Forget about the couch. Now you can be a train, seaside or park potato instead

Move over, iPod - electronics firms say the future is handsets showing TV programmes. Stephen Pritchard asks if we'll tune in
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The Independent Online

Manufacturers from around the globe will line up to promote what they believe is the next big thing in consumer electronics at the IFA trade fair in Berlin this week. The age of the iPod is over, they argue. The future is mobile TV.

Several million mobiles with built-in music players have already been sold by the likes of Nokia and Motorola. When Sony Ericsson launched its Walkman-branded phone earlier this month, the company predicted it would sell 100,000 units in a few weeks.

But the electronics industry is already looking beyond audio, claiming it will be video services, and TV in particular, that convince consumers to upgrade their phones. It will be using the biennial IFA fair - founded as an event for TV technologies - to persuade mobile operators and retailers to take the gamble on mobile TV.

Statistics suggest the industry could be on to something. In Romania, where Orange launched mobile TV last October, 90 per cent of customers with compatible handsets have accessed the service. In France, where Orange has 50, mostly live, channels, mobile TV accounts for 55 per cent of 3G data use on its network.

Convincing British consumers to try the technology could be harder. Mobile phone handsets are highly subsidised in the UK, and operators might be reluctant to do the same for devices that could eat into other revenue streams, such as music or video downloads and web browsing

The UK also has a high take- up for multi-channel TV, through Sky, cable and Freeview. Viewers might be reluctant to pay a mobile firm for channels they can already see elsewhere.

"There is competition for share of wallet," concedes Deborah Tonroe, the head of commercial development for multi- media at Orange. "If you have already paid £50 for Sky, do you want to pay to watch content on your phone? We have to leverage the mobility aspect. Your mobile is always with you."

In the UK, Orange charges £10 a month for its TV service, which includes channels such as CNN and a specially tailored Big Brother channel. Virgin Mobile and O 2, which are both running mobile TV pilot projects, have yet to say how much they will charge.

In Korea, where consumers can already access satellite TV from their phones, the operators collect subscriptions for the services. But they also own the satellite, giving them end-to-end control over the network. A similar business model applies to Orange's TV services in France and the UK, which run over the company's 3G data network. But alternative mobile TV technologies threaten to cut out the operator altogether.

In Korea, terrestrial rather than satellite-based digital mobile broadcasting is now being tested. This will let existing commercial TV channels broadcast to mobile s and other devices, such as handheld computers, on a "free to air" basis. Potentially, anyone with a compatible handset could watch these channels.

Here, Virgin Mobile will be using a similar technology to deliver its TV services. The mobile signals will piggy-back on the transmission network set up for digital radio (DAB) broadcasts.

An alternative standard, DVB-H, has the support of a growing number of manufacturers and network operators. O 2 will be using it for its trials in the Oxford area. But a national rollout of DVB-H would mean allocating fresh radio spectrum for the broadcasts; DAB is already licensed, so the process should be easier.

The operators, however, like DVB-H because it makes it easier to charge for services. "The advantage is that operators have a return channel for billing," says David Steel, the vice president for digital media at Samsung. "But it is not really about an alphabet soup of technologies but which business models work for the consumer, and about existing versus new spectrum."

These models will go a long way to determining which devices support the technology in the near future. With over a billion handsets in use around the world, the mobile phone market remains a huge prize. But manufacturers such as Samsung expect to integrate mobile TV chips into other devices, such as laptop computers and camcorders.

This will only work if broadcasters can offer free-to-air programmes, backed by advertising or sponsorship. Camcorders and personal enter- tainment players do not have the communications links available on mobiles, making it harder to charge for content.

"If the business model needs significant capital expenditure, such as a satellite, or suits the cellular infrastructure, it is likely to be subscription based," says Dr Steel. "If it is an extension of DAB, and the expenditure is not too great, we will see other business models as well as other [non-cellular] devices."

Frans van Houten, the chief executive of Philips Semiconductors, agrees. While the offshoot of the Dutch electronics giant will be unveiling a number of mobile TV technologies in Berlin, Mr van Houten has wider ambitions.

"Phones are the market with the highest potential volumes, but we also see these [TV chips] in notebooks, portable media players and PDAs," he says. "We also see some niche applications, like TV in buses showing travel information and advertising."

In the coming year, handset makers and other electronics firms will be testing the market for digital TV services, Mr van Houten believes. But like FM radio, already fitted in a large proportion of mobiles, it could be something consumers come to take for granted.

FM chips are a strong revenue stream for Philips, but they do not produce revenue for either mobile operators or for broadcasters. Making mobile TV succeed will mean providing services that are attractive and cheap enough to persuade consumers to buy the devices, but that are also profitable to run.

Industry analysts believe this could be a stumbling block. According to Forrester Research, 18 per cent of mobile users would be interested in viewing film trailers or video clips on their phones for free. Only 2 per cent of subscribers would pay €3 (around £2) a month for the service, and 65 per cent of consumers are not interested at all.

But Michelle de Lussanet, a Forrester analyst, thinks the business models can be built. "There is a small group of people who will pay for TV, but service providers can develop other revenue streams, like interactivity."

She points to online chat services and text-based voting - already a big source of income for TV shows like Big Brother and Pop Idol -- and music or other paid-for downloads as possibilities. "Even if you are spending a little bit of money interacting with the TV programme, every text that results is a high-margin product for the operator."