U.S. Mobile TV adoption strategy: is it consumer choice?
Mobile TV is fast becoming a technology that will compliment the mobile data services already available on cell phones today. There are several competing technology standards in the world: Digital Multimedia Broadcasting (DMB) in Korea, Digital Video Broadcasting (DVB) in Europe, Integrated Services Digital Broadcasting (ISDB) in Japan, China Mobile Multimedia Broadcasting (CMMB) in China, and MediaFLO (Forward Link Only) in U.S. Among them, Korea began its mobile TV services in 2005 and the size of their market is the largest in terms of number of subscribers (19 million subscribers in 2009).
There are two main technologies in the development of mobile TV. One of them is terrestrial technology, which uses existing cellular/broadcasting networks for mobile broadcasting, and the other is satellite technology. DMB in Korea uses both technologies: TDMB (terrestrial) and S-DMB (satellite). S-DMB uses a Ku-band (13.824-13.849 GHz. for uplink and 12.214-12.239 GHz for downlink) and an S-band (2.605-2.655 GHz from satellite and gap-filler to a mobile TV cellular phone), while T-DMB deploys a broadcasting network employing unused VHF channels (174-216 MHz). DVB in Europe has also two platforms for its mobile TV service, DVB-T (terrestrial) and DVB-SH (satellite). In July 2007, The European Commission endorsed a Nokia-backed mobile TV standard called DVB-H, stating that Europe needed to pick one technology over others and promised to look at ways to mandate its use. Japan was the first country to broadcast TV to automobiles through a satellite. Its terrestrial version (ISDB-T) started its service in 2006 under the name of 1Seg (One Seg). Within the United States Market, there are two competing technologies, MediaFLO (Forward Link Only) and DVB-H. MediaFLO is Qualcomm's new technology to broadcast video to cellular phones. The U.S. major cellular network operators are only now positioning themselves for the inevitable battle that will ensue over the lucrative business opportunities that Mobile TV will provide.
BACKGROUND OF MOBILE TV TECHNOLOGIES
As we mentioned earlier, terrestrial and satellite are the two platforms for mobile TV technology. T-DMB, DVB-H, and MediaFLO are cellular/broadcasting network based terrestrial technologies and S-DMB, DVB-SH, and CMMB are satellite technologies. There are pros and cons of each technology. While satellite Mobile TV has a large coverage area, like nationwide, terrestrial Mobile TV has a regional, local coverage. Once the satellite for Mobile TV is launched, the Mobile TV service is available in all nations where the satellite signal reaches. But terrestrial Mobile TV is deployed city by city, where a cellular/broadcasting network infrastructure already exists. Usually, the satellite Mobile TV uses higher frequencies (S-band, 2.6 GHz) than the terrestrial Mobile TV (MediaFLO, 716-722 MHz, T-DMB 174-216 MHz). Even if DMB has been successful in Korea and ISDB-T is a major standard in Japan, DVB-H and MediaFLO are considered to be the two main competing technologies worldwide. DVB-H is the de facto standard in Europe and two of the largest wireless carriers in the US (Verizon Wireless and AT&T Mobile) chose MediaFLO as their Mobile TV technology platform. In 2007, Verizon Wireless just started Mobile TV service in the limited number of U.S. cities under the brand name of VCAST, which is a combined mobile TV service with a 3G video streaming. AT&T is planning to launch a similar service.
Technology Adoption for U.S. Mobile TV
Technology adoption by markets is a complex process that depends on factors that may or may not be under the control of a technology's advocates. The technology adoption process in mobile television is not driven by such a battle. Different standards can coexist, as is the case with 2G and 3G mobile systems in the US and the DMB providers in Korea, because the end user cares about the technology only to the extent that it affects his or her value proposition in purchasing the service (i.e., cost, quality, viewing experience, etc.). In these markets, it is possible for providers to switch from one technology to another (as was done by AT&T Mobile and Bell South Mobile when they switched from TDMA to GSM several years ago). The adoption of mobile TV technology is therefore driven by making a compelling value proposition to end users rather than the choice of the standard.
