguestelecom.fr; Delphine Huchet, Canal Plus, delphine.huchet@canal- plus.com; Ingrid Schiefloe, Canal Digital, ingrid.schiefloe@canaldigital.com; Julia Buchmaier, Premiere, Julia.Buchmaier@premiere.de Belinda Simmelink, Forrester Research, BSimmelink@forrester.nl; Carl Eliasson, Shared Value (For Modern Times Group), Celiasson@sharedvalue.net)