Mobile TV Market (2) the Subtle Role of Telecom Operators

"Killing time" is the core for the development of mobile TV.

---

[+] Consumers are spending less time watching TV day by day.

Being optimistic about the mobile TV market, chip makers, cell phone manufacturers, telecom operators, media operators and value-added content providers have been making preparations in advance. However, is mobile TV really what consumers want? An unspoken doubt is: will anyone really watch TV on the go?

First of all, a trend is crystal clear. Consumers are spending less time watching TV through TV sets. Statistics show that at least in mainland China and Taiwan, the number of people surfing Internet after 8 p.m. at night are increasing steadily, so is the time spent.

Each person has only limited hours in a day. As more and more people choose to spend their off hours in front of computer screens, the TV audience group would diminish. IPTV has not been successful, largely because it is still trying to bring people back in front of TV screens, ignoring the fact that nowadays people hardly watch TV anymore.

The correct way to attract today's TV audience is to move audio or TV programs onto the screen of computers and cell phones. However, the decrease of the time for watching TV and the increase for using computers do not mean that the hours spent on watching cell phone screens would increase.

Here we have two questions to think about: 1) Consumers' hours on the go are fixed (on their way to work/home, or weekend outdoor trips, etc.), so what are their requirements for TV programs during those hours? 2) Is it possible to stimulate the enthusiasm of consumers for mobile TV even in room?

Will consumers buy if we successfully address the user experience challenges for watching video programs on 3G cell phones, and enable press-and-play, fast and effective channel switching and easy, simple billing?

[+] "Killing time" is the core for the development of mobile TV.

Product managers of mobile TV programs might have been racking their brains for clues about consumer requirements. The fact is they don't have to. What consumers want is just to kill time. It would be so boring at bus or subway stations that consumers would like to have something to watch; they may just want to snatch a little rest during busy office hours to steal a look at the cell phone, or they want to take a look at some important news.

Killing time, by all means, is the most critical application of mobile TV. There's no need for complicated interaction programs. Previously, 3G cell phone-base audio/video programs were so troublesome to operate that the "interaction" eventually turned "killing time" into "killed by time".

"Killing time" is also the key to mobile TV billing. One simple question: how much are you willing to pay for killing time? Currently in Taiwan, cable TV bills are about NTD 600 per month. How much, then, is reasonable for mobile TV? 200? Or 100?

DVB-H-based mobile TV offers one-way broadcasted digital programs, which, in theory, don't have to be received only with cell phones. Special terminal devices would be developed in the future for receiving such wireless digital programs. And there might be USB terminals for computers, too.

If digital TV itself is offered for free, there's no need to bother with which terminal device to use (ideally, of course, it's more convenient to be built in cell phones). In view of the current situation, however, monthly billing modes such as those adopted by the cable TV sector will be considered by operators. Therefore, integrating the fee into cell phone bills seems to be a natural choice.

If so, telecom operators would be put into a very subtle position. They might have nothing to do with mobile TV program provider, or become just a billing solution provider for the later, or even play a role similar to cable TV system operators.

[+] The subtle position of telecom operators in the mobile TV industry

In the first case, where telecom operators have nothing to do with digital TV content providers. TV-enabling cell phones bought by consumers (or other terminal devices) will be able to receive TV programs by design. If the programs need charges, consumers can make payment to TV program provider directly to get user IDs.

To get a simpler picture, just imagine binding a cell phone with a digital TV terminal. Each device functions independently without the interference of the other. If TV program providers want to charge the users, they could choose a number of channels, but would have to print and send the bills themselves.

Program providers can also choose to cooperate with telecom operators, if they do not want such troubles. That leads us to the second case: fee collection through cell phone bills. A more deep cooperation model could make interactive programs together with mobile operators and enable real-time program balloting through GPRS.

Trouble, however, is at door. There would be numerous program providers and TV channels. Say, there might be 5, and a consumer could choose to pay one for the program he watches, but he would not be able to afford all 5 if he wants to watch them all.