The cost drivers for mobile services are determined by spectrum costs, equipment costs, engineering costs, media costs, and marketing costs. The media costs consist of content acquisition costs and the costs of reformatting and packaging the content for mobile broadcasting. The adoption of a single standard can drive down equipment cost (both for the consumers and the service providers) and engineering costs somewhat, but the real cost factor is in the media costs because it is ongoing as opposed to up-front. If the adoption of a single standard allows media to be packaged for mobile TV once, then the costs are shared by all providers, reducing the cost basis.
In cellular technology, the US experienced a technology competition between European based technology developers, Nokia and Ericsson and U.S. based Qualcom. From 2G cellular technology to 2.5G and 3G, both parties have been in head-to-head competition. In mobile TV technology, there has been a service using an existing 3G unicast technology, which sends a video streaming signal over a 3G channel. This technology is affordable when the number of mobile TV users is few. The United States followed European's lead in adopting the open standard GSM for its cellular phone network. This is primarily because the large network operator AT&T used GSM as its technology. But in the Mobile TV situation, AT&T Mobile has surprisingly announced to go with the proprietary Qualcomm technology, MediaFLO. It is described as using a broadcast service known as the FLO network to provide shared content while also taking advantage of the 3G network to provide unique content to subscribers. Since Verizon Wireless took CDMA and CDMA2000 developed by Qualcom as 2G and 3G mobile cellular service standards, it is natural that Verizon Wireless chose MediaFLO (by Qualcom) as its Mobile TV standard. Since AT&T Mobile is committed to using the MediaFLO technology, it would probably be a safe assumption to believe that AT&T Mobile feels like MediaFLO technology is superior to the DVB-H technology or it could reduce the media cost of mobile TV service from the overall value chain systems.
User's Perception IN United States
The authors conducted a survey about potential demand for mobile TV service in the U.S. The effective respondents included professionals (non-student), upper division undergraduate students (junior and senior), and professionals with a status of graduate student, who reside in a small city (Meridian, Mississippi, population around 40,000) or a metro area (San Antonio, Texas, population over 1,000,000) of the southern region of the United States. Distribution of the respondents is that 66% are in their twenties. The following table shows distribution of respondent's age and job status.
In comparison to the RBC Capital Market's survey about Mobile TV, three quarters of their respondents in North America replied that they had no interest in watching TV using cellular phones, and 69% said that they do not see themselves using cellular phones for musical entertainment. However, since the respondents in our survey are relatively younger, their interests and propensity to use technology are remarkably different. A new media service like Mobile TV usually targets a younger generation which historically has shown to be more amenable to using new technologies. In contrast more than half of the respondents in our survey (refer to Table 2) answered that they are interested in watching TV on their cell phone, whether it is a terrestrial based or satellite based mobile TV service. We found that the younger the respondents, the higher number for Mobile TV.
Since 84.1% of the student only group respondents are in their twenties, which is a much higher percentage of twenties than in the other groups, the student only group's Mobile TV preference is higher than those of other groups (Table 3) and there is no significant difference of Mobile TV preference between small city and metro area (Table 4).
Table 5 and table 6 show respondents' willingness-to-pay for a Mobile TV enabled cellular phone and a monthly Mobile TV subscription rate. More than 50% of respondents are willing to pay $100 for a Mobile TV enabled cellular phone and $10-$20 per month for the Mobile TV service. There is no significant difference in willingness-to-pay between students and professionals. The importance of this finding is that students and professionals face many of the same environmental factors but also have many of the same goals. Theoretically, the primary factor would be busy lifestyle and the goal would be to find a balance between work and pleasure. In table 7, there is a list of content categories respondents want to watch in their cellular phone. News and weather are the top two favorite contents and entertainment, movie, and music video are the next group of contents.
Further research in this area is justified in that it could address the issues of environmental factors and group goals in more detail. Speculatively, it could be because of busy lifestyles, or it is the way this generation has found to stay connected with their world. The entertainment value just adds convenience and utility to a tool they are already using daily.
According to the Cellular Telecommunications & Internet Association's (CTIA) wireless industry, at the time of June 2010, the estimated number of U.S. mobile subscribers was over 293 millions, which means a penetration ratio of mobile service is 97.6% with an assumption of 300 million U.S. population. This means that the wireless voice market is almost saturated and wireless carriers are trying to extend their services to new areas such as 3G and/or other additional value-added services like Mobile TV.
