C2Mmonthly

The EC’s decision to mandate DVB-H as the de facto mobile TV standard attracted as much criticism as it did praise. In the US, the regulator’s actions may be making it possible for mobile TV to go from a general concept to a multi-billion dollar business. How did this happen?

“The (US) market for mobile video is forecasted to explode over the next four or five years.” Those that are trying to figure out how profitable the mobile TV market will be or struggling to get their head around how indeed to turn a profit for their business can take a lot of consolation from that sentence. It’s not said very often, especially in Europe. Well, the most sceptical and suspicious, European may say, isn’t this just classic American marketing spin? Well, the more objective analyst may say, it probably isn’t. The statement comes as the bottom line finding of a report from the Progress & Freedom Foundation (PFF) in the US, a think tank that studies the digital revolution and its implications for public policy.

In ‘A Primer on the U.S. Mobile Television Market’, PFF Adjunct Fellow Joseph Kraemer presents facts and figures concerning the mobile television market which the foundation believes will grow dramatically in the next five years due to both US regulatory policy and a variety of other factors. Again let’s just hold that thought: the regulator is acting to make sure that there are positive business outcomes for the industry. "From a public policy perspective, the market-focused wireless broadband policies of the U.S. have been successful," stated Kraemer, PFF Adjunct Fellow and Director at LEGC's Washington D.C. office. "These policies have made it possible for mobile television to progress rapidly from a general concept to a business that is poised to generate billions in revenue form tens of millions of users. The reports of the demise of U.S. technical and business innovation are just plain wrong (at least with respect to mobile television)."

Strong opposition
Compare this measured opinion by commercial industry analyst on what the regulator can do with the febrile state of Europe’s market following the announcement by the European Commission (EC) this time last year that EU member states adopt DVB-H a the single standard for mobile TV. Whilst the likes of Nokia readily applauded the decision, a lot of businesses and even the UK, German ad Dutch governments strongly opposed what they thought of as a business-inhibiting move. So how is the mobile TV and video boom going to come about? In its analysis, the PFF identifies three key factors which it believes will contribute to the expected growth of the U.S. mobile television market: increasing use of mobile/handheld platforms as entertainment devices; incentives for device manufacturers to incorporate video functionality in their equipment; greater availability of spectrum.

In detail, the PFF says that it has identified the expanding use of cellular telephones, laptops, and other mobile / handheld platforms as entertainment devices used to view not only video content supplied from film studios and TV companies but also from the nascent but soon to explode user-generated content market (YouTube etc.) PFF sees the phenomenon is especially prevalent among the under 35 population segments, a demographic that attracts a lot of attention to many advertisers, especially those in the fast moving consumer good segment. Associated with this is the increased willingness of mobile device manufacturers to incorporate video receive functionality into equipment such as laptops and mobile phones. Now this is not done out of great altruism to develop a market and push back the frontiers of mobile telephony. Instead it’s a cold business decision to tap into increased device prices due to expanded functionality and also the potential for consumers to pay to upgrade their devices in order to acquire the new functionality.

The 'real kicker'
But the real kicker from the US regulatory body, the FCC, is making available increased spectrum for media rich services such as mobile TV and video. There are some clear examples already of positive, business-enabling decision. For example, the former television channel 55 being used by Qualcomm’s MediaFLO service for mobile television; the potential use by Sprint and Clearwire of spectrum in the 2 GHz range for mobile video; the expected near-term development of a mobile standard that will facilitate traditional over-the-air broadcasters targeting mobile receivers for digital broadcasts as of late 2009.

The US Congress and the FCC saw its primary role as to make sure that abundant wireless spectrum became available through auctions, lotteries, or administrative procedures: after that it has left the market to decide what to do with it and to develop suitable, successful business models. As regards these, the PFF says that the key determinants of mobile television economics include the network capital requirements to build out a national network; access to receiving devices; access to, and cost of, video content.

From a public policy perspective, the PFF firmly believes that the market-focused wireless broadband policies of the FCC have been successful. It regards these policies as the cornerstone of generating a multi-billion dollar business serving tens of millions of customers.

Perhaps paraphrasing the great US novelist Mark Twain, the PFF says that its findings mean that with respect to mobile TV, reports of the demise of US technical and business innovation are exaggerated. The various mobile TV stakeholders appear to be willing to compete without asking for special interest protection from Washington meaning that mobile TV users in the US at least can be reasonably expected to enjoy lower prices, more choices, and faster new technology introductions. Oh to say the same for Europe.