Business models for mobile TV

Business models for mobile TV RIPE@2006 Amsterdam, Nederlands November 16 18, 2006 Theme:Securing Innovation By Reza Tadayoni and Anders Henten Associate Professors CICT Technical University of Denmark tadayoni@cict.dtu.dk & henten@cict.dtu.dk Abstract The present paper is an exploratory study of the technological and market development potentials of mobile TV. Different mobile TV platforms and technologies are available on the market, and huge resources are put in pushing the development forward. The business model aspect is indicated as one of the major challenges for the mobile TV services to be a success. In this paper the Business model aspect of mobile TV is analysed for the four major mobile TV platforms/technologies: MPVR (podcast), In band services, Wireless /Mobile IPTV and the Converged Platforms. Some of the questions we try to answer in this paper are: Is it likely that mobile TV will lift off and develop into the huge and profitable market that different market players are hoping for? Which are the business models, including technology solutions, most likely to prevail? And, in connection of this, who are the market players having the biggest interest in the different kinds of mobile TV solutions? 1

1. Introduction Today s broadcast industry faces a major challenge in personalising content and segmenting channels to a still more fragmented market that, apart from digital TV and radio, includes the Internet being accessed in different ways, e.g. through small personal terminals. In particular, the youth have their requirements for content and communication covered through the Internet and mobile services, while their consumption of the traditional TV (Sofa TV) is correspondingly reduced. This development has caused broadcasters, including public service institutions, to look for new ways to address the mobile segment by offering streaming of video and audio to mobile devices in new and more efficient ways. From the mobile industry, there is also a strong interest in developing a mobile TV market. This applies to the manufacturers of networks and devices and to the network operators. This has resulted in a number of platforms and ways of developing and implementing mobile TV services. The mobile TV platforms are important cases of a materialisation of convergence between telecoms and broadcast sectors. The mobile TV platforms enable real interactivity, which is a long awaited possibility for broadcasters to offer real interactive TV. Apart from interactivity which is inherent in the technical architecture of mobile TV systems, the mobile device is personal and always connected, enabling major innovations in broadcast content and service types. The present paper is an exploratory study of the market development potentials of mobile TV. Is it likely that mobile TV will lift off and develop into the huge and profitable market that different market players are hoping for? And, which are the business models, including technology solutions, most likely to prevail? And, in connection of this, who are the market players having the biggest interest in the different kinds of mobile TV solutions? Mobile broadcast (TV) seeks to exploit the convergence potentials of the combination of mobile communications and broadcasting. There are, presently, four basic kinds of technology solutions. One type of solution uses an in band transmission of the broadcast signals. This means that the unidirectional broadcast signals are transmitted via the channels also used for bidirectional communications. In a 3G system, for instance, the broadcast signals will be transferred via the same two way communicative channels as voice and interactive data communications. In another type of 2

solution, the communicative two way channel is separated from the one way broadcast channel. But it all happens on one integrated terminal receiving the unidirectional communications on one channel and using another channel for two way interactive communications. A third kind of solution is in reality not mobile TV, as the users in advance i.e. before being mobile from, e.g., Internet connected PCs download the programmes they want to view on their portable terminals as in the case of Mobile Personal Video Recorders (MPVR), for instance podcasting. This type of technology offer could, therefore in principle, be excluded from this survey of different mobile TV solutions. However, in the market place, podcast can very well turn out to be a competitor to mobile TV proper. A fourth kind of platform is the mobile/wireless IPTV services, where the mobile device (being a wireless enabled mobile phone, PDA, or other devices) is connected through a wireless network (like WiFi, WiMAX, etc.) to, e.g., the Internet. But not only are there different types of technology solutions, there are also different standards in each of the different technology solutions. In the paper, there is a presentation of the most important standards regarding the kind of technology solutions where the one way and the two way channels are separated. This includes the DVB H standard, the DAB IP, the DMB standard and QUALCOMM s MediaFLO solution. However, the paper does not primarily concentrate on the market diffusion of these different standards. The paper focuses on the analysis of the business models relating to the three abovementioned general kinds of technology solutions. In the literature on business modelling, a conception of the term business model, often used in rather blurry ways, has crystallised during the past few years 1. This conception of what a business model should include typically deals with the following four main pillars: A value proposition A technology solution A cooperation platform A financial design 1 E.g. Edward Faber et al: Designing business models for mobile ICT services, paper presented at 16 th Bled Electronic Commerce Conference, 9 11 June 2003 and Alexander Osterwalder: The business model ontology a proposition in a design science approach, Université de Lausanne, Ecole des hautes études commercialles, 2004. 3

