The bigger picture with mobile TV

There has been extensive press coverage over the last few days of two mobile broadcast trials in the UK. Virgin and BT Movio reported the results of their DAB-based test while O2 and Arqiva shared the findings of their DVB-H trial. The two studies varied considerably in their conclusions, highlighting differences in the approaches adopted by both groups. They also fell short of revealing other key metrics, such as the effect of mobile TV handsets on other revenue generating services such as voice and SMS.

Key findings

  • Users are willing to pay GBP 8 per month for access to mobile TV services [Virgin]
  • Mobile TV was the first multi-channel TV experience for 31 percent of users [O2]
  • There is greater demand for radio than TV services on mobile handsets [Virgin]
  • 36 percent of viewing was done in the home, compared to 23 percent at work/college [02]
  • Average viewing times varied considerably between the two trials, with O2 users viewing for more than 3 hours per week while Virgin trialists tuned in for just over an hour per week.

These results raise a number of questions. Firstly, how much of an impact does handset form factor have on the time spent viewing mobile TV services? The O2 trial used Nokia’s ‘widescreen’ 7710 handset, while Virgin deployed a standard ‘monobloc’ Windows Mobile smartphone. O2 users reported viewing times three times longer than those of the Virgin trialists. I believe the enhanced screen quality, superior usability and more natural viewing angle of the 7710 played a significant role in this.

O2 also offered more channels (16 in total), including most of the UK’s standard terrestial stations, thereby providing users with access to familiar content and a compelling ‘demo’ to show to their friends and family.

However, viewing times are not necessarily the most relevant metric. The economic case for mobile TV remains unproven and it doesn’t matter how long users are willing to watch for if they aren’t willing to pay a correspondingly higher price for the service and the handset.

It would be interesting to know, for instance, how many users continued to carry their standard mobile handset for making calls and sending texts during the trial. I would suspect this would be quite a high percentage among O2 trialists, who would be unlikely to switch to a device as large and cumbersome as the 7710 if they had an ongoing requirement for high voice usage for either business or personal reasons. The Virgin trial, which used a device with a form factor more similar to the handsets on which most users will expect to receive their mobile TV service is probably a better indicator of potential uptake.

Another unanswered question is raised by O2’s finding that most viewing occured in the home. PMN have long held the view that the mobile environment is fundamentally incompatible with traditional TV consumption. It is unsurprising, therefore, that the highest number of viewing minutes were recorded in the home, where the immersive experience of viewing television on a small screen device is more practical.

What effect, then, will the rising popularity of home media sharing have on the popularity of viewing TV on a mobile phone. Will users still choose to view TV on their mobile handsets when they have a house unwired with a Wi-Fi network for sharing TV, music collections and video libraries on any laptop, PC or TV screen? As O2 found, the mobile TV experience was the first time nearly a third of users had watched multi-channel TV. Their higher viewing figures could be as much a factor of novelty as genuine enthusiasm for TV in the mobile form factor.

Returning to the economic practicalities, there are several issues to be addressed regarding standards, network build-out costs and handset availability. Virgin and BT used existing DAB infrastructure for their trial. The spectrum is available today, much of the infrastructure is already in place and it also comes with the added benefit of providing access to the UK’s mature market for DAB radio.

O2, on the other hand, used the DVB-H technology more widely supported within EU countries, but mired in spectrum availability issues and requiring the deployment of new infrastructure. Indeed, O2 has already started talking to other operators about the possibility of sharing the costs of network construction and is lobbying the government to address the spectrum issues.

DVB-H benefits from the support of Nokia, the world’s leading handset manufacturer, which is already making aggressive moves to solve the economic case on the terminal side. The Finnish manufacturer has the scale and financial resources to invest in developing DVB-H handsets at a loss if it guarantees a leadership role and profitability in the future.

DAB lacks an individual champion with the strength of Nokia, but the market for chipsets and terminals is already well developed because of the widespread popularity of digital radio in the UK and several other territories around the world. Companies like RadioScape, which pioneered the use of DAB to deliver multimedia content to mobile devices, are working on software-based radio technology which could eventually lead to the development of an integrated DAB and W-CDMA chipset for mobile devices.

From a cost perspective, it is tempting to see streaming TV – as supported by Vodafone, Three and Orange – as a less expensive alternative. It is supported by existing technology, the economies of scale are already in place for handsets and it can be delivered today using previously allocated spectrum. However, the costs are still there, they are just more evenly dispersed throughout the deployment cycle: the reality is that most UK network operators will require significant capacity upgrades and most likely the introduction of the HSDPA upgrade to their 3G networks if streaming TV becomes a mass market service.

