News and New Products

What’s holding back mobile TV?

By Ed Sperling -- Electronic News, 1/12/2007

Electronic News sat down to discuss the long-overdue future of mobile TV with Ed Sawma, senior director of applications marketing at Motorola; Penny Cornali, technical marketing director at PacketVideo; Scott Wills, president and COO of HiWire, and Rutton Ruttonsha, senior VP at NXP. What follows are excerpts of that conversation.

Electronic News: First let’s set the landscape of this discussion. What do your companies do in mobile TV and what’s holding back this market?
Wills: HiWire is a division of Aloha Partners, which is the largest owner of 700MHz spectrum in the United States. Our mission is to build, deploy and manage a broadcast network that is optimized to deliver streaming television to partners such as wireless carriers and other providers. There have been a lot of clip services and video services masquerading as television. If you were to provide a real TV service that consumers desire, it would be high-quality, high-resolution streaming television.
Cornali: PacketVideo is a multimedia software company for mobile devices. In the mobile TV sector, we provide the software for the devices as well as the ESG (electronic service guide) and all the interactivity. The biggest issue we see is interoperability. All front-end systems have to work with all handsets and all network devices.
Ruttonsha: NXP was formerly Philips Semiconductor. We provide end-to-end solutions for mobile TV from a semiconductor perspective, from the tuner to the channel to what processes the picture. One of the biggest key issues is the user. Getting user acceptance is probably the biggest issue.
Sawma: Motorola is doing a lot of things related to mobile TV in handsets and also end-to-end solutions. Our connected home business has a video delivery system that has matured over decades. We’re leveraging that into the mobile environment to do video delivery and security. We’re also deploying mobile transmission networks for video delivery. We think interactive services will be a key driver in the future.

Electronic News: What do people expect from mobile TV? Is it the same programming they already get or something new?
Wills: There isn’t any one thing consumers are looking for. What the data shows, though, is consumers are looking for a fairly traditional television experience. They want familiar brands. They want to be able to access those brands through a familiar electronic service guide. And they want tonnage of quality streaming content. There is also a subset that wants some content tailored for the mobile device. That’s about 30 percent of the people. About two-thirds want the traditional content.

Electronic News: Are the one-third that want tailored content different in age from the remainder who want traditional TV?
Wills: All of the likely subscribers tend to be younger. They’re men and women—slightly skewed toward men today—in the 18 to 35 group, with a little spillover in the 35 to 44 group.
Ruttonsha: You asked why hasn’t it taken off? It has taken off in other parts of the world besides the United States. In Japan, if you ride the subways, they’re glued to it. You can’t pry it out of their hands. In Korea, it’s happening in a huge way. It’s creeping into Europe now for sports and news.
Sawma: If you look in the mobile environment, it accelerates faster than in a traditional environment. If you ask people what they want first, they want regular TV. Maybe in a few years they’re going to get bored with it, though. What’s going to end up happening is mobile TV will become the center of the interactive environment. We’re creating a sense of community among the mobile users. They’re not only consuming static video. They’re doing a YouTube model or interacting with each other.
Cornali: A lot of people, based on what’s going on in the world, are going to want to see CNN if there’s a big story going on. You need new content and you need compelling content. So you need a brand, a star—something that’s going to help build the mobile market. If you can’t get it anywhere else, you’ll be forced to watch it on mobile TV.

Electronic News: What size screen are they going to watch it on?
Ruttonsha: People get hung up on screen size. It’s not a matter of screen size. It’s a matter of resolution. You can see a football on a VGA screen go all the way across the screen. There are a lot of misconceptions. We ran focus groups. If you ask 10 people if they’d watch TV on a small screen, they’d say no. Then, if you actually give them a high-resolution screen running content, 7 out of 10 said they would get one. It’s a matter of user experience to get them into it.