The value proposition issue deals with the offer (service and/or good) that a company or a network of companies makes to the users. In the context of mobile TV this includes an analysis of what users want and are prepared to pay for. Do users, for instance, really want to watch longer programmes on small mobile devices or is it necessary to develop special kinds of content for mobile TV? The technology solution is part of the business model. It is an important determining factor in the quality and price of the offer to the users, and it is also an important factor in determining the impact and influence of different market players in a value chain/network. With one type of technology solution, one kind of market player may be the dominant one in a value network, while another market player may dominate another type of technology solution. The cooperation platform (or the value chain/network) concerns the cooperation between the different parties taking part in the production and delivery of a service and/or good. With respect to mobile TV, different markets players are involved: content providers, aggregators, network operators, etc. An important element to analyse is who the dominant players in different cooperation configurations are. Finally, the financial design deals with the costs and revenues and their distribution among the different parties to a value chain/network. It is obvious that the different elements in a business model are all interrelated and that an analysis of possible business models in a field will have to examine these interrelationships. This is what the present paper aims at doing regarding the different basic solutions discussed. 2. Major mobile TV platforms Mobile TV is not a new phenomenon. Motorola s first step towards mobile TV, the portable TV, was on the market in the beginning of 1950s. Later in the last decade of the last century, in the era of emergence of digital TV, mobility and mobile TV had a certain role in the European discussions and argumentations for legitimacy of allocating valuable terrestrial spectrum resources for TV. 4

Today, however, mobile TV is radically changing character and is representing the convergence between broadcast TV and mobile services. Mobile TV of today is a service delivered to personal mobile devices, a context that enables potentials for huge developments in the services and content industry. Four main mobile TV platforms are available on the market: 1. MPVR (podcast): The video content is uploaded to the terminal through a local connection to the Internet. The general term here is Mobile Personal Video Recorder (MPVR); when used for uploading of content to ipod it is called podcasting. On this platform neither mobile nor broadcast networks are used and the local connection to the Internet can be any connection like USB, cable, wireless LAN, Bluetooth, etc. 2. Wireless IPTV: The video content is delivered to the mobile device via a wireless network. The terminal must be capable of connecting to the wireless network using, e.g., WiFi or WiMAX standards. 3. In band: The video content is delivered to the mobile terminals via mobile networks. A good example of these types of services is MobiTV in the US. 4. Converged platforms: The video content is delivered to mobile terminals through a broadcast network and the interactivity is implemented through mobile networks. This requires that broadcast reception is implemented on the mobile terminal. Examples are DVB H and DMB. Furthermore, different combinations of these platforms can be deployed. When, for example, it comes to the third platform, the mobile networks are not only deployed as return paths but also as forward paths to deliver customised video service to the users. The first platform is different from the other two in two ways: 1) It doesn t depend on the mobile/broadcast networks and 2) the content is downloaded to the terminals, while in the other platforms the content is mainly delivered to the terminals using streaming technologies. 2.1 MPVR/podcast In the MPVR case, the content of a TV programme or video service is uploaded to the terminal prior to use and is later consumed off line. The upload is performed using a local Internet 5