The broadcast model, although it may have higher upfront costs for network infrastructure and handset investment, should prove cheaper in the long-term.

O2 and Virgin have both taken positive steps in conducting these trials. They have gathered valuable operational experience and ‘prepped’ the industry for the commercial introduction of these services later in 2006.

I believe, however, that mobile TV will never be a significant profit generator for network operators as a standalone service. The fundamentals of viewing video content in the mobile environment limit the usefulness of this application and therefore limit the amount users will be willing to pay. Mobile TV will become mainstream – by 2010 it will be a standard feature on most mid-range handsets in the UK – but it will be sold as an integrated package of home entertainment by the major media companies.

Small wonder, then, that Richard Branson has been willing to accept a lower payment for his share in Virgin Mobile to ensure the merger with cable company NTL proceeds. As the largest single shareholder in the combined group, he will be uniquely positioned to drive the media convergence which will be essential to the success of mobile TV.

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  1. 2
    Marek Pawlowski

    As a follow-up to this story, I received an interesting press release from Flextronics Systems Software:

    Flextronics Software Systems launches mobile application for consumer market

    London, January 20, 2006 – Flextronics Software Systems (FSS) today announced the launch of HipTV – a mobile TV solution which marks the first step on the road to an IMS-based solution. Using DVB-H, the product will deliver mobile television direct to a mobile phone or handheld device such as a PDA without the problems associated with video streaming.

    In contrast to video streaming on GPRS/UMTS networks, HipTV on DVB-H delivers sharp images synched with clear sound but the real benefit is for network operators as it frees up bandwidth to the network. Increased bandwidth enables many more customers to access the service. In a World Cup year, this means that England football fans wanting to watch the match against Sweden can do so on the train – without worrying about an overloaded network cutting their connection.

    “With the commoditisation of voice and SMS, IMS offers the next revenue opportunity for the mobile industry – you don’t need to look further than mobile TV to see this,” said Ajay Gupta, Assistant Vice President, Flextronics Software Systems. “The mobile TV market is expected to grow from 130,000 users to more than 83 million users in five years and now our software can evolve into providing the mobile TV solution on IMS.”

    ABI Research predicts that by 2010, more than 350 million businesses and consumers will be using IMS services. This adds up to an annual global industry worth $100 billion1. Analysts predict that most of the major network equipment providers (NEPs) will have the core elements of an IMS portfolio in place as early as next year.

    According to Thomas Valovic, programme director, VoIP Infrastructure at IDC, “[In 2007] we expect most of the major NEPs to have the core elements of an IMS portfolio.” “The years 2007 and 2008 are where we begin to see a significant ramp-up of IMS revenues,” he said2.

    “The launch of HipTV should prompt service providers to see the potential of IMS solutions to deliver revenue-generating services like this. Network equipment providers, service providers, handset and terminal vendors and system integrators who aren’t starting to prepare their networks and handsets for the arrival of IMS will be left behind,” said Ajay Gupta.

    The company is expecting to launch more future-looking application frameworks like IMS Client and will be demonstrating mobile services such as video notes during 3GSM. Video notes is a messaging application that allows callers to leave a video message instead of a voice mail. They will require no additional call to the operator’s network because they are IMS-based.

    Flextronics software also provides outsourcing and consultancy services to help customers prepare for the wave of fixed mobile convergence (FMC) and take advantage of IMS. With applications for service providers, NEPs and handset manufacturers, Flextronics offers customers an end-to-end partnership for all IMS initiatives.

    1 As reported in Total Telecom, 23rd December 2005 – “IMS to boost European telco revenue.”

    2 Thomas Valovic, IDC, was speaking at the IDC-sponsored Web conference, “The Promise of IMS: Igniting a Telecom Network Transformation”, 30th November 2005.

    About Flextronics Software Systems

    Flextronics Software Systems (FSS) is an end to end communication solutions provider with more than 200 customers worldwide, in the Telecom Infrastructure, Service Provider, and Business Process Outsourcing sectors. A specialist in convergent network solutions, FSS offers both Products (Licensable Technologies) and Full Spectrum Outsourcing Services to its customers for Wireline, Wireless, Next Generation Fixed or IP networks. Assessed at SEI-CMMI Level 5, FSS has been an ISO 9001 company since 1996, employing more than 5000 professionals at Bangalore, Gurgaon and Nuremberg development centres.

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