Conundrum Continues: Mobile video drives mobile traffic but for how long?

Overview

With the success of smart phones, tablet PCs and game players, video continues to be the dominant form of mobile data traffic on wireless networks.  Cisco Systems predicts that mobile video will increase at a compound annual growth rate of 131% between 2009 and 2014.   Yet we constantly hear and read user complaints about poor video quality, stalling/ freezing.  Can mobile video traffic continue to climb while users are so dissatisfied with reception?   

The conundrum is that mobile video transported on 3G mobile networks cannot deliver the quality users desire, while the stand alone. broadcast mobile video networks are commercial failures with the new, standards based networks pushed off into the future.  How long can this continue without mobile video traffic falling off a cliff? 

Meanwhile, broadcast mobile video networks have yet to be profitable. Qualcomm's FloTV (AKA MediaFLO) has been a huge disappointment and the company is considering shutting it down, according to the Wall Street Journal.     Mobile-TV Push Gets Fuzzy Reception.

And, the mobile DTV network that we thought would be up and running by now is nowhere near launch.  The WSJ reports, "A group of U.S. local broadcasters, in fact, is just beginning to gear up an effort to deliver a broadcast service called Mobile DTV to U.S. markets, using transmission capacity freed up by a transition from analog to digital technology." 

Discussion:

Let's look at the market dynamics for mobile video:

1.  Poor video quality and bad reception due to cellular network congestion leads to customer dissatisfaction

 In its 2010 Mobile Minute Metrics report, Bytemobile states that mobile networks experience the most congestion at 10 p.m. when mobile video consumption peaks, causing users to have the most stalling.  In other words, it's not there when they want it most. 

"The mobile data industry is experiencing tremendous growth, with video as the key driver," said Joel Brand, VP of product management at Bytemobile. "While operators are enjoying revenue growth from data subscriptions, they are also experiencing rapid escalation of traffic, which is outpacing available network capacity and adversely affecting quality of service."   In addition to a deteriorating user experience as data traffic continues to increase, operators will have to implement stringent billing policies as way to curtail data usage, Brand said.

For more information see: Mobile Networks Falter Under Video Demand.   

The analogy of more memory and faster processors for improved performance also applies to mobile data traffic.  Apps developers and users have had no problem consuming more memory and increased processing power of speedier microprocessors.  We predict that as aggregate and individual mobile bandwidth increases, it will be consumed just as rapidly presenting the same congestion problem users now face with mobile video.  Chris  Koopmans, VP of Product Development for ByteMobile, states, "Many operators say 'the next speed will solve your problem'… the point we're trying to make here is however fast you make your network, users will consume it.  No matter how fast it is, you will always end up with congestion."  And, we totally agree with that comment!

2.  Qualcomm's FLO TV has been a commercial failure

Qualcomm built FLO TV as a broadcast network, featuring scheduled channels of programming that mobile users can tune to. It does not use the cellular networks for mobile video, unlike MobiTV.  Qualcomm's FLO TV powers mobile-TV services marketed by AT&T Inc. and Verizon Wireless (a joint venture of Verizon Communications Inc. and Vodafone Group PLC).  After six years designing and building this network, Qualcomm has conceded that growth has been disappointing and may shut it down.  Qualcomm CEO Paul Jacobs, told the WSJ that Qualcomm was "considering a number of alternatives" for FLO TV. He wasn't more specific and a company spokeswoman declined to elaborate. But, he said Qualcomm is in early-stage discussions with unnamed companies about FLO TV and the radio frequencies it controls. 

The spectrum Qualcomm owns for mobile broadcasting is a distinguishing element of FLO TV. Most users of smartphones use conventional cellular networks to call up video programming, such as downloads from services like Apple Inc.'s iTunes store and streamed videos from sites such as Google Inc.'s YouTube.

The Journal reports that there are fundamental handicaps in the U.S. for mobile video.  "Unlike markets like Japan and South Korea, where mobile TV has a sizable following, many Americans are driving when they aren't at home or at work—and less able to watch TV on the go than users in countries where public transportation is more widely used."

"Here it is a little difficult," said Mark Beccue, an analyst at market-research firm ABI Research. The market-research firm estimates that 12.8 million people will subscribe to mobile TV in North America in 2010, which he expects to grow to 25.9 million in 2012 in response to factors such as a proliferation of devices with bigger screens for watching videos. By comparison, the firm's worldwide estimate calls for 178.4 million subscribers this year and 384.5 million in 2012.