From a broadcasting perspective, the Mobile TV market in the United States is only in its infancy. However, the technology is being developed behind the scences to the point that Mobile TV could be a common house-hold word in less than five years. The U.S. will benefit from the improvements made in rest-of-world (ROW) markets. This will accelerate the adoption process so that once the crtical mass decision point is reached, the roll out of the appropriate technology will be very quick and costs should be even more competitive. The technology demanded by ROW is definitely growing in momentum. The competitive forces that will shape the Mobile TV market allows for a profitable industry given that there are few/weak competitive forces in the supplier's bargaining power and low threats from new entrants in the market. The steps along the value chain still need to be developed within the United States in order to meet the demands of potential Mobile TV customers.
New services like mobile TV require significant investment, flexibility in technology choice, and innovative management skills. Since mobile TV represents a convergence in technologies between cellular phone and mobile TV, it will also create market niches (pay per view, etc.) and challenges (competing technologies and services). Through the survey of potential customers taken from different regions of the country, we found that the average price consumers are willing-to-pay for mobile TV is close to $25. Interestingly, in our survey we found there was no difference between student and professional groups. Based on the output of the survey, U.S. consumers are interested in the Mobile TV service. Value to both professionals and students is similar to what one would expect to pay for the most basic cable or home-based satellite service.
The cellular television mobile service industry is complex. These complexities span technical, logistical, social, and cultural factors. Cooperation is essential among the cellular and network service providers, service developers, and equipment makers, to collaborate with governments, policy makers, and users if they are to create a growth market in the mobile TV telecommunication industry in America. History is replete with examples of other industries trying to work with content providers and this one difficulty could determine the long term success or failure of the cellular TV concept. The authors also believe that the findings from this research contribute towards the understanding of the pricing and distribution model for the rollout to the American audience.
Lee, S. and Kwak, D., (2005), TV in Your Cell Phone: The Introduction of Digital Multimedia Broadcasting (DMB) in Korea, Proceeding of the TPRC 2005 conference.
Shim, J., Shin, S., and Weiss, M, (2007) Digital Multimedia Broadcasting (DMB): Standards, Competition, and Regulation in South Korea, Journal of Information Technology Theory and Application, Vol. 8, No. 2, pp 69-81.
Seungjae Shin, Mississippi State University, Meridian
Harold D. White, Mississippi State University, Meridian
Table 1: Distribution of Respondent's Age with Job Status Job Status 20-29 30-39 40-49 50~ Total Student Only 95 12 5 1 113 Student+ Professional 53 11 10 2 76 Professional Only 12 9 17 15 53 Total 160 32 32 18 242 Table 2: Age group and Interest in Mobile TV Age Group No. of Terrestrial Satellite Based Respondent Based Mobile TV Mobile TV 20-29 160 59.4% 56.3% 30-39 32 46.9% 50.0% 40-49 32 43.8% 46.9% 50~ 18 17.8% 22.2% Total 242 52.5% 51.7% Table 3: Mobile TV Preference with Job Status Job Terrestrial Satellite Based Based Mobile TV Mobile TV Student Only 62.7 63.9 Student + Professional 40.8 40.8 Professional Only 44.9 42.9 Table 4: Mobile TV Preference with a Region Job Terrestrial Satellite Based Based Mobile TV Mobile TV Small City .516 .485 Metro Area .563 .449 Table 5: Distribution for Willingness-to-pay for Mobile TV cellular phone Price $100 $200 $300 $400 $500 $600 Mean Percentage 51% 26% 16% 3% 2% 1% $184 Table 6: Distribution for Willingness-to-pay for Mobile TV Monthly Service Price $10 $20 $30 $40 $50 $60 Mean Percentage 32% 26% 21% 9% 5% 6% $25 Table 7: Mobile TV Content Preference Contents News Weather Entertainment Movie Music Video Percentage 65.8% 49.4% 39.7% 36.2% 30.7% Contents Sports Education Drama Shopping Adult Percentage 28.4% 12.8% 12.5% 6.2% 3.5%
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|Author:||Shin, Seungjae; White, Harold D.|
|Publication:||Academy of Information and Management Sciences Journal|
|Date:||Jan 1, 2012|
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