connection. Different MPVR standards can be used. However, ipods, termed podcasting, is the most used solution. Podcasting started with audio, where different radio programmes being uploaded to an ipod. But now the video component has also been developed so that one can upload TV programmes to an ipod and use them later. The context here is the use of mobile terminals for timeshift purposes. The main advantage of this platform is that there are no air time costs, when using video services. The disadvantage is that the terminal is not online and that time sensitive TV/video services are not suited for this type of solution. 2.2 Wireless IPTV In the Wireless IPTV (WIPTV) platforms, the video content is delivered to the mobile device via a wireless network. The terminal must be capable of connecting to the wireless network using, e.g., WiFi or WiMAX standards. There are different views about the definition of IPTV. To broadcasters, IPTV (or Broadband Television) is a new emerging platform for distributing digital television channels to home consumers using a TV screen 2. IPTV is complementary to existing satellite, cable and terrestrial systems, although in some cases it may become a vigorous competitor to them, and the WIPTV is a competing and complementary infrastructures to other mobile TV platforms. For WIPTV to be a true competitor to other mobile TV platforms the underlying wireless network must be mobile, and here the mobile WiMAX standard is a viable candidate. One of the main advantages of WIPTV is the inherent return channel in the IPTV networks, which makes it appropriate for interactivity and on demand services. 2.3 In band platform In band mobile TV means mobile TV services offered within the mobile networks. In especially the third generation mobile networks, TV and video services are seen as important revenue generators. At the moment, there are several mobile operators offering TV services within their networks. One 2 Franc Kozamernik 2006, IPTV a different Television?, European Broadcasting Union (EBU) 6

successful service provider of TV and video service to mobile platforms is the US based MobiTV, described in sub section 2.2.1. The strength of the in band platform is that only one network, the mobile network, is deployed. The mobile operator does not need to coordinate the organisation of the platform with other market actors. It is only necessary to have contract with the content providers. Another advantage (for the users at least) is that there is no need for specific terminals that have interfaces to both mobile and broadcast networks. The disadvantage compared to the other platforms is that the limited capacity in the mobile network must be shared between voice, video and other services. Hence one person s use of video services will influence the overall network resources and thereby on the other users possibilities for using mobile services. 2.2.1 Case study: MobiTV MobiTV is a US based company founded in 1999. It is a content aggregator having a range of TV channels in its package such as ABC News Now, CNN, and Fox. Furthermore, it offers cartoons, music videos, etc. In 2003, Sprint became the first mobile carrier to offer the services of MobiTV to customers. Presently, Cingular and Alltel have also become mobile carriers for MobiTV in the US, and MobiTV claims to have app. 1 million subscribers (but is by other sources reported to have only app. ½ million). Furthermore, MobiTV operates in UK through 3 and Orange, in Canada thorough Bell Canada, Rogers and TELUS Mobility, plus in other countries. It is thus a commercial operation and not a trial. The primary technology chosen is a mobile in band solution, but lately other technology solutions have also been taken up such as WiMAX and, in cooperation with AT&T, any kind of broadband access. 2.4 Converged platforms Converged platforms are essentially broadcast TV infrastructures, which are optimized for mobile reception. There are different standards on the market. The services will be viewed using mobile 7

terminals which are enabled for one of these standards, and there can be a return path for interactivity and on demand services. Broadcast networks are characterised by: a) One to many transmission, b) High capacity. The communicative networks are characterised by: a) Point to point communication, b) Low capacity. It is, however, possible to establish multicast in communicative networks and point to point in broadcast networks. In the latter case, a return path must be implemented. In general, these solutions are not efficient. The inefficiency can be illustrated by an example: If one wants to offer point to point broadband connectivity using satellite broadcast networks with a capacity of 2 Mbps per user, it will, for instance, require 3125 satellites to cover 50% of the Danish population. By combining broadcast and communicative networks (converged platforms), the services provider can split the services into different elements and transmit the elements with high capacity requirements and mass appeal within the broadcast networks. This combined platform enables service providers to develop new services including high quality video/audio components. It is also important to mention that the on demand aspect will be essential on the converged platforms, as the return channel offered by the mobile operator also can be used as a forward path to deliver individualised services to the users. Therefore, the same content, which is delivered live over the broadcast channel, can also be sold to individual users at other times. This creates several possibilities for packaging the content in different forms and delivering it to the users in specific contexts using different business models. The main advantage of the mobile TV converged platform is that video/tv is transmitted within the broadcast networks and that one person s use of video/tv services doesn t influence the use of others. This is a very important advantage for the video/tv services with mass appeal. The drawback of the converged platforms is that it needs specific mobile terminals which can connect to broadcast networks. Moreover, a main challenge with regard to this platform is to find the right coordination of market players and an efficient business model. And, frequency allocation is another challenge, especially because the frequencies which will be allocated in Europe will primarily be taken from the resources, which traditionally has been used for broadcast purposes. 8