Generally speaking, that is not good news to the mobile TV sector. The real solution to maximize the interest of program providers is to build a single platform to enable free switching of channels. Yes, there are always competitions. However, if competitions lead to obstacles for consumers, that's no good to anyone.

More over, consumers have been accustomed to the monthly billing mode of one package for watching over 100 channels, which will not change in a short time. Therefore, a player capable of integrating all programs, which is similar to a cable TV system operator, is highly expected. Who will assume this role? It seems to be telecom operators.

That turns out to be the third case. However, everybody wants to dominate. The TV industry does not want their channels to be controlled by others, while the telecom industry will not give up the opportunity of entering the media market. Ironically, the fate of this scenario depends on whether mobile TV is fee-based or not. (
2007/11/25 - By Digitalwall.com - Way to
China Internet/Telecom )

---

- Read More

Prev : Mobile TV Market (1) Cell Phone plus TV, the Dream of Everybody


Next : Mobile TV Market (3) Terminal Manufacturers & Content Providers

---

- Today in History

Mobile TV Market (2) the Subtle Role of Telecom Operators - 2007/11/25

Great Future of Wireless Broadband (3) Scarce Resources - 2006/11/26

Google's Choice (2) Lessons for the Software Giant - 2005/11/20

VoIP (1) It's a Fool Not to Make Telecom Money - 2004/11/28

Mobile TV Market (1) Cell Phone plus TV, the Dream of Everybody

Press a button and the programs are popping up on your screen, with high fidelity and no worry for the cost of data transmission.

---

[+] Press the button and no program comes on your screen

Watching movies on handsets has been the dream of every telecom operator since the beginning of 3G (of course, they keep telling the consumers through TV ads: "this is what you have been dreaming for"). Fixed line operators, in the meantime, have been doing everything they can to sell IPTV to their customers.

Unfortunately, there have been only a few successes worldwide for those two dreams, which should largely be accredited to their particular geographic or social environments, for example, mobile Internet in Japan, mobile TV in Korea and IPTV in Hong Kong. In other countries or regions? Hardly heard of.

Nevertheless, technological progresses are being made continuously. The development of mobile TV is bringing in a new light of hope into the industry. In fact, "mobile TV" is just a general term, which covers any technology that enables consumers to watch TV on their cell phones.

By that definition, mobile TV has been a reality in CDMA/WCDMA-based 3G cell phones. However, before we go further into the development of the mobile TV sector, we need to take a look at what actually happened to 3G cell phones.

First of all, 3G has 3 major goals: high-speed Internet access, streaming media and video phone. With IP-based Internet access, users cannot get the streaming media movie they want by just pressing a button. Instead, they have to select a set of hierarchical menus.

Throughout the interaction process, users have to send requests and receive responses through the cell phone. A program has to be buffered before being played. This is a sheer difference from our experience with TV, where we get programs by just turning on the TV set. It is this difference that shapes everything.

[+] Billing modes stop consumers

In short, with conventional TV, you get the program as soon as you turn it on, not to mention the fast and effective channel switching through the remote controller. With Internet-based IPTV, you turn it on, but have to wait for a while; you switch a channel, but have to wait for a while; you press the play button, but also have to wait for half a minute. For that reason, IPTV has not been able to replace cable TV, nor has 3G cell phone-based streaming media.

Telecom operators had hoped to graft video phone to movie/TV programs to get better interactive experience (for example, allowing users to watch football games by dialing 123456). However, with the 64K bandwidth and poor transmission quality of video phone (maybe you cannot even see where the ball is), they had to give up.

In addition, there's a billing problem. For decades, telecom operators have been accustomed to billing by minutes or by transmitted data volume, as they say, such billing mode could better reflect their costs (they need to be paid so long as there're data flowing through their telecom equipments). However, consumers are loath to pay. Have you seen anyone who pays his TV bills by minutes?

Monthly billing could be a compromise. However, telecom operators have not been able to introduce total monthly billing packages. For example, they might pack a few programs into one package. However, there are usually many such packages (as each telecom operator would cooperate with a number of content providers). Want to get all the packages? Well, pay for them all!

