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Thu 29 Jul 2010 04:00 AM

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Roadmap to mobile

Mobile TV has taken two contrasting paths in Europe and the US in terms of technology and business models. But what is the correct route for the Middle East with a platform full of dead ends?

Roadmap to mobile
Despite DVB-H take-up being sluggish at best in Europe so far, the majority of commentators agree that some form of broadcast standard is needed to complement a 3G (or LTE) based two-way service.
Roadmap to mobile
Hilal Halaoui, Principal, Booz & Co.
Roadmap to mobile
Hadi Raad, Principal, Booz & Co.

Mobile TV has taken two contrasting paths in Europe and the US in terms of technology and business models. But what is the correct route for the Middle East with a platform full of dead ends?

A complicated business model and an even more complex technical backdrop have made mobile TV a difficult format for telcos and broadcasters alike. In the Middle East, there have been only a handful of roll-outs with limited success. Outside the region, the situation is not much different.

Europe embraced mobile TV very early with most opting for the DVB-H broadcast standard. Results were mixed.

"There are only a few services on air based on DVB-H or DAB/DMB, but a lot of countries are still waiting for the analogue switch-off to make new spectrum available," says Stefan Wallner, strategic TV market development manager for transmitters at Harris.

Wallner was involved in early trials of the technology in the UK, Switzerland and Australia.

"With DVB-H, a separate transmission network is called for, factoring in an additional expense to the business model," explains Wallner.

The emergence of the new terrestrial standard in Europe, DVB-T2, will allow broadcasters to use the same network for regular and mobile services, dramatically reducing the costs incurred during the implementation stage.

The DVB organisation is also renewing its efforts on the mobile front with the formation of the DVB-NGH (next generation handheld) working group. Wallner says this could lead to renewed flexibility and new opportunities to make mobile TV more flexible.

The high cost of network roll-out led many services to pursue a subscription based model. When coupled with premium football content, a decent subscriber base was built in Italy with the operator claiming that its ARPU increased by 20 percent as a direct result of the service.

"DVB-H has only been successful in very few cases, such as in Italy with H3G. H3G has a significant customer base of around 1 million users - around 15 percent of its subscribers," says Hadi Raad, principal, Booz & Co. "H3G, also has a successful roll-out of DVB-H in Austria with one million subscribers, about 10 percent of its customer base. In the Middle East, Mobison launched a DVB-H service in Iraq back in 2009 with limited adoption in the region of 10,000 subscribers. The DVB-H consortium in the UAE, which inludes telcos, broadcasters and tech firms, is still in a trial phase."

There is evidence however, that a free-to-air (FTA) model for mobile TV Europe would fare better.

Overall subscriptions struggled and several operators in Europe opted to switch off their mobile broadcast services and offer video content via the 3G networks instead. This of course results in a huge data strain in the network.
A different approach in the US has allowed services to gain a little more traction, albeit in a fairly understated way.

The main difference in the two approaches - aside from the disparate broadcast standards - is the content approach.

"Here in the US the user wants localised content, news sports and weather," says Jay Adrick,VP of broadcast technology, Harris.

To address network concerns (there are at least six digital TV standards active in the US) the company has developed transmission hardware with standards software-defined. Adrick says Harris is now developing waveforms to suit all of the mobile standards. This also allows for upgrades to equipment, expanding its lifespan.

This also reduces the cost for broadcasters but Adrick says that there is still work for the content owners to do to ensure a healthy ROI.

"It's crucial to be able to monetise mobile TV through multiple revenue streams, not just a monthly charge for the service. It's important to be able to measure your audience and provide feedback to advertisers," says Adrick.

The platform could also serve as an information portal. Harris is working with software developer Roundbox to develop applications such as traffic reporting. Roundbox also develops a number of widgets, TV guides and weather bulletins.

The Middle East is lacking the terrestrial TV network infrastructure to fully (and cost effectively) deliver mobile broadcast services via DVB-T2.

The MENA region is however well served by cellular communication networks with 3G and even 4G networks fairly well-established.

Long Term Evolution (LTE) technology has been touted by some as the most likely means to serve video content (streamed or on-demand) to customers in the region. The mobile broadband standard can reportedly offer speeds of up to 100Mb/s. These networks are still a few years away from being commercially accessible in the region and are by no means an ideal solution.

"A mass adoption of mobile TV over LTE networks will create a large burden on the network," says Hilal Halaoui, principal at Booz & Co. "An individual mobile TV user will experience a better quality of service over LTE, but serving the mass market with mobile TV over this type of network will require a large investment."

Halaoui suggests that the ideal network for the Middle East would be a hybrid broadcast model. Halaoui says that a standard such as DVB-H in conjunction with satellite based SDMB technology would best serve the region. But the success of the network is not technology dependant alone.
"There needs to be strong content distributed through tailored and rich channels. Practically, subscribers to such a mobile TV service, would like to benefit from roaming capabilities, where they can view their favourite channels even when they are abroad. Another issue is the handset technology which would preferably be the same device customers use for making mobile calls. Such a service would also need to be affordable, and within the reach of key segments, especially young people. These are the main ingredients for a successful mobile TV service in the Middle East."

Much has been said of the telcos' assumed role in establishing the networks, but Halaoui rightly points out that the incentive for broadcasters to increase their role in adoption of the service is far from compelling at present.

"Broadcasters do not yet see the volumes that they do through the traditional screen - in terms of the amount of subscribers or the number of eyeballs for advertising. The overall ecosystem for mobile TV is still in its infancy, limited availability of handsets; underdeveloped market productions tailored to small screens; and difficulties in mobile advertising business models, and this is creating caution among broadcasters and mobile operators, alike," adds Halaoui.

"At present the mobile distribution channel for broadcasters does not represent a substantial revenue source. The complexity lies in many areas, and it is mostly inherent in a business model, where a partnership is needed between broadcasters and mobile operators. For mobile operators, the partnership model with broadcasters is still a nascent one."

The broadcasters and telcos still have time to create viable business models as network infrastructure is developed. But what is the correct choice for the region and can DVB-H really succeed in the region after its patchy record elsewhere?

"The main driver for operators to roll-out DVB-H is the lower cost-per bit in high-traffic video applications. The network is more profitable if it is utilised for voice applications. This would suggest that operators would be better off using their telecoms network for the delivery of voice and data services, and another with a lower cost per bit, for the delivery of video and other broadcast services, such as DVB-H," says Raad.

"However, due to the need for specific DVB-H compatible devices - of which there are few - DVB-H faces significant challenges from streaming mobile TV services, that run on 3G or LTE. The future of broadcast technologies such as DVB-H is questionable. It's already too late for DVB-H to succeed in many markets. It could have been successful, few years ago, before operators started their investments in 3G and LTE."

Raad can envisage one scenario that could revive DVB-H as one component of a broader mobile video strategy.

"If devices such as DVB tuners that could integrate with existing handsets become widespread then there could be some growth. The business model could simulate then that of the hybrid STB in the fixed business, where users use their satellite dish for FTA content and their two-way IPTV connection for premium pay content, with DVB-H playing the role of satellite and the mobile internet acting as the two-way connection."

Regardless of the eventual technology used to deliver mobile content to the masses, the broadcasters and the rights owners maintain a constant advantage - the domination of the content itself. This is something the telcos are well aware of.

"To secure their own position, [telecoms] operators will need to leverage their key assets: their customer relationships, customer analytics, investment capabilities, and infrastructure," says Raad. "The mounting business generated by applications is more than just another growth opportunity. It is an imperative, a necessary component of the future of the business, in which operators must actively participate in order to thrive and not just become utility-like pipe operators."