A number of competing standards are emerging. An important standard, which is described in more details in sub section 2.3.1, is the DVB H standard. Two other important standards are the Digital Multimedia Broadcast (DMB), which is based on the European DAB standard, and MediaFLO, which is a proprietary standard developed by QUALCOMM. DMB is commonly known as the Korean standard and is mostly deployed in South Korea. However, DMB is based on the European DAB 3 standard and is standardised by ETSI and there is some interest in European countries for DMB. A major European introduction of DMB will be the trial in Germany in relation to the world cup in football in 2006. MediaFLO is a proprietary standard developed by QUALCOMM. MediaFLO is designed specifically for mobile TV purposes and is not backwards compatible with other legacy standards. This non dependence on legacy standards has been propagated as one of the strengths of the MediaFLO, as the design has only been concentrated on developing the most efficient broadcast standard for mobile terminals. 2.4.1 DVB H standard Mobility has been propagated as one of the strengths of the DVB T standard. This has, not least, been an important argument for promoters of terrestrial digital TV networks for legitimising the use of this standard even in countries where other multi channel infrastructures (cable and satellite) have been reasonably well developed. The argument is that terrestrial DVB (DVB T) in contrast to satellite and cable makes mobility and nomadic use (indoors as well as outdoors) possible. This is a valid argument as long as it concerns nomadic and mobile use of TV as we know it, which is typically used in camping vans, cars, busses and trains. However, when we discuss mobile use of personal (hand held) terminals, there are restrictions in DVB T s potentials for supporting mobility. One of the major problems is power consumption which will be handled when watching TV in a train or a bus but which will be a practical problem when using a mobile phone or PDA to watch TV. This problem has been taken care of in DVB by standardising DVB H, which is based on 3 In some recent pilots DAB IP is used. DAB IP enables mobile TV to share multiplex capacity with DAB digital radio services. For more information see, e.g., the British BT Movio pilot. 9

DVB T but reduces the power consumption and adds error correction capabilities that facilitate mobile reception. In November 2004, DVB H was already adopted as a European standard by ETSI, and when the final use and content formats are decided upon, DVB H will be ready to be launched as the often announced convergence between communicative and distributive platforms discussed on a theoretical level for the past twenty years. The DVB H transmission standard is able to combine Digital Video Broadcast with IP (Internet Protocol). By adopting IP Data Cast (IPDC) there is a possibility for transmitting 30 50 digital TV programmes, web pages or other digital content to a mobile phone by occupying only a single channel (MUX) in the frequency area that, at present, is used to transmit one analogue TV programme. The convergence between IPDC and 3G/2.5G/2G mobile communication, therefore, opens up for new market prospects and business models. DVB H transmission can, due to bigger bandwidth, secure the optimal simultaneous distribution of both broadcast and other digital content to many users, while the mobile part is used as a return channel enabling both browser based interactivity and personalisation of content and ensuring future m payment solutions, which will all influence the development of new innovative mobile services towards the future yet unknown (4G) network. A number of DVB H trials are developed in different locations: Berlin, Helsinki, Oxford, and Pittsburgh are the most extensive ones 4. 2.4.2 Case study: WalkTV in Italy In Italy, the 3G company 3 has a commercial DVB H based mobile TV operation. In 2005, 3 bought the TV broadcaster Channel 7 and thus acquired a national digital license. This has enabled 3 to launch a mobile TV service by the name of WalkTV with a wide coverage. The service started in the beginning of June 2006, and already after 5 weeks, the company announced that they had acquired 111,000 customers. This amazing growth is related to the fact that the timing was right, as 4 For more information please visit the web site if IPDCforum: www.ipdc forum.org 10

