Friday, June 06, 2008

Mobilopoly

Verizon Wireless's acquisition of Alltel makes it the biggest player in the US mobile market and poses an ever growing problem for the UK's Vodafone, which owns 45% of the market. A huge amount of capital is tied up in this business and Verizon has announced that it will not be paying a dividend until 2012.

This situation, reminiscent of that other transatlantic telecom debacle, Concert. Vodafone can't afford to buy out Verizon (especially given current market conditions) and Verizon has little need to stump up to buy back shares in a majority owned subsidiary. And the figures are so enormous and the pill so poisoned that no one else will touch the situation.

The relevance of this to the growth of TV over IP is huge. The show is moving on and we are now with mobile devices and video where we were with PCs and video some decade ago.

The sector has, to date, been a graveyard for many startups whose business models simply aren't viable due to the walled gardens and oligopolies run by the mobile operators in almost all markets around the world. There are simply too many mobile orientated companies to mention and the few who have been modestly successful have acted as suppliers to the mobile giants.

I remain bullish about this sector as a whole and expect mobile TV takeup to increase gradually, but more on PDA type devices (or MEDs - mobile entertainment devices) than on traditional cellphones, but it's going to be a relatively trivial task for current video on PC operators to adapt their services to these devices, especially as the boast more and more powerful processors and better web browsers.

Whilst the giants at the top of the industry maintain their oligopolies there is very little nurture that trickles down to mobile video startups and they face a tough task.

2 comments:

steveaw said...

I remain an interested reader of your IPTV Times blog, which makes a great educational read – please keep it coming :)

Just a comment on 'Mobilopoly’ .I agree that the mobile operators are protectionist in nature and tend to stifle (mostly accidently) any attempts by smaller companies to innovate. I’m interested though as to why are you bullish on mobile TV. Outside footy highlights and headline TV news (very occasional dramatic events rather than daily events), I can’t see the attraction for a large audience in devoting mobile-attention-time to live broadcast content. There are plenty of alternatives for this audience who have a device (mobile internet, downloaded music or video content, IM & social networking etc); travel is likely to be a lousy experience (train, tube.. OK, airports would work well); mobile channel search and EPG functions are hard to imagine as being as good as with large screen or IPTV.

What I do think will be a growth business is downloads (at home) onto the mobile device : the operators are getting very excited about picocells / femtocells as these will enable them to grow (3G) network capacity and coverage without huge investment, letting the customer and the customer’s broadband ISP take the strain .... One side effect (probably built into business plans) of femtocells is the ability to offer an ‘easy sync’ service to the mobile device at home. So, you could see the MED as a part of the consumer’s overall content management system – a subset of stuff which looks interesting is put onto the MED (or high end phone) and then watched when out and about

Another angle is the supply-side : though it’s interesting that Qualcomm have invested in spectrum suitable for Mobile TV (no doubt keen to establish MediaFlo in Europe), I think that most device and system vendors will be cautious : the DVB-H trials a couple of years ago worked well in terms of technology but I don’t think these established a lot of consumer interest. So, MNOs seem unlikely to be pressing vendors for TV features in the near future.

I’m sure there are some counter-arguments to this - I look forward to hearing them !

Iolo Jones said...

My optimism is down to the growth in technologies like WiMax and devices like the iPhone, which can be used to watch longer form content than highlights or clips.

The mobile as we know it is likely to continue morphing into something more akin to a personal entertainment device rather than communication devices we have right now.

I also disagree about downloads; this is an interim solution in an unwired world. With perfect connectivity it is immaterial where the content is stored. The success of streaming over downloads for services like 4OD and iPlayer shows how this has already happened in the PC world.

But you are right in that the operators are failing to find ways to monetise content in a meaningful way. I suspect Apple will be the first winners - with downloads from iTunes - but the market won't really establish itself until the networks are more efficient.

In the longer term the mobile may well become the controller for the 50" screen on the wall of your living room (what we used to call a 'TV set'), which handles billing, conditional access and changes channels!