Like most things in wireless, the mobile TV contest boils down to devices, networks and—perhaps most importantly—spectrum. As such, two U.S. companies are racing to build mobile TV networks using the same transmission standard (DVB-H), and both trumpet their position as the competitive high ground.
The first and best-known competitor in the DVB-H race is Modeo L.L.C., a subsidiary of tower giant Crown Castle International Corp. The company plans to build out 30 markets by the end of next year using 5 megahertz in the 1600 MHz band. Crown Castle won the spectrum at a Federal Communications Commission auction in 2003.
Already, Modeo has completed a trial run of its offering in Pittsburgh, Crown Castle’s home base. Further, the company has promised to have a commercial mobile TV network up and running in New York City by the end of this year. According to Crown Castle’s Securities and Exchange Commission filings, Modeo spent about $13.4 million on the New York buildout in the most recent quarter. Also in the quarter, Crown Castle reported a loss of $2.7 million due to Modeo’s operating costs.
But even as Modeo strides toward its DVB-H goal—comfortable with support from wireless giants Nokia Corp. and Texas Instruments Inc.—the company faces an unexpected and surprising frustration: Hiwire.
Announced in April, Hiwire is Aloha Partners’ mobile TV effort. Coming out of left field, Hiwire owns a valuable 12 megahertz of spectrum in the 700 MHz band that it cobbled together through both auctions and acquisitions.
Hiwire chief executive Charles Townsend, a former head of marketing for soft-drink vendor PepsiCo Inc., founded Aloha in 2002 for the express purpose of acquiring spectrum in the FCC’s 700 MHz auction. So far, Townsend has convinced Aloha’s investors to inject a combined total of $100 million into the company, with the money going toward auction bids, technology trials and spectrum acquisitions. Townsend said that, during the past few years, Aloha has acquired 700 MHz spectrum from Cavalier Wireless, Datacomm and David Gates, a man who won spectrum in an FCC auction. Townsend declined to provide the financial details of the acquisitions.
Now,Townsend has convinced his investors—whom he declined to name—to put their money toward a mobile TV effort: Hiwire.
“I just think (mobile TV) is a huge business, and will be able to support a multitude of players,” Townsend said.
Hiwire is gearing up for a DVB-H trial in Las Vegas starting in the first quarter of next year. The company initially had hoped to launch the trial this fall, but “the equipment wasn’t quite ready yet,” Townsend said. He said Hiwire has lined up handset and infrastructure vendors to participate in the Las Vegas trial, but he declined to name them.
Although Hiwire has no announced carrier partner to sell its mobile TV offering, initial indications point to T-Mobile USA Inc. as a possible collaborator. According to a research note from Kagan Research L.L.C., Aloha has a deal with T-Mobile USA for “unspecified technical trials.”
“If one of the national carriers decided to partner with us … then we will start to deploy (mobile TV) nationwide,” Townsend said.
Hiwire boasts that its spectrum position in the 700 MHz band is superior to Modeo’s 1600 MHz spectrum holdings. Due to the nature of the lower 700 MHz band, transmissions can travel much further using less power than those in higher bands. However, Modeo counters that it is the only mobile TV vendor with clear, uncluttered spectrum in key markets like New York, Los Angeles and Chicago.
Despite Hiwire’s high-flying mobile TV plans—which include a slick PowerPoint presentation and research into consumers’ appetite for mobile TV—the company is still hedging its bets. Townsend said Hiwire is also running a CDMA EV-DO technology trial in Phoenix. Using equipment from Lucent Technologies Inc. and Hiwire’s 700 MHz spectrum, the Phoenix fire department is testing the technology. However, Townsend made clear that “our top priority is really mobile TV.”
Interestingly, some analysts have suggested that the only way for Modeo and Hiwire to effectively compete against mobile TV rival Qualcomm Inc. is to team up. However, a Modeo spokesman seemed to dismiss that idea by praising the technical and economic merits of the company’s offering. Townsend similarly shelved any notion of a team-up, explaining that most of Crown Castle’s cellular towers are 200 feet high and Hiwire’s network will require broadcast towers at least 600 feet high.
Modeo has grandiose plans of its own—plans that go above and beyond that of partnering with a cellular carrier. Although the company declined to discuss its business plans, it did say that it had publicly demonstrated its service over “non-phone” devices including personal digital assistants and laptops. The company said there is a “complementary market” for a variety of mobile TV devices in addition to cell phones.
Under such a scenario, Modeo could sell a DVB-H PC card to laptop owners, thereby expanding its customer base beyond cell-phone owners.
But it also seems that Modeo’s plans may involve a straight-to-consumer cell-phone play. Earlier this year, the company unveiled a Modeo-branded Windows Mobile smart phone built by Taiwanese vendor HTC. The GSM device could be sold unlocked, meaning that users could purchase the device straight from Modeo and then add a SIM card to access voice and data services from any GSM carrier, such as Cingular Wireless L.L.C. or T-Mobile USA Inc.
Modeo declined to comment on its business plans for the HTC phone.
Hiwire and Modeo join a growing number of companies around the world playing with DVB-H technology. Carriers in Finland, France, Germany, Italy, Spain and elsewhere are either testing DVB-H or building commercial networks based on the technology. And major handset vendors including Nokia and Motorola Inc. have promised to support the transmission standard in handsets.
However, despite all the activity in the mobile TV market, a larger question hovers over the entire issue: Will consumers pay to watch TV on devices outside of their living room? The answer is unclear.