What's more, the monthly packages only cover the transmission costs of telecom operators. To ensure the reasonable income for content providers, consumers have to pay for contents separately. How could a consumer possibly understand, or withstand so many layers of charges?

Are telecom operators ready to become media companies? It seems not. For example, how about offering completely free mobile TV programs and leaving telecom operators and content providers to earn their bread solely from ads? For telecom operators, that is horrible.

[+] The turmoil of standards

In addition to telecom operators, closely related with the sector are traditional cell phone manufacturers. The global cell phone market has been saturated for years, and the years of fast growth gone. Yet leading cell phone manufacturers are still there and thriving - thanks to continued innovations.

The first innovation might be the camera phone introduced a few years ago, followed by the music phone. New technologies, combined with successful marketing, have triggered tides of changing handsets among consumers. What would be the next innovative application? Obviously, it would be cell phone + TV. And the next? Cell phone + GPS.

Over the years, telecom operators and cell phone manufacturers have learned that consumers favor individual cell phone applications over mobile Internet access. Such applications should be easy and simple, and have nothing to do with Internet accessing.

Now, there are new technologies coming to us. Digital files are transmitted mainly through broadcasting technologies. You will no longer have to wait like you did with 3G or IPTV. Press a button and the programs are popping up on your screen, with high fidelity and no worry for the cost of data transmission.

For the industry, however, the war is just beginning. There are too many standards for using the cell phone as the carrier to play TV programs. While some standards, e.g., DVB-H are derived from the TV industry, others, e.g., MBMS, have their origins in the telecom industry.

TV-derived standards alone have already seen Japanese, Korean, European and Chinese standards, not to mention 3G-based digital TV broadcasting technologies developed by the telecom industry. The turmoil seems to have cast a shadow over the outlook of the sector. (
2007/11/18 - By Digitalwall.com - Way to
China Internet/Telecom )

---

- Read More

Prev : The Next Step for Web 2.0 (3) Collective Will Is the Cornerstone of Everything


Next : Mobile TV Market (2) the Subtle Role of Telecom Operators

---

- Today in History

Mobile TV Market (1) Cell Phone plus TV, the Dream of Everybody - 2007/11/18

Great Future of Wireless Broadband (2) Public WiFi is Not Enough - 2006/11/19

Great Future of Wireless Broadband (1) Living in the WiFi City - 2006/11/12

Google's Choice (1) Lessons for Portals - 2005/11/13

A Word of Advice for Small Online Stores - 2004/11/14

Great Future of Wireless Broadband (4) WiMax, 3G and 4G

WiMax will eventually engage with 3G in the field of voice communication.

---

[+] The declining communication revenue

Imagine this: you will be able to make mobile phone calls for unlimited minutes so long as you pay a fixed amount of money each month; if you want to watch a movie or download music or use other value-added services, you pay additional charges, but there's no such costs as communication fee or transmission fee any more.

For telecom operators, this is a nightmare. No more are the good days of waiting for subscribers to make phone calls and printing phone bills calculated on talking minutes. They now have to earn their meals by providing sufficient contents. But that is too troublesome and not the specialty for operators. Worst of all, they will have to share money with content providers.

This is what's happening to your phone line at home. For an ADSL line, the telecom operator is able to charge only two types of fee: the lease for the line (including voice and data services) and the Internet access fee. Both are almost fixed each month.

If, instead of dialing traditional phone calls, you use the line only to dial Skype VoIP calls, you will be able to use both the Internet and the voice services with that amount of monthly payment. Eventually, telecom operators will have to sell IPTV to you to look forward to earning more through contents.

Yes, wireless bandwidth resources are limited and incomparable with the cable broadband. But who can say that some kind of a novel technology will not appear in the future to change all this? After all, consumer demands are always there and the amount of bandwidth that a consumer can buy with each dollar has been on the rise over the past years.

[+] The unpredictable future of WiMax

In the field of 4G, a concept which is not even clearly defined so far, players are already fighting for the ability to set the standards. Thanks to the promotion of Intel, WiMax has got the support of many telecom equipment suppliers and handset manufacturers, and is now the hottest bidder for the 4G technology.