the service was launched in connection with the soccer world cup which was later won by Italy. Since then, the growth has been more modest. In end September 2006, there were app. 140,000 customers. 3. Business models In this section, central elements of the three technology solutions discussed in this paper are analysed with respect to the four pillars of business models listed in the introduction: value proposition, technology solution, cooperation platform, and financial design. 3.1 Value proposition The basic value proposition in mobile TV is that users get access to broadcast video content on their mobile terminals. Access to audio broadcast content via mobile terminals has already existed for a number of years as a relatively popular service, offered as one of the applications on mobile devices. The mobile devices have a radio receiver (FM or digital) in addition to the mobile air interface and simply function as small radios when not used for mobile voice or data communications. There are also examples of adding TV receivers to mobile phones. In Japan, most 3G terminals have an analogue TV receiver 5. Furthermore, digital TV via 3G networks has, as described, been promoted in the US, for instance 6. There are, however, serious problems in these solutions. One is a technical problem regarding the high battery requirements. The other is a price issue. When using the mobile two way network for broadcasting, the capacity of the system is quickly used up and the price of using the service is high. In addition, there is an issue concerning the interest (or lack of interest) that users may have in watching ordinary TV programmes outside normal TV time on small mobile device screens. The character, length and picture quality of TV programming is adapted to traditional TV viewing at home, and an important question is whether users are interested in the same kinds of programmes when using a mobile device as terminal. The first European WAP story warns against trying to transfer directly a specific kind of content (web pages) from one medium to another. 5 Information from Andres Arjona: Internet Protocol datacasting, Helsinki University of Technology, 2005, page 6. 6 Ibid. page 6. 11

However, it all depends. Some programmes may be well received by the users, for instance news and live sports where it is important to follow the events at the moment they are happening. It is expected that the soccer world championship this year (2006) will be important for kick starting mobile TV. Furthermore, as in so many other cases, adult content, i.e. porn, is also considered as a promising area commercially. Other types of programmes are less well suited as, for instance, movie films with traditional lengths and where the picture quality is important. Expectations among some observers are that a suitable length for many programmes for mobile TV is no more than 1 2 minutes. But it will also depend on other factors such as commuting time of users, where users with long commuting times may be more inclined to watch traditional length TV programmes. However, as a general rule, there will have to be specifically edited programmes or versions of programmes for the specific medium of mobile TV. This applies for live mobile TV (in band, converged platforms, or WIPTV), while in the case of postcasting the programmes will mostly be the ones used for traditional TV. The most important thing is, however, the personalisation of the viewing offer. Mobile terminals are in themselves personal devices and it will be important to include mobile TV in a personalised context. This involves, among other things, the use of personalised Programme Service Guides facilitating access to the personal preferences of the individual users. It involves the use of the interactive facilities of the two way channels. And, it may also involve the use of the two way channels for specific on demand services. It is in the mediation between the facilities related to the one way channels and the two way channels that the potentials for personalisation or customisation are found. It is in this mediation that the advantages of live mobile TV are obvious as compared to podcasting. 3.2 Technology solution As more extensively described in section 2 of the paper, mobile PVR or podcasting can be used to watch TV programmes in a time shifted manner. The programmes are not watched online but are downloaded on the MPVRs for later use when convenient. This is a solution that the producers of MPVRs, for instance Apple, obviously are very happy with. The broadcasters also see great potentials in this kind of solution, as their programmes will be seen by more people and especially by young people that TV broadcasters are concerned about losing as viewers. In this kind of 12