So with such slow growth and no profits, will Qualcomm redeploy the spectrum they own from FLO TV to something else?  We think so.  Qualcomm has "very valuable spectrum, and now the question is are we using it well with the FLO TV service," Jacobs said at the Wall Street Journal's D Conference last month.

Qualcomm isn't the first to pursue, and drop a similar broadcast approach, according to the WSJ. Crown Castle International Corp., which had been planning a service similar to FLO TV called Modeo, in 2007 changed strategies and announced plans to sell its wireless spectrum. Later the same year, Aloha Partners LP, whose subsidiary HiWire had tested a mobile broadcast service, instead announced a deal to sell its spectrum to AT&T for $2.8 billion.

 3.  Mobile DTV standard based networks still in a holding pattern

We really thought that this standard would solve the congestion problem by providing a separate band for broadcast mobile video.   Here is what we wrote last Fall:   Will the new mobile DTV standard enable Mobile Video to succeed in 2010?

Why hasn't it been deployed yet?  The WSJ reports:  "The backers of Mobile DTV, dubbed the Open Mobile Video Coalition, is pressing ahead with plans for services that also require special chips for receiving broadcast signals, typically built into media players or included with a device called a dongle for outfitting a laptop computer to use the service."

Anne Schelle, the Open Mobile Video Coalition's Executive Director, told the Journal that its research shows that Americans are willing to pay for the right mix of locally generated programming and other content. "I don't think [Qualcomm's experience] means that consumers aren't interested in this," she said. "Consumers are highly interested."

But why is it taking so long for market liftoff?  The mobile DTV standard is almost one year old.  In my independent research, I have not found a single investor or developer for the mobile DTV standard- not even Motorola, which talked about the need for a separate mobile video broadcast channel at a conference I attended last Fall.

Significant questions about the business model for mobile DTV still need to be answered. These include whether the technology should broadly launch as a free, ad-supported service or as a subscription offering, and whether stations have the right to simulcast their normal network programming through mobile DTV. And, while wireless carrier Sprint is participating in the Washington trial, which was organized by the Open Mobile Video Coalition (OMVC), no formal deal with a carrier to implement mobile DTV technology in handsets or other devices has been reached. If these questions aren’t addressed soon, the commercial launch of mobile DTV could be delayed well into 2011 or beyond.  Will it be DOA?  Only time will tell.

4.  Most users prefer to watch video on their TV, rather than a mobile gadget!

Chris O"Brien, one of the most incisive tech reporters I've ever read had another great article in the Aug 1, 2010 San Jose Mercury that documented users strong preference for watching video on a TV (and not a mobile gadget).  "Almost 99 percent of all video is still watched by people using their televisions. While our viewing options have multiplied, our viewing preference hasn't much changed: sitting on a couch in front of a TV. In fact, we're spending more time watching more video on TV than ever before. In Silicon Valley, home of YouTube and a host of online video startups, this seems astonishing, where we believe with near-religious fervor that the future is coming faster than ever and changing everything.  It's not. Rather, this is a good lesson in how consumers' most deeply ingrained habits can slow down the pace of change. And it's a reminder of how living here can sometimes warp our sense of technology's true impact."

O'Brien: BitTorrent and the reason things are changing slower than you think

We find this article quite reassuring and on the money.  As a result, we predict that in the near future, most folks will watch Internet video on their new TV's and not on mobile gadgets and gizmos.

Conclusions:

We think something has to give and very soon.   For mobile video to be successful, it will take the initiation and success  of live and on demand videos delivered via mobile DTV networks in conjunction with more 3G network capacity  (i.e. aggregate bandwidth for users) to have a better experience watching You Tube, Hulu and other Internet Video sites on their mobile gadgets.  If this does not happen, we think that the wireless telecom industry will be in big trouble.

0 thoughts on “Conundrum Continues: Mobile video drives mobile traffic but for how long?

