Qualcomm cuts its losses on FLO TV : Shut down already underway

Qualcomm Inc. (QCOM) is in the process of shutting down its mobile broadcast FLO TV service. After hesitantly entering the direct-to-consumer side of the space just a couple years ago, Qualcomm is now cutting its losses on that front and is in the process of shutting down FLO TV.
Wholesale customers, such as those on AT&T Mobility (T) and Verizon Wireless (VZ), will not be immediately affected. The white-label service, which is resold by both carriers, will continue running as is for the foreseeable future. But that is likely to change down the road.
The news, which was first reported by paidContent, has now been confirmed by RCR Wireless News. There’s no doubt many in the industry will see the shutting down of FLO TV as a major loss for Qualcomm. The direct-to-consumer service was a small percentage of FLO’s overall business, but the company won’t say how many customers will be affected by the shut down. Also, job losses would be unlikely since Qualcomm tends to absorb shifts like this and moves employees around often.
Bill Stone, president of MediaFLO Technologies and FLO TV, has reportedly informed staff that operations will go dark in the next few months, or right around the beginning of 2011. In fact, the store for FLO TV is already offline.
As recently as July, Qualcomm CEO Paul Jacobs hinted at a sale of FLO TV, and since then he’s been pretty up front about his interest in either selling off all the network, technology and service or evolving the company’s use of the network as a wholesale broadcast service provider.
Now that Qualcomm is putting its costly direct-to-consumer endeavor to rest, the company wants to pursue other wholesale arrangements that could take advantage of its network and MediaFLO technology.
The San Diego-based company still has multi-billion-dollar value in the 700 MHz spectrum used for the FLO TV offering, but it’s also spent billions building out an entirely new wireless network for mobile broadcast TV, developing the technology and staffing a workforce necessary for a first-of-its-kind nationwide service.
The company has certainly invested heavily in the service, but top executives have been more openly discussing the challenges the subsidiary faces to this day. The No. 1 enemy of FLO TV was scale and it faced a lot of hurdles that contributed to that. Initially, the company faced scale challenges of the physical kind when it had to wait years, in some cases, for broadcasters to move off of spectrum it acquired. This effectively made FLO TV’s launch impossible in many top markets and left its coverage map looking like swiss cheese for far too long.
Device availability was an early problem as well. It only inked deals with two of the top four U.S. wireless carriers and the devices equipped with FLO TV chipsets were always a little behind the more popular phones and emerging class of smart phones at the time. Eventually, the company released its own standalone device, built by HTC Corp., but by that time many consumers, particularly the ones most likely attracted to always-on, broadcast TV were getting accustomed to accessing all of their content on a single device – a smart phone.
And finally, there’s price. Although Qualcomm has never released subscriber numbers, and it was admittedly handicapped on that front by all the previously mentioned challenges, pricing was most certainly one of the strongest deterrents of all for FLO TV. The company played around a little bit with price, and even offered stripped-down packages at a slightly discounted price, but the service’s cost was always in the double digits, ranging from $10 to $15 per month. Americans love their TV, and Qualcomm often reminded us of that, but most consumers simply aren’t big enough fans of the tube to plunk down that much cash for such a service.
We will update this story as we learn more.