solution, it will often be traditional TV programmes that are downloaded, and even if it becomes popular and widespread, a co existence with live online mobile broadcasting is not excluded. The in band solution where the broadcast content is transmitted via the two way channel on mobile networks has the advantage that it is online and, furthermore, that there are great potentials for combinations of the one way and two way services and for interactivity and personalisation. The downside is that this solution requires much capacity in the mobile networks and that it is a very expensive solution for the users. But it could very well be a solution that mobile network operators would favour, as it would lead to much traffic on the mobile networks and, therefore, vast revenue possibilities. It is, furthermore, at solution that the mobile network operators would dominate, as they would be the natural centre in the networks of companies delivering services to end users. The Wireless IPTV (WIPTV) is very interesting as it extends the range of IPTV (also Internet TV) to the mobile devices. While in the In band and the converged platforms the mobile operator plays a central role, in the WIPV platforms alternative infrastructure operators will be very important. So the basic characteristics of the Internet, both when it comes to the development of services and also the market players can be applied to this technology solution. However the main problem for this solution is that true mobility must be implemented in the wireless access infrastructures like WiFI and WiMAX. The fourth solution uses two separate but interrelated channels. There are potentially the same possibilities for combinations of the one way and two way services and, therefore, also for interactivity and personalisation as in the in band solution. Furthermore, it does not have the same problems with heavy requirements on mobile network capacity, as the broadcast content is transmitted on separate one way channels. It is thus a technologically more efficient solution, but there may be greater problems with respect to the cooperation between the different elements in the networks of companies. As there are two separate channels, it is unclear whether the central players in this kind of solution will be the network operators or the broadcasters or a totally new type of content aggregator. Another dimension is that the equipment manufacturers have a great interest in this type of solution. If it becomes successful, there will be a great demand for new terminals and also for network equipment when implementing specific network transmitters for mobile TV. 13

Nokia, for instance, is very active in promoting the DVB H solution, while Ericsson favours the DMB solution. 3.3 Cooperation platform The MPVR solution can be very simple in the sense that users just download video programmes from the web sites of the TV broadcasters or other video providers and time shift their viewing of the programmes. This business model only involves the content providers, the content aggregators (e.g. the traditional broadcasters) and the ISPs, which the users have already paid for broadband connectivity. It may well be that new content providers producing specific content for MPVRs and new content aggregators will be established. But it is, at any rate, a business model dominated by content aggregators (traditional broadcasters or others). With respect to the in band solution, mobile operators are inserted between the content aggregators and the users. This applies also to some extent to WIPTV, however, here alternative access providers can have central role. Furthermore, there is an additional function relating to the interplay or mediation between the one way services and the two way services 7. This is a function that most probably will be seen to by the mobile operators but could in principle be taken up by a third party. Apart from this, the same players are involved in the business model as in the previous PVR solution, i.e. content providers and content aggregators. The dominating players in this type of business model are likely to be the mobile operators. The converged solution is the most complicated one with respect to business modelling. The reason is that there are two potentially dominating parties, the mobile operators and the broadcasters, and essentially two different models: Continuation of the broadcast paradigm, i.e., the further development of the TV media. Advancement of mobile services, i.e., TV as another video service in mobile platforms. 7 The different functions and market players are examined, e.g., in a paper by Andrius Butkus: New business opportunities for DVB H personalized services using CRID, paper presented at the 2005 CICT conference in Lyngby. 14

The important issue here is to see that a mobile broadcast converged platform is a materialisation of a real interactive platform. Interactive TV was launched with digital TV but, apart from a rudimentary interactivity, the very potentials of it have never been utilised. With mobile communications, the interactivity will be an inherent characteristic of the platform and, therefore, a continuation of the broadcast paradigm will not be a forward looking approach. Here the convergence paradigm will be much more efficient, as it opens up for innovative service and business development. While there is for purely technical reasons an intermediating entity (the mobile operators) between the content aggregators and the users in the in band solution, this is not necessary in the solution combining one way and two way communications. It can also, in principle, be the broadcasters that organise the interactivity via the two way channel, while the mobile operators just function as bitpipes. This solution, however, is not very likely, as the mobile operators have an interest in organising and controlling the mobile TV service, and they have the experience with the kind of customer contact that interactive services entail. With the much simpler system of over charged SMS, it is the mobile operators that charge the end users and distribute parts of the revenue to content aggregators (and subsequently content providers). They own the customers as they say in that business. Furthermore, users have become accustomed to paying for mobile content, while there is less inclination to pay broadcasters for their service. This will, most likely, lead to the dominance of the mobile operators using this technology solution, as will be discussed in the following sub section. 3.4 Financial design The main issues relating to the financial design are the costs, the revenues and the distribution of the revenues among the players in the network of companies taking part in producing and delivering the services. With respect to the cost issue, there is no doubt that the cheapest solution is MPVR. There is no cost of wireless transmission capacity and no special wireless networks to be constructed. But it is not either a solution on which much money is going to be made except for the PVR producers, first and foremost Apple. 15