  1. Analysis: Consumer discord in the eye of the video storm
    Consumer confidence appears to still be heading in the wrong direction. In fact, consumer expectations of what economic conditions will be like six months from now dropped a whopping 10.7 percent in July, according to the Thomson Reuters/ University of Michigan Surveys of Consumers. Also, consumer expectations about technology spending declined in the most recent research from the Consumer Electronics Association and CNET.
    Service providers might have a bit more confidence about their ability to sell, but their potential buyers aren’t so sure, and that’s enough to make me wonder if we’re only now in the eye of that perfect storm, where it’s reasonably calm. The back end of that storm may pack its own punch.
    Meanwhile, service providers may not be any better positioned to head off video cord-cutting than they were before. Sure, Verizon Communications has made some TV Everywhere content available, and Comcast has been more aggressive than just about anyone in pursuing a hybrid strategy, but Comcast’s recent cable TV rate hikes in some markets suggest that it doesn’t believe this storm will get worseMeanwhile, service providers may not be any better positioned to head off video cord-cutting than they were before. Sure, Verizon Communications has made some TV Everywhere content available, and Comcast has been more aggressive than just about anyone in pursuing a hybrid strategy, but Comcast’s recent cable TV rate hikes in some markets suggest that it doesn’t believe this storm will get worse
    http://connectedplanetonline.com/residential_services/news/consumer-dischord-to-impact-video-market-0802/

  2. Regarding Alan's article, I wonder what part the success or lack of success of FLO TV has to do with consumer awareness versus the challenge of having a product that meets a consumer's need.  I suspect it is the latter rather than the former, although, as a consumer I don't think I would know about FLO TV, if it weren't for the fact that I am in the industry.  

    But, all of the consumer awareness in the world won't make up for having a product that doesn't meet a true consumer need.  A push model for mobile, where people have to abide by someone's else's schedule doesn't match the on-demand expectations that those early adopters have come to expect from media.  With there being so many ways to get content on-demand, from YouTube to Sling to off of the memory card, there is little need to be tied into the network's schedule.  

    Further, is the demand and viewing the same for a truly mobile device that is handheld vs the lean back experience of the television?  I doubt it, as mobile tends to be much more snack-like, except for those occasions, such as an airplane flight, where people have blocks of time to watch a full-length movie.  Full-length movie watching on an airplance isn't going to be via a wireless network.

    I heard several years ago at a conference that there were something like 25 million jobs in the U.S. that lend themselves to viewing videos during their "down time".  These "down times" tend to be short, so the best videos would either be short or would be those that were on-demand, such that the viewer could control the playback.  This situation lends itself, again, to downloaded media or short, YouTube-like videos.  

    Another factor that may have affected the success of the broadcast video approach to mobile video is that other activities that didn't exist in a widespread manner 4 or 5 years ago now compete for viewer's time.  For instance, people are using their mobile devices to update and read their Facebook accounts, which takes away from time for watching videos.   

  3. So if mobile users only want to snack on video, how can the new mobile broadcast TV standard be a commercial success?  What about live sporting events, concerts, news?  I always thought there'd be a place for "premium video" where the user pays a subscription fee to watch live programming + VoD.

    Here is yet another bullish forecast for mobile video market:

    Mobile Video to Double Reach by 2013
    AUGUST 3, 2010

    $1.34 billion in revenues predicted by 2014
     The population of mobile video viewers in the US will grow nearly 30% in 2010 to reach 23.9 million, according to eMarketer’s forecasts. The still represents a reach of only 7.7% of the total population and less than 10% of mobile phone users, but those numbers are set to double by 2013 and increase still further in 2014.

    The number of mobile video viewers, which includes people of any age who watch video content on mobile phones through mobile browser, subscriptions, downloads or applications at least once per month, will continue growing in the double digits for a compound annual growth rate (CAGR) of 22.8% from 2009 through 2014.

    http://www.emarketer.com/Article.aspx?R=1007845

    1. Interestingly, I was as Universal Studios today and a production company was filming a commercial FLO TV. This is very interesting, if FLO TV is about to be dropped. Of course, it might just be the inertia factor whereby it would be cheaper just to produce the commercial. Maybe, it will never be on-air.

