Mobile TV took a big step forward last week as Qualcomm Inc. announced plans to deploy an $800 million nationwide network delivering multimedia messaging service broadcasts to mobile handsets.
Use of the network, which is expected to come online in 2006, will be offered to CDMA and W-CDMA operators in the United States through MediaFlo USA, a new Qualcomm subsidiary. MediaFlo will aggregate and distribute streaming audio and video over as many as 100 channels, including 15 live video channels.
The one-way, high-speed network will use Qualcomm’s 700 MHz spectrum, the majority of which the mobile chipmaker bought in an FCC auction last year. The company picked up the rest of the spectrum last month from an unidentified original licensee.
“Qualcomm strongly believes that the broad delivery of wireless multimedia services is the logical next step in the evolution of the wireless industry,” said Dr. Paul Jacobs, president of Qualcomm’s Wireless and Internet Group.
The new service promises to dramatically increase offerings for mobile video fans. MobiTV, which is the only live mobile television network available today, features about 20 channels; Sprint PCS’ Sprint TV includes four “basic” channels plus a handful of premium offerings.
Qualcomm said the video may be broadcast at up to 30 frames per second-roughly the rate of TV and substantially faster than today’s mobile video services. National TV networks, local channels, cable providers and satellite operators will provide content to MediaFlo, which Qualcomm eventually hopes to spin off.
Because the network will transmit only one way and because the 700 MHz band has good propagation, the new network will require “30 to 50 times fewer towers” than current wireless networks, the company said, lowering costs and expediting buildout. As a mobile technology provider, Qualcomm also stands to benefit from increased sales of chips and other hardware needed to support the network.
While Qualcomm said it will consider third-party investment in the network, it is expected to foot much, if not all, of the bill itself. The company has more than $2 billion in cash on hand.
The announcement drew immediate attention from carriers, which see the project as a way to off-load data-heavy services that weigh down infrastructure. The day after the announcement, Sprint PCS Chief Operating Officer Len Lauer said Sprint is already in talks with Qualcomm about using the network.
Verizon Wireless is also eyeing the network, a spokesman said.
But even as the industry buzzes about the revenue-generating possibilities of mobile TV, questions remain about demand.
A report released last week by U.K. analyst group Jupiter Research indicates that only 13 percent of European users were interested in mobile video, while more than twice that number-27 percent-wanted to listen to music on the go. Studies of U.S. consumers have arrived at similar results.
But where some analysts look at 13-percent consumer interest and predict a cool reception for mobile video in the near future, InStat/MDR director of wireless Clint Wheelock is optimistic. After all, he said, a recent survey by the analyst firm showed U.S. interest in mobile music was at 11 percent, while gaming was 6.5 percent among wireless users, and both segments are considered red hot. Wheelock and others also note the success of mobile video in more mature markets in Asia.
“This is a service that is just barely being deployed,” Wheelock said last month. “I think that just tells you about the potential for market size in each of those categories.”
And because the network will be built specifically to deliver MMS, costs for the end user could be substantially lower for mobile video. Between video subscriptions and required data packages, today’s mobile video fans are paying $25 to $35 a month for service.
MobiTV declines to disclose viewership, but it has been widely considered a success, with analysts estimating between 100,000 and 200,000 subscribers paying for the service. A higher-quality viewing experience coupled with cheaper, more simplified rates could result in a dramatic mobile video uptake.
“If the services are priced attractively, this could be another great source of revenue for wireless network operators and could extend the `listening’ audiences for TV stations that have to rely on fixed-location viewing,” agreed analyst Andrew Seybold of The Seybold Group. “It can and will change the way entertainment is delivered to those who are not in a fixed location.”