Intel is going to embed WiMax into its notebook computers, in a hope to get the popularity that WiFi once had. Despite the slower-than-expectation progress, the ambition of the giant should never be ignored. In addition, Nokia has also got into the line of supporters, announcing its plan of introducing WiMax handsets.

However, in view of the current status of 3G services around the world, WiMax, which claims to be 10 times faster than 3G, is really in an awkward position. As 3G has been in commercial use for only a few years, mobile operators who are yet to retrieve the return of their investments are really hesitating about making additional investments in WiMax.

A more possible solution is to issue licenses to fixed-line telecom operators or emerging mobile operators and allow them to build WiMax APs. As a matter of fact, struggling to stem the multi-year decline in revenue, fixed-line operators have been longing for accessing the mobile market for many years. For them, WiMax could be an opportunity.

When mobile operators have little interest in WiMax, a fallacy has appeared in the market, holding that WiMax is a complementary service, instead of substitute of 3G. This has rendered wider imagination for WiMax, particularly in the China market, where 3G has not been launched yet.

[+] 3G and WiMax: foes, not friends

The two services are considered by some to be complementary because the priority of 3G is the mobile voice communication, while WiMax, with its advantages in data transmission, can provide notebooks with the Internet access. In this regard, mobile operators could build two types of network to separate the services: "3G serves people on feet, and WiMax serves people on seats."

In Korea, dual-mode handsets supporting both 3G and WiMax are already available in the market. It seems possible for both to co-exist peacefully? However, we see now that the two technologies are born to fight each other to death and there could never be such a thing as complementation for each other in the real market.

First of all, if fixed-line operators get the WiMax license, they will use the data transmission capability of WiMax to provide wireless VoIP services, which is bound to dig a portion of subscribers away from mobile operators. With so many world-leading suppliers involved in the development of WiMax handsets, the supply of terminal devices will not be a problem sooner or later.

It is reported that the data transmission cost of WiMax is only one tenth of that of 3G. Maybe the WiMax community led by Intel is too optimistic. But if it were true, the fee rate of WiMax-based VioP could be as low as one tenth of that of 3G too.

If the operators that have got the license forget the fact that the number of mobile phone subscribers is far larger than that of notebook users, and only plan to provide Internet services to notebook or PDA users with WiMax, then they must be crazy. WiMax will definitely engage with 3G in the field of the voice communication.

[+] Mobile phone flat rate with unlimited minutes

Were WiMax to appear a little bit later, the follow-on versions of 3G might have the chance to provide larger bandwidth and a more comprehensive IP environment; or, in plain words, a 4G network environment upgraded from 3G might be able to provide the VoIP service, thus render WiMax unnecessary?

Could VoIP all-you-can-eat monthly flat rate become a reality in the 4G time? It will have to depend on how low the transmission cost is. Even if it is low enough, the 4G-based VoIP service might still be charged by minutes in the initial stage. Operators will not withdraw to the bottom line of monthly flat rate at once, so long as the fee rate is acceptable to consumers.

Yet for 4G Internet accessing for notebooks, which does not go through a phone number, operators might consider to offer monthly flat rate. Although 4G is a comprehensive IP environment, operators might still want to separate the Internet access from the voice communication after taking into consideration the reality in the marketplace.

However, there's one thing uncertain here. Today, WiFi handsets with embedded Yahoo! Messenger or Skype are already available. Such handsets will be supported in the 4G wireless network too. With such handset and access to the 4G network of an operator, consumers would be able to make phone calls free by only paying the monthly fee.

Such handset might not have their own phone numbers, or would have to go through troublesome procedures (e.g. SkypeIn) for the numbers, or might encounter the containment from telecom operators. But anyhow, the competition is there and operators have no way to pass it by. It will eventually drive 4G VoIP toward the destiny of monthly flat rate.

The trick is that if 4G really offers monthly flat rate, it will deprive Skype of its room of survival on the mobile terminal. How could Skype, a service that depends on consumers' hunger for lower fee rates, expect to survive any longer once the mobile phone service is as cheap as what monthly flat rate offer?

