At NAB there was an air of excitement about the prospects for U.S. broadcasters to get into the MHP video business. Whether this enthusiasm is justified or not is very much in debate. This week AT&T announced that they are deploying mobile TV services in about 55 markets in partnership with MediaFlo.
But the real question is whether ANY broadcast video service for mobile users is going to be successful?
Broadcasters have beach-front spectrum as their ante into this poker game. Verizon and AT&T just anteed up billions for 700 MHz spectrum, but it is not clear whether they will use it for new high speed data networks or for video service.
Now a consortium of telco, cable and computer industry companies have announced that they will build a WiMax network capable of delivering high speed data to mobile devices.
My analysis will continue after this NYT story about the announcement... http://www.nytimes.com/2008/05/07/technology/07sprint.html?th&emc=th A Technology Consortium Plans a Wireless Network By MATT RICHTEL Published: May 7, 2008SAN FRANCISCO - A who's who of technology and telecommunications companies plans to announce on Wednesday that it intends to build the first of a new generation of nationwide wireless data networks, according to several people briefed on the deal.
The consortium includes a disparate group of partners: Sprint Nextel, Google, Intel, Comcast, Time Warner and Clearwire.
The partners have put the value of the deal at $12 billion, a figure that includes radio spectrum and equipment provided by Sprint Nextel and Clearwire, and $3.2 billion from the others involved. They expect the network, which will provide the next generation of high-speed Internet access for cellphone users, to be built in as little as two years, but there is no timetable on when it will be available to users and the price is not determined. The partners are seeking to beat Verizon Wireless and AT&T Wireless to the market.
The partnership of such fundamentally different companies underscores the convergence of Internet, entertainment and telecommunications services. The wireless network of the future is expected to be fast enough - rivaling speeds that cable customers have in their homes today - to allow delivery not just of text and simple Web pages, but of video and advertising.
It also faces considerable challenges. Given the peculiarities of the wireless spectrum that the partners intend to use to deliver the data signal, it may not be easy for the group to create a wide-ranging and adequately reliable service, according to Craig Moffett, a telecommunications industry analyst with Sanford C. Bernstein & Company.
He noted that the partners involved were top companies, but that could also work against the interest of the group. Each member has a somewhat different agenda and that could lead to conflicts over operating and managing the network, he said.
Sprint Nextel, which has struggled in recent years against a much stronger Verizon and AT&T, is looking to capitalize on its ownership of spectrum; the cable companies are looking to create an additional service to provide broadband access outside the home; Intel would like to sell its chips and generally expand computer use; and Google hopes to develop another platform for advertising, according to people briefed on the deal.
"Whether it looks good on paper, I'm not sure," Mr. Moffett said. "There certainly are a lot of question marks that surround the viability of a proposition like this."
Several of the companies involved in the deal, including Sprint Nextel, Google and Comcast, declined to comment on the partnership.
But three people who had been briefed on it - and who spoke in exchange for anonymity because the arrangement had not yet been announced - said that the group had high if still developing expectations for the technology.
One of these people said that Clearwire, a wireless company started by the telecommunications industry pioneer Craig O. McCaw, would take over management of the project. This person said that the partners were aware that they had differing agendas that might have to be subordinated to some extent to make the project work.
"This has huge possibilities for profit," the person said. To achieve that, the partners "are going to have to set aside some individual company issues."
The announcement of the partnership comes as the wireless data business is growing, but one that wireless providers think has vastly more potential. For example, wireless data - predominantly text messaging - constituted 23 percent of Verizon Wireless revenue in the first quarter, up from some 17.5 percent in the period a year earlier, Mr. Moffett said.
The hope of the telecommunications industry is that users will begin using such service for a range of applications, including surfing the Internet on laptops and phones, and downloading music and video more often to those kinds of devices.
The disparate nature of the participants in the Clearwire partnerships also hints at the possibilities. Perhaps most significant is the participation of Google, the search advertising company, which has provided $500 million for the operation.
A person briefed on the deal said Google could provide the search engine abilities for the wireless platform, enabling it to sell advertising there. Google took a similar approach in an initiative to use a free Wi-Fi network in Mountain View, Calif., where the company is based, and in a failed plan for a Wi-Fi network blanketing San Francisco.
The investments by other participants include $1.05 billion from Comcast, $1 billion from Intel and $550 million from Time Warner Cable. Bright House, a cable provider, will invest $100 million, while a private investment group with wireless industry expertise, Trilogy Equity Partners, intends to invest $10 million, according to a person briefed on the arrangement.
Miguel Helft contributed reporting. End_________The real issue here is how rapidly consumers will shift their dollars from traditional entertainment distribution infrastructures to a pay as you go system based on downloading content.
Many analysts believe that the war between Blu-Ray and HD-DVD was primarily about delaying consumer acceptance of another physical medium for the distribution of entertainment content long enough for Internet download to become a viable option. From here it looks like that strategy worked.
With the announcement from Apple this week that new movie titles will be available from the iTunes store on the same date as the DVD release, there is little reason to burn expensive gas to go to Best Buy or Blockbuster to buy/rent movies. My experiments with iTunes movie downloads, to keep me entertained during those long flights to and from NAB, have convinced me that I may never buy a DVD again. And I'm still poking along with a relatively slow 1.5 Mbps DSL service.
If Verizon, AT&T and the new WiMax consortium can deploy wireless data networks that deliver >5 Mbps in the next two years, the game is essentially over. There will be little need for physical distribution, and paying for a mobile TV subscription will be ludicrous. That leaves broadcasters will a small window of opportunity to develop Free To Air MPH services, but little chance of developing the market for paid video services, which accounted for about 3/4's of the revenues that the Open Mobile Video Coalition projected at NAB.
The only chance for broadcasters to monetize the MPH services is IF they can deliver downloadable content cheaper than AT&T, Verizon and the WiMax consortium.
It's a long shot, but possible.The most encouraging thing I saw at NAB was the fact that a large percentage of TV broadcasters are actually working together, through the OMVC, to save their business. But are they willing to pony up $12 billion to finance this effort, as the WiMax consortium is doing? Or the tens of billions that AT&T and Verizon just spent for spectrum - and the billions more they will spend to build out the infrastructure.
And then there is the nagging little problem of technology. Can U.S. broadcasters compete by putting a band-aid onto a legacy DTV standard that leaves them at a huge disadvantage in terms of spectral efficiency? That is, can they compete with perhaps a few Mbps per 6 MHz channel?
Fortunately, I have bigger problems to deal with, like starting up a new brewery.
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