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Cable, iTunes subscription model, cultural factors ‘stalemate’ U.S. mobile TV growth

This year marks 10 years since the first video played on a mobile phone. While technology has advanced in leaps and bounds since those early trials, profits remain elusive.

That's the challenge for mobile TV operators today, especially in the United States, according to Jeff Heynen, Infonetics directing analyst and author of the telecom research firm's recent report “Mobile Video Phones, Services, and Subscribers.”

"We're in a stalemate at the moment," Heynen said. "Until a viable business case has been proven out by a major operator, U.S. growth is going to be slow."

There are several reasons for this, according to Heynen.

"One thing that's held us back is that vast numbers of [U.S.] subscribers get TV via cable. In Europe and Asia-Pacific, cable penetration was never that high, so they already had the infrastructure in place to deliver over-the-air digital signals. U.S. broadcasters never had to encode digitally — they let the cable operator do that for them.

"When the digital conversion happens," he said, "that's when you'll start to see broadcasters offering over-the-air mobile TV."

The prevalence of the iPhone/iTunes purchasing model also hinders adoption in the United States. "Why would I pay extra for broadcast TV when I can download content?” Heynen said.

Cultural differences also play a role.

"Other countries have mass transit, where people watch TV while commuting," Heynen said. "In Europe, the average number of TV sets in a home is one. If you're a teenager and want to watch something different, you watch on the computer or a mobile phone."

But there are mobile TV opportunities in the United States — operators just need to look in the right places.

The 2008 Beijing Olympic Games have already shown the power of live sports to get people watching TV on their phones. "Sports, news, traffic conditions — things that only have value when they're live" can increase audiences of mobile TV.

Another opportunity is the backseat audience. "There's another potential market for soccer moms with DVD players in the back of the car. The next step is live TV."

Heynen is also impressed by most operators' persistence in trying to make a business out of mobile TV. "They're betting a lot of capacity on making mobile TV successful," he said.

So where is the money?

"I think it's going to be tied to excellent mobile content," he said. "It has to be more on-demand and have more capability for TiVo-type services on the phone — and the ability to take a call while you're watching. It all has to be there for mobile TV to be successful."

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