McAdams On: Qualcomm’s Swan Song
10/8/2010 3:18:34 PM
The demise of FLO TV is lamentable in its own
right, but it’s also a harbinger for broadcasters pinning hopes on Mobile DTV. Qualcomm’s
decision to shut down FLO proves mobile video is a tricky business.
Qualcomm had arguably the best technology extant for delivering TV channels to
handheld devices. MediaFLO technology could deliver 20 channels of 240i video
in the space of one TV signal. It was wildly efficient compared to the unicast
scheme used by wireless providers at the time. And it could
change channels in two seconds rather than some days later.
MediaFLO was a breakthrough technology. Qualcomm sank $683 million into spectrum
and several millions more into building a network of transmitters across the
country to launch it. They may have been better off just demonstrating MediaFLO’s
efficacy and licensing it to wireless carriers. Instead, they put together FLO
TV, which Verizon and AT&T ended up using the for their video offerings.
Consequently the carriers had no skin in the game, and Qualcomm had all of it. Both
carriers charged a fee for video service, and therein lies the rub for
broadcasters. People weren’t willing to pay ten bucks to watch “American Idol”
on their phones, or anything else for that matter. At least too few to support
the business. comScore’s most recent count is 5.7 million subscribers, or
around 2 percent of the nation’s 285 million cell phone users. That’s five
years in, and not accounting for churn.
Qualcomm tried to stimulate adoption by introducing standalone receivers last
year. It was too late. The Qualcomm division that includes FLO TV lost $252
million on revenues of $29 million during fiscal 2009; and $141 million on
revenues of just $9 million for the first nine months of fiscal 2010. Game
The object lesson seems clear. There are not enough people willing to pay for
mobile video to make it a viable subscription business. Surely broadcast
executives have a handle on this, and aren’t sniffing glue when they carry on
about the value of local programming. Mobile DTV has to be an
ad-supported, free-to-air service. It’s enough to expect people to buy
receivers, especially before Apple deigns to stick the chips into its
If ever there was an opportunity to resurrect and reinvigorate the very model
of free TV, this is it. It’s clear the broadcast industry failed miserably to
fully exploit digital television. It could have been sitting on a truly robust
and hypercompetitive multichannel offering instead of fending off spectrum
The only way for Mobile DTV to reach any sort of critical mass is to launch it
for free. People are sick of being soaked by wireless carriers and pay TV
providers for every little add-on imaginable. The idea of going to an
electronics store today and buying anything new that doesn’t incur a monthly
fee is mind-boggling. Demand would be tremendous.
The Mobile DTV business model should have two primary goals: Making it
effortless for users and attractive to advertisers. That’s it. Nothing more.
Pay-per-view and premium services can be added later. Going out, it needs to be
straightforward. I go to Radio Shack. I buy a handheld. I turn it on while I’m walking
out of the store.
I watch TV.