  4. I have never seen a commercial for Flow TV.  For years, it was promoted with great fanfare by Qualcomm, but has never gained market traction

  5. Some Questions for Mobile DTV by Bill Hayes is the director of engineering for Iowa Public Television.
    The strategic goal is not to turn on Mobile DTV by some fixed date but rather to develop a business plan for deploying the service.  The list of issues and potential problems is described at:
    http://www.tvtechnology.com/article/104082
    ————————————————————————————————————-
    Mobile DTV will bring local broadcasts to portable devices, but not until 2011

    Mobile DTV and will be used to broadcast local TV directly to portable communications devices, such as mobile phones, laptop computers and DVD players in your car.
    "There aren't a lot of battery-operated digital TVs on the market," said John Taylor, vice president for LG Electronics USA.
    "I think most of the attention has been shifted to this new standard for mobile digital TV," he said.
    Mobile DTV is an upgrade over the hand-held digital televisions that are on the market now because it is designed to broadcast a continuous signal even if you are on the move. If you have used an antenna to receive digital television programming, you know that the slightest movement of the antenna can cause the picture to drop out. Mobile DTV uses technology that will allow you to continue watching a broadcast without interruption as you ride in a car, or walk with your mobile phone.
    You can receive television programming now on portable devices through streaming video over the Internet. But Mobile DTV broadcasts a direct signal from a local station to a portable device.
    One hold up to full deployment of mobile broadcasts is an uncertain business model. There are services, such as FLO TV, which allow users to pay for a subscription to watch certain television network shows through portable devices. While local news broadcasts would likely be offered free through Mobile DTV, there are questions about whether those stations will be able to broadcast network programming, since pay services like FLO TV are offering those shows.
    Also, over-the-air stations will have to invest in new equipment to broadcast Mobile DTV. A recent article in Broadcasting & Cable magazine indicated stations will have to spend $100,000 to $200,000 to install the equipment.
    http://jacksonville.com/business/2010-08-01/story/mobile-dtv-will-bring-local-broadcasts-portable-devices-not-until-2011
    ————————————————————————————————————————–
    Another unknown is whether the mobile device makers will include the Mobile TV broadcast receiver – radio and electronics in their new gadgets.  If so, how will the additional power consumption effect battery life?

  6. By this time I was expecting a tablet device (PC or eReader) that could receive and play broadcast mobile video (via the ADTV std) as well as Internet video (via 3G or mobile WiMAX).  Also, interactive maps and games. Hasn't happened yet.

    Dish Network plans to offer mobile video via a 3G connection from its STB/Sling Box to the iPAD or smart phone. 

     

    http://blogs.wsj.com/digits/2010/08/05/dish-network-is-about-to-bring-tv-to-your-ipad/

     

     

     

  7. “The emergence of devices like iPad is one of the things we're pointing to as a key enabler for people to cut off pay TV services completely,” said Vince Vittore, senior analyst with Yankee Group.
     

    The iPad launched with the expectation that it would be a media-driven device with greater video -iewing capability than a video-capable smartphone, mostly thanks to its 9.7-inch screen. The early inclusion of the ABC Player, Netflix and TV Guide iPad apps at the Apple app store hinted at another target — the evolving online TV and over-the-top video sectors — in its sights. Though the number of video entertainment apps for the iPad is still fairly low, the implication could be that if it continues to sell at a healthy rate (about 3 million have been sold so far), more online video players will embrace the device platform as another destination, in addition to desktops PCs, laptops and to a lesser extent mobile phones, where video viewers are headed when they turn away from their living room TVs.

    Since the iPad’s launch, Apple has not itself attempted to tie the device to subscription TV services, but a rumored reconfiguring of its Apple TV product and brand may yet explore that territory.

    Either understanding the possibility of tablet PCs as a competitive video threat or just recognizing their potential utility in relation to current TV and video viewing paradigms — or maybe both — several TV service providers have quickly moved to craft their own iPad-friendly video strategies:
     

    –At the Cable Show in May, Comcast CEO Brian Roberts demonstrated how the iPad could be used as a Xfinity video remote control. Though it was an unexpected and welcome exhibition of how a TV service provider might deploy the iPad, Comcast notably did not speculate on how a tablet could be deployed for TV Everywhere-style video viewing.
     

    –Verizon and its Android device partner, Motorola, reportedly are exploring development of their own tablet PC to be used in connection with Verizon's FiOS TV platform. The Financial Times reported that it could be a TV-viewing device, though neither company has yet offered greater detail.
     

