Will DTT emerge as mobile TV victor?

The worldwide battles over mobile TV standards have lasted four long years and no clear winners have emerged. But now, argues Dermot Nolan, director of the TBS consultancy, a "perfect storm" of technological and economic developments means that the debate may be settled in a surprising way.

In response to early mobile-TV developments in South Korea and Japan, the US and Europe started to develop indigenous mobile-TV standards as competitive industrial responses.

But the upfront infrastructure investments were always daunting even before taking account of spectrum-auction fees. Now, with the global credit crunch, the investment looks even more challenging. At the same time, soaring power prices mean that transmission costs are also rising.

Despite some optimistic field-trial results, the pay-business model for mobile TV always looked challenging and consumer take-up has been relatively low. The problem is that while mobile-telephone customers pay for voice, SMS, ringtones and mobile broadband "dongles" (now a popular DSL substitute), everything else is perceived to be "free": cameras, WiFi, FM radio, games and MP3 players (with the notable exception of Apple).

South Korea provided the perfect testing ground for mobile-television delivery systems and business models: free versus pay and terrestrial versus satellite. By February 2008, the six-channel free terrestrial T-DMB had around 10 million customers and the 19-channel TU Media pay-satellite service had only 1.3 million customers, far short of the three million subscribers it needs to break even.

Mobile television is embedded in the Japanese ISDB-T DTT system introduced in 2006. The business model is free and the system is strongly endorsed by Japanese broadcasters and handset vendors, which means that a quarter of handsets have mobile TV. Recent figures from broadcaster NHK indicated that about 20 million handsets were in use. The latest handsets include diversity reception, further improving the mobile-TV service that is available to 80 per cent of the Japanese population.

In the US, the MediaFlo system is offered by mobile operators Verizon and AT&T - the current Verizon offer costing US$15 per month for eight channels - but no subscriber numbers have been disclosed. Analysts suggest that fewer than half a million MediaFlo subscriptions have been sold, but the lack of hard subscriber information makes it difficult to assess its prospects.

In Europe the prospects of the once-promising T-DMB system have largely receded with the closure of the BT Movio service in January 2008 and the format's disappearance in the German market. It now looks more likely that T-DMB and its derivatives will be used for advanced digital audio broadcasting (DAB) services, in various European countries.

Mobile-television services using the DVB-H standard were introduced in Italy in 2006 by 3 Italia, TIM, and Vodafone. By the end of 2007 fewer than one million handsets were in circulation and the number of active subscribers is unknown. As in the US, handset choice is restricted, which reflects the caution of vendors and mobile operators about subscription-based mobile broadcast television.

3 Italia has just launched a free mobile-television offer, which seeks to emulate the Japanese and Korean terrestrial business models and which may lead to a marked increase in service.

In other EU countries - including France, Finland and The Netherlands - DVB-H services are either on air or are soon to launch.

Recent developments in Germany have created a situation that could change the prospects for mobile TV in other markets, thanks to a "perfect storm" of regulatory and technological developments.

The incumbent mobile operators (Vodafone, T-Mobile, and O2) lost out in the DVB-H licensing awards to the Mobile 3.0 consortium, which has so far struggled to meet its initial licence obligations. The mobile operators' competitive response has been to launch DVB-T handsets from LG, Giga, Samsung and other vendors offering free DTT services.

Significant strides in developing technology to enable mobile-television reception via DVB-T have been made: TV viewing time without recharging the battery is now between two and five hours and receiver sensitivity has been improved by a factor of two-to-five compared to conventional DVB-T systems.

Reports from Germany indicate that the performance of the DVB-T handsets is very impressive. ARD and ZDF are retaining UHF transmissions in various l????nder to serve the emerging mobile-television market and take-up is reported to be very high.

For mobile-telephone operators, the advantages of DVB-T-based mobile TV include: access to free TV channels, no new infrastructure or spectrum auction costs, no programme rights issues, and the ability to wrap pay-TV services on 3G mobile around the free-to-air DTT channels. Vodafone Germany's chief executive Friedrich Joussen declared: "These DVB-T devices came as a surprise and call a payment-based subscription model into question".

The DVB-T-based mobile TV model has already been deployed by Telekom Austria and similar services are now expected in Greece, France and elsewhere.

In the UK, the switch to high-power DTT that is under way as part of switchover means that signal power is increasing tenfold. Given the German experience, this might be more than adequate to provide mobile DVB-T coverage in urban high-population density areas.

This will be further enhanced by the inevitable emergence of a diversity of DVB-T handsets. The ramifications of this most unexpected mobile-television development are likely to have far reaching consequences for DVB-H, MediaFlo, the upcoming Ofcom UHF auction, and the humble Freeview system.

Dermot Nolan is director of the TBS consultancy

This article first appeared in telecoms.com sister publication New Media Markets

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