The other solutions involve considerable costs for the network providers. At first, the in band solution will not necessarily require additional network investments. However, if the service ever gets to be a success, there will have to be huge investments in expanding network capacity. For the users, this is also the most costly solution, as they will pay for using the expensive two way communication channels. With regards to the WIPTV model, new network infrastructures or mobile upgrade of the current wireless infrastructures must be in place, before the consumers can use the services in mobile environment, here it is most likely that the Internet payment models will be used. In the case of the two channel system, special network transmitters will have to be mounted or satellites will have to be launched, and the users will eventually have to bear these costs. However, in the longer run, this is a more cost efficient solution than the in band solution. Regarding the revenue aspect, there is one major question, and that is what people are willing to pay for. This entails, at least, three sub questions: To what extent are users willing to pay for content? Which kinds of content are they willing to pay for? And, which are the kinds of providers that users are accustomed to pay to for content services? The first sub question has been forcefully raised by Andrew Odlyzko who in his well known piece on whether content is king 8 documents that users generally do not pay as much for content as they pay for interactive communication services. This, of course, has to do with the costs of producing and disseminating mass communication as compared to interactive communication services. But it is also important to recognise that users generally are more willing to pay for two way interactive and interpersonal communication services than for one way content services. This is an important lesson to learn for the coming mobile broadcasters. It is, indeed, a lesson that operators from the telecommunications area have had to learn when they entered the world of converging communication media thinking that they did not want to be mere bit pipes and that content was king. 8 Andrew Odlyzko: Content is not king, First Monday, vol. 6, no. 2, February 2001. 16

The fact that there is a limit to what users are prepared to pay for content and that they are more willing to pay for interpersonal and interactive services leads to the conclusion that it is important to develop the interactive and personalisation parts of mobile TV. The more development of the interactive and personalised elements, the easier it will be to charge for content based services; i.e. that the kinds of content that users are willing to pay for are the ones that have customised interfaces and include personal and interactive services. This is why the combination of the oneway channels and the two way channels is so important for the development of mobile TV. This lead to the last question regarding the kinds of providers that users are accustomed to pay for services. In the ICT business, there is a saying that it is better to launch a service as a mobile service than as an Internet or broadcasting service. The reason is that users have become accustomed to pay (even heavily) for mobile services including content based services, while they have become used to find content on the net for free and to have access to broadcasting at relatively low prices at least not prices that can pay for mobile services. In Denmark, there were, for instance, 30 million transactions via mobile terminals in 2005, while there were only 19 million transactions on the Internet 9. The 30 million mobile transactions are indeed small in amounts of money transferred and the slow start of the 3G networks illustrates that mobile network operators have difficulties in seeing the markets for mobile data services. However, the example shows that there is a willingness to pay for mobile content, and mobile broadcasters will surely try to take advantage of this. Furthermore, it shows that mobile operators probably will be in a better position to charge for mobile TV than traditional broadcasters. Last but not least, there is the distribution question, i.e. the distribution of revenue among the different contributing companies. In the SMS area, the European broadcasters presently take a considerable share on the revenue from over charged SMS in Denmark the figure is around 25% and even higher in some cases. If the service is going to lift off, it will be necessary to find revenue models, including revenue sharing models, that do not result in too high prices for end users and that allow for the content providers to have a sufficient income on their content. The most likely scenario, also in the two channel solution, is that the mobile network operators will dominate the networks of companies and be the organisations charging the end users and, therefore, owning the 9 ComputerWorld, Denmark, March 2006. 17