To be able to make free phone calls has been the dream of mankind, and unintentionally become the driver for the evolvement of the communication technology. Telecom operators who depend solely on the switching of phone calls or transmission of data for their income would face severe challenges sooner or later. They will have to transform into service providers with diversified abilities. (
2006/12/03 - By Digitalwall.com - Way to
China Internet/Telecom )

---

- Read More

Prev : Great Future of Wireless Broadband (3) Scarce Resources


Next : The Fourth Generation of Internet Marketing (1) RSS Marketing

---

- Today in History

Mobile TV Market (3) Terminal Manufacturers & Content Providers - 2007/12/02

Great Future of Wireless Broadband (4) WiMax, 3G and 4G - 2006/12/03

Internet and Books (1) Dilemma of Online Publishing - 2005/12/04

VoIP (2) Who Depends on Whom - 2004/12/05

VoIP Gives out the First Cry - 2003/12/07

Predictions on China Internet Market (3) Online News & Blog

Both the surplus and shortage of contents can create new business opportunities.

---

[+] The four pillars of the Internet

As a matter of fact, the concept of "Four Pillars of Internet" was first raised back in 1999. Although many people insist that today we be already in the Web 2.0 time, we have not yet stepped out of the range of those four pillars. Therefore, in my view, Web 2.0 is only an improvement, not an innovation.

Specifically, the four pillars are known as four Cs, i.e., Content, Communication, Community and Commerce. So far, all Internet companies, without any exception, have been competing in those four fields.

Geographically speaking, competition modes can be divided into 2 major types. In continental markets such as the United States and P.R. China, Internet portals tend to be involved in all of the above four fields. However, these markets are so large that single-field-oriented websites are also able to survive and even compete with portals in specific fields too. For example, in the U.S. market, eBay has been standing up to Yahoo!

In island markets such as Taiwan and Hong Kong, which have much smaller sizes, each of the four pillars of portal websites is very strong and there is little room left for single-field-oriented websites, which, in most cases, end up to be taken over by or establish some kind of partnership with portals.

[+] Surplus and shortage of content

Talking about contents, online news is the first thing that the domestic Internet subscribers think of. With the occurrence of important domestic and international affairs during the years and the efforts in early years that portals have made toward their goals of becoming media companies, online news eventually grows to be a classic of China's Internet market.

The following figure shows the proportions of the Internet subscribers in China that search for news information on the Internet and of those who do not think online news could satisfy their needs. Obviously, the higher the demand for news gets, the higher the dissatisfaction rate is. That seems to be only normal human feelings.

However, the section of the curve for the past year or so shows that, as subscribers' demands for news rise, the dissatisfaction rate declines. That indicates in the field of news, online content has begun touching its ceiling. From the finding of CNNIC questionnaires, we can even see that subscribers are beginning to feel tired about massive information, which makes it only harder for them to find the contents they really need. In addition to highlighting the role of search engines, how to enable subscribers watch the news they really want (i.e., the My News concept) will be the next focal point of the online news sector.

[+] Personalization and broadband news: The focal points of the next stage

In addition, the drastic increase in broadband subscribers will drive online news toward its next milestone—live online broadcast. This is an indisputable trend given the fact that, so far, even in the most developed regions for the broadband, the percentages of subscribers watching live broadcasts online still remain low.

According to a report released by CNNIC in December 2005, as many as 37.1% of Internet subscribers have the experience of watching and downloading movies or TV programs online. However, I am rather inclined to believe that most of those subscribers only download the contents, but not watch them online.

Downloading, however, is also a form of news dissemination, as there's no rule specifying that only live broadcasts could be called news. Normal broadband news archive downloading could be a viable option. News editor staff of portals must develop and improve their broadband content editing abilities as well.

Compared with the digital TV or IPTV whose future is largely uncertain, I am more optimistic about live online broadcast which uses computer as the tool for watching. The report also reveals that, between 8:00 p.m. and 9:00 p.m., more than 60% Internet subscribers are surfing the Internet (instead of watching TV), and the percentage is still rising. Which one, then, do you think will become the mainstream?