    –Satellite TV provider DirecTV announced earlier this month that it was making a new NFL Sunday Ticket To-Go plan available for viewing on the iPad and other mobile devices.

    –Fellow satellite player Dish Network announced its own plan to make programming available over the iPad and other mobile devices at no extra charge when they are tied into a set-top box like Dish’s SlingBox.
     

    –Time Warner Cable said it is developing its own app in which the iPad can be used for TV navigation. Unlike some other service providers, TWC openly speculated that the tablet PC could evolve to play a role in its TV Everywhere strategy, become an open development tool for third parties and even be used to share content across social networks.
     

    –Summing up, The Wall Street Journal reported just today that “at least seven of the 10 largest subscription TV providers in the U.S.” are busy creating tablet PC apps that tie into their TV services in some way. 
    What may be most surprising about the abundance of service provider iPad/tablet TV activity thus far is that it is not being led by AT&T, the telco that has been Apple’s closest partner in the telecom industry and helped launch the iPad back in April with ground-breaking service contract flexibility. AT&T did recently announce the capability to download and view TV content on the iPhone, a significant announcement in its own right, but one that was notable in its lack of mentioning how the iPad could be used in the same way. Though, one can expect that converting the app for the iPad is in AT&T’s plans.
     
    http://connectedplanetonline.com/mobile-apps/news/ipad-inavigate-iwatch-081310/

     

  8. AT&T and Dish Network (see earlier comment) are providing mobile video by linking the mobile phone to the STB.  I would have thought they'd use the new ATV mobile video broadcast standard, whose commercial viability is now questionable.
    The U-verse Mobile app gives  U-verse subscribers the ability to download and watch popular TV content on their iPhone so they can take their U-verse TV experience with them, wherever they go.  AT&T is the first TV provider to offer an integrated mobile app that allows you to both manage your DVR and download and watch select shows. The app is another example of how AT&T delivers more value to U-verse TV customers with continued service enhancements and innovative apps.
    U-verse Mobile replaces the popular Mobile Remote Access for iPhone app and incorporates the ability to browse the U-verse TV program guide, view program descriptions, schedule and manage your DVR recordings, while adding the ability to download available episodes over any Wi-Fi connection, and watch them in full-screen mode on your iPhone from anywhere. U-verse TV customers already enjoy the flexibility of remote DVR management. More than 100,000 U-verse TV customers use the Web and Mobile Remote Access apps every month.
    http://www.att.com/gen/press-room?pid=18230&cdvn=news&newsarticleid=31017

  9. We’re heading for a mobile network traffic jam
    • Operators must act now to address it
    • Customer segmentation and pricing innovation are part of the solution
    –>The holy grail is converged, personalized and dynamic pricing

  10. Thanks Ken, 

    One of my main conclusions was that more people would be watching OTT video on their TVs than mobile video on their gadgets.  The article tends to reinforce that opinion:

    "The upshot is that TV viewers can be looking at video streamed straight off the web, other programming from satellite or terrestrial broadcast and yet more from a digital video recorder or DVD –  and not care, or even necessarily know, which is which. "

    They also say that mobile broadcast video is in big trouble.  I wonder why it hasn't been deployed yet and if it will be DOA???  Any thoughts on this or other points made in my article?
     

    The only trend I see is for the mobile gadget to access the STB or DVD in the home to watch videos (e.g. Dish/Sling TV and ATT U-Verse with iPhone).  I believe that the mobile gadget will mostly use a WiFi hot spot/ residential network with wireline broadband access, rather than 3G network to access the “mobile” video streams over the Internet or from the STB/DVD.

  11. Verizon Sets Live TV iPad App For FiOS

    Another example of iPad/ iPhone app that downloads videos from the  pay TV STB/DVR:

    Verizon FiOS TV subscribers will get to play with several new multi-platform video applications over the next year, including an iPad app that will allow subscribers to stream live cable network feeds to the Apple tablets.

    The iPad app, which expects to be launched sometime next year, will allow authenticated FiOS subscribers to view live content from their cable set top boxes on their iPads from within their own homes, according to Verizon CIO Shaygan Kheradpir said during a Verizon demonstration Tuesday within his New York City home

    Kheradpir said the iPad software simulates the functions of a traditional cable box and can be accessed through a free app that downloads a video mosaic of the most popular programming currently being viewed by Verizon subscribers. A Verizon spokesman said that the app will be "platform agnostic" but will initially launch with the popular Apple tablet.