users. And, they will have to create sufficient room for the content providers and broadcasters to run their business too. 4. Conclusion A number of possible mobile TV platforms are discussed in the paper. The aim has been to present a technological and market based analysis to identify the potentials and the characteristics of possible business models. With regards to the technological platforms, both complementary and competitive characteristics can be identified. Different platforms can supplement and/or substitute for each other depending on the type of services and content that will be successful on the mobile TV platforms. One of the possible solutions is the off line time shifted consumption of TV and radio and other video services. However, in this paradigm the amount of services will be reduced to services where a) the timing doesn t play any role, b) the interactivity is not used. If, on the other hand, the dominant paradigm becomes consumption of live TV, where content types like news become the dominant forms, then MPVR s position in relation to other platforms will, at best, be limited to some reduced service types. However, if the mobile terminals have the necessary memory capacity, the MPVR solution will be a good complement to in band and other mobile TV platforms. In the live TV paradigm, the in band model, the WIPTV and the converged model will compete with each other. The converged platform has the in band capabilities as well as the possibilities for distributing the TV/video services to several concurrent users in a more efficient way, using the broadcast networks. From a technical point of view, the converged platform is more efficient, but it requires coordination amongst different market players and it requires new mobile terminals with broadcast interfaces. Regarding the three questions being raised in the beginning of the paper, i.e. will the mobile TV market lift off, which are the business models likely to prevail, and which are the interests of the different market players, the preliminary answers must be: 18

It is difficult, at the moment, to make very certain forecasts. However, with the initiatives already taken, it seems likely that mobile TV will be an important business area in the coming years. In spite of the problems with establishing business models including mobile network operators and broadcasters, the likely most successful solution is the converged model combining one way and two way communications. It is the most efficient solution technologically and economically if involving live TV. However, there will be a coexistence with the other solutions. The MPVR solution is an immediately good solution for broadcasters. This, however, does not mean that broadcasters have no interest in the two live solutions. Mobile operators have an immediate interest in the in band solution because of the potentially big traffic revenues. But, exactly for the same reason, this solution is not likely to be the most popular, as it is a very expensive solution for the users. The converged solution will be able to attract support from mobile operators as well as broadcasters even if a modus vivendi has to be developed. Furthermore, this solution has important support from equipment manufacturers. WIPTV enables extension of IPTV to the mobile platforms and by that it enables access to huge amount of content on the Internet. 5. References Arjona, A. (2005) Internet Protocol Datacasting Transparent Interactivity Using Different Communication Channels, Master s Thesis, Helsinki University of Technology, Finland Butkus, A. (2005) New Business Opportunities for DVB H Personalized Services Unsing CRID, paper presented at CICT conference, 2005, Lyngby, Denmark Gerard, F. Jukka, H. Erik S., and Pekka T (2006) DVB H: Digital Broadcasting Services to Handheld Devices. Proceeding of the IEEE, VOL. 94, no. 1, January 2006 Faber, E. et al (2003) Designing business models for mobile ICT services, paper presented at 16 th Bled Electronic Commerce Conference, 9 11 June 2003 19

IP datacasting Content services White paper, Sonera MediaLab, May 2003 Kornfeld M., Reamers U. (2005) DVB H, The emerging standard for mobile data communication, EBU Technical review, January 2005 Odlyzko, A. (2001) Content is not king, First Monday, vol. 6, no. 2, February 2001 Osterwalder, A. (2004) The business model ontology a proposition in a design science approach, Université de Lausanne, Ecole des hautes études commercialles Reimers, U. (2005) Multimedia Services to the Handset, DIFFUSION Online 2005/44, EBU Tadayoni R. (2004) Interactive TV in convergence perspective New opportunities for Media industries, in TV and Interactivity in Europe, edited by Fausto Colombo, 2004, pp. 69 82 20