Electronic News: What does that do to battery life?
Ruttonsha: It’s getting better all the time, and screen technology is coming, as well. It’s the backlighting that uses battery life. Our engineers are developing reflective screen technologies that maximize the battery life. The semiconductor part only takes about 25 milliwatts.
Wills: If you look at the research, when people complain about the issues with mobile television, 76 percent of their complaints involve quality of the video and frame data rates. Only 6 percent of people complain about screen size. But it won’t be limited to a 2.5-inch to 3-inch screen. We’re testing screens as small as 2 inches and as large as 15 inches. You’ll be able to access this content in a number of screen sizes.
Ruttonsha: There’s no reason you shouldn’t have a variety of screen sizes. There’s another twist to this, though. The quality of audio is also important. If the audio is perfect, you can tolerate some misses on the screen. You don’t even see it. That’s what users have told us. That’s also the same for a big TV screen. If the audio is great, you think the picture is a lot better.

Electronic News: Will the future be a separate TV, or will it be a multifunction device?
Cornali: There is a market for a standalone device. With sports, when they scan the audience you can see people watching a game on a portable device and another game in person.

Electronic News: They sound like sports junkies.
Cornali: Yes, but the junkies are the early adopters. They’re going to say, ‘yea’ or ‘nay,’ this is great or not great. But you’re not always going to give your handset to your kids to watch TV on a long drive. You’re going to want a separate device you can loan or share.
Sawma: We’re looking at using mobile video in certain venues. In sports arenas, you can give them to VIPs and luxury boxes and allow them to see different angles of the game or watch other games at the same time. There will be a variety of devices.
Cornali: It’s the same with Nascar right now. They have in-stadium broadcasting, so you can see what’s going on from inside different cars.

Electronic News: Is there a convergence between mobile TV and IP TV? Will they merge?
Ruttonsha: That depends upon the bandwidth. There is tremendous bandwidth coming on line now. In the U.S., I was quite surprised that the typical usage rate (for mobile TV) is two to five minutes. If it extends out to 15 to 20 minutes, which is what we hope will happen and what is happening in Asia, that will create a bandwidth issue.
Wills: That’s clips, though. If you segment that data and look at people who are watching streaming TV, they’re watching twice as many channels and they’re watching it for close to 15 minutes. Outside the U.S., it’s well over 15 minutes.
Ruttonsha: Then you run out of bandwidth.
Sawma: In regards to convergence, whatever technology you use to get that content to you, that should be the technology that’s used. Whether it’s IP that delivers it to you or broadcast that delivers it to you, the point is that you don’t care because you’re getting the content you want.

Electronic News: Aren’t most shows 30 minutes?
Cornali: That’s with commercials. If you take out the commercials, the average show is about 20 minutes.

Electronic News: That opens up a different area. Do the digital rights also include commercials?
Ruttonsha: It depends on your business model. In the areas where this has been successful, it has been free to air. Then you pop in the commercials. But you cannot expect a person to pay for this service and then add commercials.
Cornali: People do that now.
Wills: I think the model will be a blended one of subscription fees as well as advertising, which is the same in cable TV and satellite. There are other models that are commercial-free. With the iPod, it’s a portable video device and you pay $2 to get your one-hour show, and it’s commercial-free.

Electronic News: How much are people willing to pay for a service, then? Has that ever been determined?
Wills: For this to take off in the United States, we need an advertising-supported service that has some level of subscription fee and definitely not on a pay-per-view basis. You’re not going to get mass adoption on a pay-per-view basis.
Sawma: You definitely don’t want a pay-per-minute model. Nobody wants to think about how much they’re paying when they watch a show.
Cornali: If you look at TV as a whole, it started out with a little box and fuzzy channels. Everyone said no one would sit in their living room and watch it because it was black-and-white and horrible resolution. It grew, technology grew, adoption grew. When cable came along, conventional wisdom was that people wouldn’t pay for TV. Then cable grew. As people got used to watching HBO and premium content, that grew. The next big thing will be mobile.
Ruttonsha: That’s the point. It starts off free. You have to hook the users. People love free stuff.
Cornali: They paid for it in Italy.
Ruttonsha: No, it was free for the first three months and then they started charging.
Sawma: I think in Europe there’s certainly a willingness to pay for a base service. Then they have a tiered service where you pay a premium. As for advertising, once you get adoption and you can do very targeted advertising, you might not have to show the person as many ads to get the same revenue out of it. There are some interesting advertising models. They may show you an ad while you’re changing the channel.

