Changing Channels

Sunday, Sep. 25, 2005 By MARK HALPER / OXFORD

Photo-illustration for TIME by LOU BEACH

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The idea isn't new. Five years ago, mobile operators started spending hundreds of billions of euros licensing and building 3G networks to deliver, among other things, video images. But it's turning out that heavy video usage can bog down a 3G network. "Broadcast is far more effective at mass mobile," says Screen Digest's Nolan. Users, of course, don't really care how the images are transmitted, but media and mobile companies do. Every bit of programming that travels over a broadcast network rather than a mobile network is lost revenue for the operators. In December, six of Korea's biggest networks will start broadcasting free of charge to users with mobile devices made by Samsung, LG and others, bypassing mobile networks completely. Mobile phones and television companies "are coming together and creating lots of questions like, 'Who owns the customer?'" says Richard Sharp, vice president of multimedia at Nokia.

As with many nascent technologies, though, there are some hurdles to overcome before mobile TV goes mainstream. It's not yet clear, for example, whether consumers are willing to pay the estimated $650 (less if operators subsidize them) for TV-ready handsets. Mobile-TV broadcast companies also face the daunting challenge of gaining airspace in different countries with different regulations; regulators must first decide whether to allocate spectrum space for them and, if so, how to distribute it fairly. Even if some countries grant spectrum as early as next year, others could lag behind by several years, holding back the mass production of equipment on which industries rely to lower costs. And if different countries assign different frequencies, handset vendors would have to build phones for separate markets — a logistical hiccup that would eat into profits. "Spectrum allocation is the biggest problem we have on our plate," says Hyacinth Nwana, Arqiva's managing director of mobile media.

For the moment, at least in Europe, the mobile operators still have an edge in the turf war, because they know how to put phones in people's hands and how to mass-market mobile services. And they already provide some video content over their existing networks. But once mobile broadcasting goes mainstream, users could well abandon 3G for the real thing. The near future will likely involve some mixture of transmission methods. One possible scenario is that consumers might freely fetch mass-market shows from broadcast airwaves, while purchasing more specialized video — such as, say, a Lenny Bruce skit or minor-league soccer clip — from mobile networks. This would not be all bad for mobile operators. Not only would it save some revenue for them, but it would also allow them to free capacity on their networks for their core product — voice.

Sports (and, of course, porn) is expected to be a big driver of mobile-TV traffic, just as it has been for mobile-phone video. German broadcasters and mobile operators are hoping to have the service in place for the 2006 World Cup, while Nokia plans to sell TV-compatible handsets in commercial volumes by the 2008 Beijing Olympics. The conventional wisdom is that people will "snack" on short snatches of mobile TV and save longer viewing periods for their larger TV sets. All that, however, must still await resolution of some fairly hefty issues. Music downloading didn't take off in a mass way until MP3 compression became an industry standard, and mobile-TV operators must decide among at least four would-be mobile broadcasting standards under development.

Still, one look at Gina Policelli's face tells you why so many companies are vying to dominate the mobile-TV space. "I would pay for this." When customers are that eager, tech firms will find a way to make Mobile-TV work first, and iron out the details later.