[+] Myths about Blog

If there is enough, or even more than enough online news to meet our demands, what is the point for the existence of the massive information brought by Blog which is tagged as the grassroot media, and the numerous Bloggers? In its December 2005 report, CNNIC released that 14.2% subscribers used Blog frequently, 3.7% up from the level of June of the same year.

Will the figure exceed 70% (the proportion of Internet subscribers who often read online news)? If not, Blog will not become a mainstream media. In other words, Blog is not mass media, but demassified media for a niche market. It is impractical to expect a niche to take the place of mainstream media.

I often tell a joke that the so-called community service is "a group of people with the same identities gathering together to warm each other". Blog, which falls into the scope of community service too, cannot break away from that feature despite its distinct media characteristics. Of course, such a group of people could also support the business operation of an Internet company so long as the number is large enough.

Having finished the main dish of mainstream media, subscribers may still have the appetite for a dessert of Blog to avoid being drawn by the massive information. Internet companies that run Blogs need to have a clear view of their competition situation with portals in two fields, i.e. content and community. It is impractical to brag about overtaking their rivals in all of the four fields.

[+] Information with low demand might survive in large markets

In addition to news, there are, of course, many other types of online information. Surprisingly, despite their low demands compared to online news, the demand is strong enough to support the listing of Internet companies at NASDAQ, for example, traffic and travel information, which facilitates the listing of Ctrip.com (NASDAQ: CTRP), the largest online travel agency in China.

It indicates that in a sufficiently large market, even the proportion of the people is small with the demand for the information of a certain type, it is still possible to gather them together and create value by leveraging the borderless Internet. Real estate, automobile and medical information in the above figure has that identity and, therefore, should be heeded by startups.

In the CNNIC reports over the years, three subjects keep attracting my attention: online recruitment, online education and online games. The first two are typical hot subjects in the saturation stage of the Internet. Take online recruitment for an example, the proportion of this sector among Internet usages has soared during the recent years:

Online recruitment has been one of the first fields in the development of the Internet industry. However, it has not gained sufficient media attention in virtually all markets around the world. In the meantime, as the first profit-making players in the Internet industry, online recruitment companies have kept a low profile in counting their money.

[+] Online recruitment will be one of the key fields

In 2005, Monster.com, the largest online job site in the United States purchased 40% shares of ChinaHR.com, the largest local online recruitment company. In the meantime, 51job (NASDAQ: JOBS) landed on NASDAQ, too. Nevertheless, I believe that, in China, this market segment is just off the start line and still has a large development room in the future.

According to a report released by CNNIC in June 2004, the No. 1 reason for using online job sites is "rich available recruitment information" (35.5%). On the other hand, the largest problem is "too much false information" (31%), followed by "recruiters care little about information delivered through the Internet (26.4%)".

As to the question: "Is it possible to find a satisfactory job through this means?", only 50% of the repliers give yes, 26.9% give no and 24.9% say they do not know or it is hard to say. Obviously, there are huge market demands that have not been satisfied. Also, there are many large players in this market, but few did a good job. Therefore, there is still a large room for the future development.

Content producers tend to believe that what they offer is invaluable. Sometimes they seek customer demands based solely on their own instincts. Through analysis on information needs and satisfaction rates of Internet subscribers, we are able to tell which fields have too much information, and which fields have unsatisfied information demands where business opportunities lurk. (
2006/03/12 - By Digitalwall.com - Way to
China Internet/Telecom )

---

- Read More

Prev : Predictions on China Internet Market (2) Subscriber Number Is King


Next : Predictions on China Internet Market (4) Job, Education & Games

---

- Today in History

Predictions on China Internet Market (4) Job, Education & Games - 2006/03/19

Predictions on China Internet Market (3) Online News & Blog - 2006/03/12

Media, Community, and Blog (2) The Dream of New Media - 2005/03/13

Stop Internet Marketing (2) All Action; No Reaction - 2004/03/14

3G Time Comes (2) Mobile Internet Is Not the Killer Application - 2003/03/16