It’s TV, but not as you know it

Mo­bile broad­band net­works will drive mul­ti­me­dia up­take

Finweek English Edition - - Communication & technology - FRIK ELS

THE 3GSM gath­er­ing of the cell­phone in­dus­try in Barcelona last month fea­tured a ses­sion called “How Mo­bile is Chang­ing TV For­ever”. It’s a strong state­ment, but a dec­la­ra­tion a few years ago that “mo­bile is chang­ing mu­sic for­ever” would now have been proven true: artists can now make more money from ring­tones than CD sin­gles, and down­load­only songs reg­u­larly top the charts.

The mu­sic phone was the must-have hand­set last year, and Sony Eric­s­son’s Walk­man phones (the Walk­man cas­sette player was the iPod of the Eight­ies) are even cred­ited for the resur­gence of the Swedish-Ja­panese joint ven­ture.

Ap­ple’s iPhone, to be launched mid-year, will give mu­sic on mo­bile net­works an­other boost – its iTunes ser­vice last year sur­passed 1bn in down­loads. A to­tal of $9bn (R64bn) was spent on mo­bile mu­sic last year and this is set to grow to $32bn by 2010 (R227bn). This is de­spite Edgar Bronf­man, CEO of No1 mu­sic com­pany Warner, say­ing at the con­fer­ence “how cum­ber­some, ex­pen­sive and com­pli­cated it still is to buy a song over the air”.

Can mo­bile TV re­cre­ate the suc­cess of mo­bile mu­sic? The in­dus­try is bet­ting on it. Net­work op­er­a­tors such as 3, Voda­fone and MTN want to of­fer television and other mul­ti­me­dia ser­vices to in­crease de­clin­ing Arpus (av­er­age rev­enue per user) and re­duce churn. Equip­ment man­u­fac­tur­ers and net­work builders such as Eric­s­son and Noki­aSiemens need new projects as shar­ing among op­er­a­tors in­creases (Vo­da­com and Cell C share many base sta­tions, for in­stance) and 3G roll­out in de­vel­oped mar­kets ap­proaches com­ple­tion. And hand­set man­u­fac­tur­ers are al­ways look­ing for new fea­tures to add as built-in dig­i­tal cam­eras, MP3 play­ers and push email come closer to be­ing “en­try level” in th­ese mar­kets.

There are two ways of de­liv­er­ing television and mul­ti­me­dia to the cell­phone – broad­cast­ing di­rectly to the hand­set or stream­ing via broad­band net­works. Car­lHen­ric Svan­berg, chief ex­ec­u­tive of Eric­s­son, the world’s largest mo­bile-in­fra­struc­ture com­pany, says 2006 was the break­through year for mo­bile broad­band. While 3G can han­dle video stream­ing, high-qual­ity mul­ti­me­dia con­tent is only re­ally pos­si­ble through the first evo­lu­tion of 3G called HSDPA, which is ca­pa­ble of ADSL-type speeds.

There are now 196 HSDPA de­vices, 86 of which are phones, from 51 sup­pli­ers on the mar­ket and 98 com­mer­cial HSDPA net­works in 53 coun­tries. “The eco-sys­tem is in place,” says Svan­berg.

Eric­s­son is speed­ing up its in­vest­ment in mul­ti­me­dia af­ter re­struc­tur­ing last year to form a di­vi­sion ded­i­cated to mul­ti­me­dia con­tent plat­forms. Apart from a long-stand- ing part­ner­ship with Nap­ster, the ser­vice that pop­u­larised In­ter­net mu­sic down­load in the late Nineties, Eric­s­son re­cently con­cluded deals with Turner Broad­cast­ing to de­liver CNN Mo­bile and Car­toon Net­work, among oth­ers chan­nels.

More than 120 mo­bile net­work op­er­a­tors around the world have launched mo­bile TV ser­vices, in­clud­ing Vo­da­com and MTN,

“Big­ger and bet­ter hand­set screens and higher net­work speeds are be­hind the in­creas­ing pop­u­lar­ity of mo­bile TV.”

which are in tri­als in part­ner­ship with DStv, switch­ing to a com­mer­cial ser­vice by midyear.

Kurt Sil­lén, VP of Eric­s­son Mo­bil­ity World, says big­ger and bet­ter hand­set screens and higher net­work speeds are be­hind the in­creas­ing pop­u­lar­ity of mo­bile TV. The num­ber of mo­bile TV users is fore­cast to in­crease from 11m in 2006 to 170m by 2010.

Al­most 90% of the TV ser­vices run on cel­lu­lar net­works, mak­ing in­ter­ac­tiv­ity and per­son­al­i­sa­tion pos­si­ble, in con­trast to the lin­ear struc­ture as­so­ci­ated with broad­cast­ing. Re­search by Eric­s­son and the Nor­we­gian Broad­cast­ing Cor­po­ra­tion showed that us­age of interactive mo­bile TV was dou­ble that of tra­di­tional mo­bile chan­nel TV.

Sil­lén fore­sees that mo­bile TV will be split roughly 50-50 be­tween chan­nels and on-de­mand con­tent, and that down­load­ing to view later, or what can be de­scribed as pod­cast­ing, which en­ables bet­ter qual­ity video, will emerge over time.

The num­ber of mo­bile TV users is fore­cast to in­crease from 11m in 2006

to 170m by 2010.

View­ing be­hav­iour is re­ferred to as “snack­ing” – 2-3 minute ses­sions av­er­ag­ing only 20-30min­utes a month. Mark Burk, an an­a­lyst at re­search firm In­forma Tele­coms and Me­dia, says that while news, weather and sports are the con­tent cat­e­gories sub­scribers gen­er­ally ask for, Voda­fone Nether­lands found that ac­tual us­age showed adult con­tent made up 38% of the to­tal.

For op­er­a­tors and con­tent providers there are var­i­ous busi­ness mod­els. “In­ter­ac­tion al­ways works well – a mas­sive 64m SMS votes were cast to de­cide the win­ner of re­al­ity TV show Amer­i­can Idol last year. Monthly sub­scrip­tion, ad­ver­tis­ing and on-de­mand pay-as-you-go are also work­able mod­els,” says Sil­lén.

Cur­rently, most net­works have opted for a monthly fee and a typ­i­cal pack­age would make South Africans’ mouths wa­ter: 3 in Italy of­fer 12 TV chan­nels, 60min/day of calls in­clud­ing video calls and 1Gb of data a month for only Euro 29 (R270).

Els vis­ited 3GSM as a guest of Eric­s­son Sub-Sa­ha­ran Africa.


Source: PwC 2006

The ecosys­tem is in

place. Carl-Hen­ric


A mop top and mo­bisode, please.

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