CTIA - Static starts to clear on mobile TV

Relatively few mobile subscribers watch mobile video today, but industry players think the trend is just in its infancy

As a mobile TV service from one major U.S. carrier gets rolling, vendors at the CTIA Wireless show this week in Orlando, Florida, will be highlighting video as a key emerging technology to make the mobile experience -- and service providers -- richer.

CTIA will be a coming-out party for Verizon Wireless' VCast Mobile TV service, which became available in 20 markets around the country in early March. The carrier will launch it in Orlando and demonstrate the service there. VCast Mobile TV comes over a network built by Qualcomm subsidiary MediaFLO USA, which AT&T's Cingular mobile unit will also use later this year. But that's just one approach of several now available.

Relatively few mobile subscribers watch video on their handsets today, but carriers and a supporting cast that includes phone makers, software vendors and old-line TV networks think the trend is just in its infancy. NBC Universal, News, Time Warner and other media companies are already on board.

Many operators already offer streaming video over 3G networks. MediaFLO uses an entirely different network, on different frequencies, and the company sells carriers access to it wholesale. This frees up 3G for data services and, proponents say, provides higher performance. The technology works like TV and uses frequencies that are now being given up by local TV stations as part of the national transition to digital TV. MediaFLO's network will roll out gradually, finishing in February 2009 when that transition is to be completed, according to Gina Lombardi, MediaFLO's president.

Users need to be aware that conventional 3G handsets can't use MediaFLO, so special handsets will be required to access the service. Samsung Electronics Co. Ltd. already has a MediaFLO phone, and another, the LG Electronics Inc. VX9400, comes out this week, Lombardi said.

Verizon charges US$15 per month for its basic service, with a four-channel service priced at US$13 per month. AT&T is set to launch its offering, which will have the same eight channels, in the fourth quarter of this year.

Another broadcast technology, DVB-H (Digital Video Broadband-Handheld), is already in use in Europe and Asia.

Video is a pain point in concerns over 3G's capacity to handle user demands down the road, said American Technology Research analyst Albert Lin. Mobile video's future appears bright -- or worrisome, depending on whether carriers can handle its potential popularity, Lin said.

Lin is surprised how many consumers -- he estimates about 2 million in the U.S. -- are willing to pay for streaming video that he said has had generally poor performance when he's tested it, in several parts of the country. He said he's seen high rates of disruptions and stopped videos.

Streaming video is sent to each subscriber individually, which uses more network capacity than broadcasting the same signal to all users with compatible phones. That could hurt the user experience if a large number of users all want to watch a live event at the same time, he said. And given the response so far, large-scale use is likely to come soon, Lin said. He sees a market of 10 million users in the U.S. alone within two years, though he thinks disappointing experiences could dampen the response.

"The network technology that has been used just isn't going to match with how consumers behave," Lin said.

Streaming video provider MobiTV says its technology hasn't brought 3G networks to their knees yet and ultimately has greater potential than broadcasting.

Users of 3G video can pause shows, advertisers can target ads at subgroups of viewers, and MobiTV can offer as many channels as it wants, said Paul Scanlan, president and co-founder of the company. MobiTV can also offer higher quality services for devices other than phones, such as video screens in cars. The company already powers AT&T Broadband TV for 3G-connected PCs. It will continue alongside the MediaFLO offering, according to AT&T.

In addition, MobiTV will be demonstrating technology at CTIA that will let it respond to high demand by using multicasting, a more efficient system that sends one stream to multiple users, Scanlan said.

The rivals may be heading into a critical period soon. Lin believes that starting late this year and especially in 2008, many consumers will be deciding whether they want to tune in.

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