There were 5.3 Billion mobile phones in use at the end of 2010. Mobile phones if we can really still call them “phones” have a myriad of uses beyond making a mere phone call. They’re used for email, web browsing, gaming, reading books, listening to and downloading music and watching and downloading video. Total global mobile data traffic is growing rapidly; in 2010 it was 2.6 times greater than in 2009. Video is becoming the major component of that data.
At the end of 2010 mobile video traffic made up 50% of total mobile data traffic and Cisco are forecasting that this will increase to 66% by 2015. With the increase in Smartphone’s and tablets this growth will increase. Smartphones represent 13% of total global handsets and 78% of handset traffic. In 2010 the average tablet generated 5 times the traffic of the average Smartphone and the average laptop 22 times the traffic of the average Smartphone.
A changing world indeed; and one that places new demands on the companies that deliver these services. And begs the question – do satellites have a place in this “new normal”?
According to a recent mobile video report from The Nielsen Company, the number of U.S. mobile subscribers watching video on their mobile devices rose more than 40% year-over-year in both the third and fourth quarters of 2010, ending the year at nearly 25 million people.
Video reaches the mobile user courtesy of either the wireless operator or the local broadcaster. By definition a cellular network is designed for point to point communication and therefore in principle if not in capacity is ideal for video on demand, two way video (Skype video calls for example) and uploading user created video as opposed to broadcast video. 4G in its various guises will do a lot to increase network speeds meaning that web pages will load faster, video can be downloaded faster and true multi-tasking on mobile devices will become a reality. However as bandwidth increases so does consumption as users expect to duplicate the home experience everywhere. Consequently mobile data traffic is growing at a rate 4.2 times faster than fixed.
No wonder the wireless operators in the US are clamoring for more spectrum! Indeed that was one of the key drivers behind AT&T’s recent proposal to acquire T-Mobile. In contrast the broadcasters are desperately trying to hold onto the spectrum they have. Having already given up spectrum in 2008 as part of the transition to digital TV, they are expressing reluctance to part with any more.
The National Broadband Plan released over a year ago is asking broadcasters to voluntarily part with another 120MHz. The NAB has not opposed the voluntary auction but has pointed out that they are using the spectrum to deliver free niche programming and will use it to deliver mobile digital TV – of which more later. They have also questioned whether some spectrum holders including Verizon, Time Warner and AT&T are actually using the spectrum they have. Not named but presumably included would be Dish who were one of the buyers in the 700MHz auction, but to date have announced no plans to use the spectrum. Dish has also recently acquired DBSD and the associated spectrum assets. FCC Chairman Julius Genachowski responded to the NAB claims at the Mobile Future Forum in March, stating that “Multiple expert sources expect that by 2014 demand for Mobile Broadband and the spectrum to fuel it will be 35 times the levels it was in 2009. This compares to the spectrum coming on line for mobile broadband that represents less than a three times increase in capacity. The looming spectrum shortage is real – and it is the alleged hoarding that is illusory.”
One way to ease the congestion is to continue to do what the cellular operators have been doing for a while now – pass some of the traffic off onto someone else’s network. While some of the mobile usage is truly mobile and occurs while the user is moving, a great deal of so called mobile usage takes place in coffee shops, airports, hotels and the home. By incorporating WiFi into Smartphones the operator is allowing its customers’ to get the same service at someone else’s expense and at the same time easing the congestion on its network.
No discussion of spectrum in the US would be complete without a mention of LightSquared, the company that has almost made a business out of rebranding, having changed its name 3 times in as many years. In its latest incarnation it is positioned as a wholesale LTE company not a satellite operator. It has access to 59MHz of spectrum and has said that its network will have around 40,000 base stations covering 92% of the US population by 2015. After previously swapping spectrum with Inmarsat to gain larger contiguous blocks; in March the company announced an agreement in principle with Open Range in which Open Range will lease the L-Band spectrum. The agreement also lets Open Range’s sell LightSquared’s satellite capacity. The partnership will also include a 4G nationwide reciprocal roaming arrangement. The companies will collaborate on the design, build-out and operation of Open Range’s network as well as on product and service evolution.
March was a busy month for LightSquared, as well as the Open Range deal, a roaming agreement was signed with Leap Wireless and an agreement for Best Buy - the Electronics Retailer turned MVNO - to use LightSquared’s network. The company is also reportedly in discussions with Time Warner Cable, Cablevision and also with Sprint. With the satellite successfully launched LightSquared is planning on starting service in the Mid West in Q3 this year.
LightSquared is demonstrating one way in which satellite is relevant in the new reality, the other very important role for satellite in the mobile video world is as the backhaul provider in areas where there is insufficient fiber or microwave as was discussed in Satellite Executive Briefing last month.
Back to the Broadcasters and Mobile Digital TV. Last November Mobile Content Ventures (MCV) – a JV comprising 12 major broadcast groups including Fox, NBC, Ion and Pearl a consortium of 9 companies including Cox Media Group, E.W.Scripps Co, Hearst Television and Raycom Media, announced a commitment to roll out mobile TV service in 20 markets covering 40% of the US population by the end of 2011. Initially the service will have “at least” 2 ad-supported channels. In order to receive the service users will need a device capable of receiving ATSC-M/H and in January MCV announced that it had received commitments from Dell and Samsung to deploy MCV compatible devices with a mobile DTV tuner. Technology agreements were also announced with Nagra-Kudelski for conditional access and with MobiTV to develop additional premium consumer applications. MobiTV currently delivers paid content through cellular networks to around 14M subscribers in the US and Canada.
MCV and Pearl are both part of the Open Mobile Video Coalition (OMVC) which has 875 member stations and includes 6 networks, covering over 100M households. Last May the OMVC conducted a free trial of mobile TV with 345 participants in the Washington DC area. Results showed that daytime was the peak viewing time and 60% of participants in the trial said they would be “somewhat likely” to use the service if it was free. Unsurprisingly local news was the most popular program genre, what was surprising was that sports came very low down on the popularity list.
So will the 60% that said they would be somewhat likely to use the service translate into a viable business for MCV? Free may be the key, Qualcomm shut down Media-Flo in the US a subscription TV service to mobile devices due to lack of subscribers. But maybe the key question is do consumers want broadcast TV or Video on Demand? My bet for the US would be on the latter and the only way the broadcasters could get around that is to utilize devices with sufficient storage capacity that a pseudo VoD service could be offered, but in the age of instant gratification is pseudo VoD good enough?
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Elisabeth Tweedie has over 20 years experience at the cutting edge of new communication and entertainment technologies. She is the founder and President of Definitive Direction a consultancy that focuses on researching and evaluating the long term potential for new ventures, initiating their development and identifying and developing appropriate alliances. During her 10 years at Hughes Electronics she worked on every acquisition and new business that the company considered during her time there. www.definitivedirection.com She can be reached at: etweedie@definitivedirection.com
