TELECOM Digest OnLine - Sorted: The Coming Mobile-Video Deluge

The Coming Mobile-Video Deluge

Monty Solomon (
Wed, 26 Oct 2005 02:08:14 -0400

By Olga Kharif
OCTOBER 11, 2005

As carriers gird for an expected surge in demand for TV mobile phones,
many are looking to Qualcomm to deliver the goods

When Qualcomm announced plans for a network that would deliver video
over mobile phones last November, analysts met the idea with more
raised eyebrows than approving nods. Qualcomm (QCOM ) had built its
reputation on licensing wireless technology and making cell-phone
chips. The concept, dubbed MediaFLO and championed by Paul Jacobs, who
later became Qualcomm's chief executive, came across as costly and too
far outside the company's core areas of expertise.

Even though demand for TV over cell phones had taken off in Asia, it
was still unproven in the U.S. What's more, the number of technologies
for beaming video to wireless handsets was already on the
rise. Investors wondered what would set MediaFLO apart -- and whether
Qualcomm would ever break even on the estimated $500 million it would
take to build the network.

Almost a year later, Jacobs's announcement is looking distinctly less
odd. Early video services from providers Cingular Wireless and Sprint
Nextel (S ) have attracted more than 500,000 subscribers, according to
MobiTV, which provides TV services for both carriers.

BALLOONING BASE. Cingular has seen its video-user numbers surge with
virtually no advertising. "It has been very popular, and that tells us
that there's something there," says Rob Hyatt, executive director for
mobile content at Atlanta-based Cingular, the largest U.S. wireless
operator. Other providers, including Verizon Wireless, have joined the
race to add customers intent on watching news, sports, and
entertainment clips over their cell phones.

Mobile video is set to take the wireless industry by storm (see BW
Online, 12/1/04 "TV Phones Prep for Prime Time"). The U.S. mobile
video user base may balloon to more than 20 million by the end of
2007, up from less than 1 million today, says Albert Lin, an analyst
at American Technology Research (ATR). Assuming each subscriber pays
$5 a month for such services, that would translate to a $1.2 billion
market. Worldwide, more than 250 million people are expected to be
watching mobile video by 2010, generating some $27 billion in sales,
vs. with $200 million today, according to market consultant ABI

Why the meteoric rise? For starters, the technology has improved, and
prices on video-capable handsets have dropped. In fact, now that some
devices are available for less than $100, "adoption rates are going up
like a hockey stick," says Key Sar, associate director of content
programming at Verizon Wireless, the second-biggest U.S. mobile-phone

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