As Korean companies bring new technologies to the U.S., broadcasters are investigating simpler, cheaper ways to put shows on portable devices
Want to check out Friday Night Lights during your commute home? How about Boston Legal? Good luck. Despite all the talk of watching live television on your mobile phone or other portable device, the idea is more promise than reality these days. What you can get, if you can get anything, is short, prerecorded video clips or a handful of channels that your all-powerful wireless carrier has chosen for you.
All of that may be about to change. Two companies from Korea, land of the wireless future, are bringing technology to the U.S. that will allow television stations to bypass wireless carriers altogether and deliver programs directly to mobile phones. The latest development on this front came on Apr. 3 when LG Electronics, in partnership with Harris Corp. (HRS), unveiled new, inexpensive technology that allows stations to zip local news and other video content to phones, portable video players, and in-car entertainment systems within a 45-mile radius.
The announcement comes just as station owners are stepping up their efforts in mobile television. A number of broadcasters are in the midst of negotiations to form a coalition for mobile-TV technology. The talks, which have not been reported publicly, are aimed at helping the services take off and could be announced as early as the National Association of Broadcasters convention later this month. "We believe that mobile TV is really the next killer application for broadcasters," says Brandon Burgess, president and CEO of ION Media Networks, which is participating in the negotiations. "There are a lot of broadcasters that are of the same mind."
The sudden emergence of direct-to-consumer broadcasting is a significant blow to companies that have been advocating alternative approaches. They include Qualcomm's (QCOM) MediaFlo, Crown Castle's (CCI) Modeo, and satellite radio companies XM (XMSR) and Sirius (SIRI). MediaFlo, for example, has been working with wireless carriers so that they can offer some television programming to their customers.
Now, the Korean technology could bypass that approach, cutting out the wireless carriers. "We don't need carrier partners," says Jay Adrick, vice-president at Harris' broadcast communications division. Besides the LG and Harris announcement, Samsung unveiled a similar technology earlier this year. TV broadcasters like the idea that they will be able to keep control of their programming and advertising—rather than becoming beholden to wireless operators. Burgess says that members of the coalition, if it is formed, will decide on one technology standard, most likely LG's or Samsung's. They will also determine whether to offer mobile TV for free, or to charge a small fee for the service.
The potential alliance creates all sorts of problems for rivals. XM and Sirius have been working for years on ways to deliver video to cars. Sirius is expected to finally make video available in some 2008 model cars later this year. (To make matters worse, the LG technology will allow TV stations to transmit radio signals—so XM and Sirius may see more competition in their core radio business.)
At least XM and Sirius have another business. MediaFlo and Modeo have concentrated on creating mobile TV for wireless service provider partners (see BusinessWeek.com, 3/1/07, "Wireless Rivals Primed for Mobile TV"). Carriers such as Verizon Wireless have been hoping to charge subscribers $15 to $25 a month for access to MediaFlo's channels.
But that pricing may be optimistic with more competition. MediaFlo, which charges carriers a fee for providing its service to subscribers, may have to consider ad revenue sharing or face a delay in profitability. "It changes the whole ball game," says Richard Doherty, director at consultancy the Envisioneering Group. "It's quite a disruption. This is a tremendous challenge."
MediaFlo executives say they're not threatened. They say the broadcasters' service is complementary to its offering. "I would argue [the broadcasters' approach] is not a direct competitor to MediaFlo," says Omar Javaid, vice-president of MediaFlo International. "These services can happily co-exist. They are complementary." Javaid points out that today, 85% of Americans not only watch local TV stations at home but also pay for extra cable and satellite channels.
Whether Americans will be as willing to pay for extra mobile-TV channels is less clear, however. For its part, MediaFlo is developing ways to stream its mobile TV to laptops and iPod-like devices as well, and is likely to compete head-on with broadcasters in those categories.
The approach of LG and Harris looks relatively cheap and easy. To implement their technology, called MPH, TV stations would have to spend $100,000 to $500,000 each on upgrades, Harris' Adrick says. If all of North America's 1,000 stations were to upgrade, that would cost, at the most, $500 million. That is a little more than half of what Qualcomm has spent on its MediaFlo network. A March field trial LG and Harris conducted in Columbus, Ohio, showed that the technology allows good reception and nearly instantaneous channel switching. "It performed better than our estimates," says Adrick.
With MPH technology, each TV station will be able to broadcast either three high-definition or six standard-definition mobile-TV channels, says Adrick. A typical U.S. city has five or six stations operating in it. So if each of the stations carries six mobile-TV channels, locals will be able to choose among as many as 36 channels total. In comparison, MediaFlo offers two dozen channels. Adrick says the MPH technology could also, in a few years, incorporate video-on-demand functionality.
The broadcasters have a lot going for them: The stations already have existing content deals in place and, unlike national broadcasting networks such as MediaFlo, can provide programming on local traffic conditions, local crime, and local sports. Unlike new entrants such as MediaFlo, stations already have long-time local advertisers, who might be willing to pay higher rates to stations able to reach viewers outside the home. "Every advertiser is looking for ways to reach consumers wherever they go," says Burgess. "Those viewers would be high-value customers."