Tuesday May 27, 10:06 PM
New TV handsets could tune out network operators |
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By Tarmo Virki
HELSINKI (Reuters) - A long-running debate over how mobile network operators will make money from TV for phones has taken a fresh twist as a new breed of handsets threatens to strip them out of the action.
Only Italy, Japan and South Korea have made much progress in developing TV for phones after years of wrangling over who will pay to build such a network, the standards to adopt and even the level of demand.
Heavyweight Nokia, which makes every second smartphone sold, has failed to find consensus even in its native Finland, underscoring how tough the push for global progress has been.
Now the whole messy affair faces a new threat, thanks to a handset from South Korea's LG Electronics, that instead of waiting for the industry to develop a special mobile TV network, simply taps straight into existing TV broadcasting.
A model from Taiwan's Gigabyte does the same.
"We think this is going to be a trend in Europe. We think this is going to be a big thing," said Yannick Levy, head of French mobile TV chipmaker DiBcom.
LG's HB620T handset has gone on sale in Germany, which is great news for sports fans ahead of Euro 2008 football and the Beijing Olympics this summer but a blow for mobile network operators set to lose out on broadcast revenues.
"This poses a new challenge for a business which faces too many challenges already," said eQ Bank analyst Jari Honko.
Research firm Strategy Analytics has estimated the market for TV broadcasts for phones could grow to $3 billion by 2012 and that excludes the potentially huge markets of Japan, South Korea and the United States, which are sticking to their own standards.
It is revenue which operators could use amid falling call prices and tightening regulations.
The new phones take in the digital television signal now being broadcast for TV sets (DVB-T), a process that until recently was too power-hungry for most phone batteries.
Levy said this hurdle has been overcome and Taiwan's Gigabyte says its DVB-T model T600 offers 3-5 hours of TV watching.
"Mobile DVB-T is a threat to (the dedicated mobile TV network format) DVB-H in Europe and parts of Asia because it gives operators another reason to delay launching DVB-H," said Neil Mawston, an analyst at Strategy Analytics.
BATTLES AHEAD
Part of the battle to get moving with mobile TV has centred on which standard to adopt, with Nokia and other European players favouring DVB-H (Digital Video Broadcast - Handheld) while Asian and U.S. vendors have pushed technologies such as DMB and MediaFlo.
"We have always been in interested in this, but the business model is not clear," said Frank Esser, chief executive of SFR, France's second-largest mobile operator.
DVB-T is a new standard facing an already fragmented market where around a dozen are battling for top spot.
All are hungry for backing from top cellphone vendors as a broad phone offering is crucial for success, but this too has been hard to come by.
Even in its native Finland, DVB-H backer Nokia has found resistance.
"Mobile TV is more for watching video clips and shorter programmes. 3G capacity is enough for such use," said Veli-Matti Mattila, chief executive of Elisa, Finland's number two telecom operator. "We don't need DVB-H."
Yet DVB-H has fared better than most, with the European Union strongly endorsing it and commercial broadcasts having started in some European countries as well as India and Vietnam.
DEMAND DEBATE
Debate over how much effort to throw behind the whole business hinges on different forecasts for demand, with many operators still cautious about getting too excited over marrying TV with tiny handset screens.
Only around 5 percent of Europeans expressed interest in watching television or video on their handset screens in a Gartner survey last year, while 20 percent of Asians said they would be interested in such services.
"I am not a big believer ...that mobile TV as the third screen is the next big thing," Dan Schulman, head of Virgin Mobile USA, told Reuters. "I think trying to take TV and morph it into mini TV is all wrong."
Trials have shown people given broadcast-ready phones will watch shows on them, but early commercial offerings in countries such as Britain and Finland have mostly failed.
"All those surveys everyone did a couple of years ago saying consumers showed limited interest in mobile TV are, at least in the short term, proving correct," said Strategy Analytics' Mawston.
One reason is that development of 3G technology has meant data transfer speeds comparable to home broadband, which has boosted video usage on cellphones, but 3G networks limit both picture quality and the number of simultaneous watchers.
If more handsets like those from LG and Gigabyte hit the market, there could be even less pressure for operators to make a go of drawing users away from 3G and on to a new mobile TV network.
"In Europe this is close to death, said eQ Bank's Honko regarding the mobile industry's efforts to agree on a TV network of its own. "A lot needs to change for this to take off."
(Additional reporting by Sinead Carew in New York and Sami Torma in Helsinki)
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