Electronic News: Who’s going to own this market from the service side?
Cornali: Traditionally, there is a triangular relationship to building the service. There are the people who own the spectrum, the cellular operators that handle the distribution and the customer care and the billing, and then you have people who provide the infrastructure and the devices. It’s unlikely that one company will own all of that.
Wills: I think the biggest opportunity early on is with the wireless carriers. There are over 200 million handsets out there. If we had a failed or stalled effort with 10 percent penetration, that would make us as large as Comcast. Even a small effort with limited success becomes a very dominant industry effort.
Ruttonsha: Going back to the triangular model, one of the reasons it’s taken so long to get going in the United States is that everyone wants an unfair share of the $6.6 billion market they see coming. In countries where it’s taken off, there’s one push to get it out there.
Cornali: Everyone looks to the U.S. for TV. Comparing us to other countries isn’t fair because it’s a much bigger market here. To be able to build out an infrastructure and reach all the major metropolitan areas is much different than what’s happening in Italy and Japan. Japan is big from a population standpoint, but in land size it’s very different.
Ruttonsha: Still, it should have happened faster in the United States. It keeps getting pushed out and pushed out. The original estimates from several years ago said we would have this low rate of 10 percent to 15 percent penetration already. We don’t have it.
Wills: The infrastructure isn’t there. Right now users get thousands of clips and they have to navigate through folder after folder. To expect that television should have taken off is wrong because television hasn’t been launched in the United States.

Electronic News: So what’s stalling it?
Sawma: In the United States, still the number one reason for purchasing a service or choosing a carrier is quality of voice. In Europe and Asia, that has been subdued. People look at applications and data as a decision maker when they go to buy a handset. In Europe, it’s easier to create the coverage because the population is denser.
Cornali: But interoperability is still key here, because handsets don’t work on everyone’s infrastructure. The Nokia N92 only works on the Nokia system. The handsets have to move up, the infrastructure has to move up, and all the players have to be more open.

Electronic News: Isn’t part of the issue also confusion on the part of the consumer?
Ruttonsha: Consumers don’t get confused.

Electronic News: Sure they do. Do you buy Blu-ray or HD DVD? Do you buy mobile TV on what’s available today or do you wait until the price drops and the technology improves? Is mobile TV going to come into your house as a replacement technology or an additional one?
Ruttonsha: I don’t think the consumer is confused. I think they are very well informed, and they elect not to choose a product because they know there is a splintering of standards and they could be stuck with an obsolete product.

Electronic News: That sounds like confusion. But either way, there’s no clear choice yet.
Wills: But I don’t think the consumer confusion issue is inhibiting mobile television growth. I think what’s inhibiting growth is caution on the part of the wireless carriers. I don’t think any wireless carrier is convinced this is going to be a big business. When I say convinced, I mean that they’re going to take several billion dollars to go build out an infrastructure in the U.S. That leaves it to us and MediaFlow and Modio to go build that out and experiment. If it becomes the success we all expect, then they’ll try to figure out a way to control it. That’s what’s slowing it down—the lack of commitment on the part of wireless carriers. Without that commitment, the networks aren’t being built out and the handsets aren’t being made.
Sawma: In a lot of parts of the world, it’s the broadcasters that are driving the initial trial. They see it as an extension. They’re broadcasting to users, and they want to broadcast to you everywhere. As the basic service matures and you get into more interactivity, that’s where the mobile operator sees additional revenue.
Cornali: Convergence is going to be another big topic. These devices have to have output and be able to go to a bigger screen. You need to take the feed and put it on a bigger screen without losing resolution.