    Kheradpir said he's currently in negotiations with content providers to secure rights for the service.

    A Turner Networks spokeswoman in attendance confirmed negotiations with Verizon but said no deals have been completed. Verizon showcased live CNN programming as part of its iPad demonstration.

    "This is the beauty of FiOS is that we have a cloud TV product and we have enough capacity to have this streams going simultaneously," Kheradpir said. "This is not your grandfather's cable TV."

    On the video-on-demand side, Verizon announced a new multi-platform offering that will allow subscribers to purchase and watch movies and other content across as many as five different video devices.

    Consumers can download or rent movies via the television and watch it on a computer, a Droid X or Droid 2-based Verizon Wireless cell phone, a Windows Mobile 6.5-based smart phone or a BlackBerry Storm, according to Ruchir Rodrigues, vice president of product design and development for Verizon.

    Verizon will store an individual's downloaded content so that it can be added and removed from any device at any time and still be accessed by other devices at any point in the future.

    http://www.multichannel.com/article/456137-Verizon_Sets_Live_TV_iPad_App_For_FiOS.php

    http://www.bloomberg.com/news/2010-08-18/verizon-to-let-tv-customers-watch-shows-on-phones-including-blackberrys.html

  12. Verizon Looks To Stream FiOS To Tablets
    Verizon is looking to bring live TV to iPads and other tablets, though it is far from clear viewers will flock to them for their mobile video fix.   Verizon Chief Information Officer Shaygan Kheradpir  said software in the set-top box, would redirect the FiOS broadcast TV signal to the iPad and users could connect over a Wi-Fi network (not 3G)
    From an engineering standpoint, the work is done, he said. But before the company can commercialize the app, it must convince content providers to allow Verizon to distribute their shows. Kheradpir said he hopes that will happen next year, but this could be a tough sell to content providers.
    Since the app is still in its concept phase, it is unclear how Verizon will charge users for the package. Orr says since it will be limited to FiOS users and the number of iPad owners relative to TV owners is still small, he's not sure what the market is for this service.
    "The people who might be interested in this are fairly limited. Of the people who own iPads, how many of them are a Verizon FiOS user? And of those, how many would be willing to pay for service uplift? I'm hard pressed to believe they'd offer it for free," Orr said.
    Verizon has invested $22.9 billion into the FiOS network since 2004 to expand its subscriber base, according to a spokesperson. Through the end of the second quarter of this year, the company has 3.2 million FiOS subscribers.
    Since the service would only be available in the home, another question is whether people would be willing to ditch their glossy big screen HDTVs for a smaller tablet device. One problem is the iPad cannot play anything over 720p, so it is unclear how it would handle streaming HD.
    http://www.ibtimes.com/articles/44408/20100820/verizon-fios-streaming-tv-ipad-apple.htm

  13. One popular type of mobile video will be watching Netflix on an iPhone, iPod Touch or iPad.  However, it could be prohibitively expensive with AT&Ts 3G Data Caps. 

    This is another great addition for Netflix, which is on fire right now. And for the iPhone, it's just one more entertainment option that separates it from the Android pack.

    Netflix makes its debut on the iPhone, iPod Touch

    The app has arrived as promised and it's a pretty faithful rendering of the Watch Instantly service found on the PC, iPad and a bunch of set top boxes and game consoles. You can search for movie titles, browse by category and add movies to your Instant Queue.

    You just need to subscribe to a Netflix membership, which starts at $8.99 a month, and you can get access to more than 10,000 Watch Instantly titles. Like the iPad, the iPhone also supports 3G viewing of Netflix and the quality is pretty clear, provided you have good coverage.

    With AT&T's new data caps, you might think twice about watching too much Netflix on the road. I watched ten minutes of video on 3G and used up 53 megabytes. One movie would easily push past AT&T's $15 250MB tier. And it would put you on pace to test your 2GB $25 limit quickly.

    This is another great addition for Netflix, which is on fire right now. And for the iPhone, it's just one more entertainment option that separates it from the Android pack.

    Read more: http://www.sfgate.com/cgi-bin/blogs/techchron/detail?entry_id=70937#ixzz0yTvfrQzD

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