Changing channels: Who will switch on to mobile TV?

By Nicolai Hartvig, for CNN                                                                                   February 25, 2010 12:07 a.m. EST

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(CNN) — It was a record-breaking performance that slowed taxi traffic across Seoul on Wednesday when figure-skating darling Kim Yu-na took to the ice in Vancouver at the Winter Olympic Games.

The South Korean capital’s cab drivers have for days been glued to their dashboard mobile TV screens, following the nation’s athletes at the Winter Olympics.

Since free terrestrial mobile TV, or t-DMB, was launched in South Korea in 2005, million of commuters on buses and subway trains have also watched game shows, sports, news and dramas on antenna-fitted cell phones with tilting screens or pocket-sized TV sets.

Broadcasters in the U.S. are hoping for a similar trend as they roll out the new mobile television standard ATSC-M/H. It will allow TV stations to put their live broadcasts on mobile devices with relatively little investment.

Yet in South Korea, terrestrial mobile TV has not lived up to its promise and while handset makers make money, broadcasters have yet to turn a profit.

Mobile TV is “not a failure but more of an ethnographic study” in a very mature mobile market, says Yunho Chung, the founder of the Seoul-based Veyond Partners media consultancy, who has been tracking the market for the past four-and-a-half years.

In penetration and geographic reach, mobile TV is more of a success, Chung told CNN. But it has been less successful economically, in part because the dominating terrestrial TV players didn’t invest enough.

“They were not expecting something great,” said Chung, adding it was seen as merely another platform for their usual channels in a country where broadcasting was traditionally regarded more as a public utility than a profit-making business.

South Korea’s government sees mobile TV as an investment. It put its research capability at the service of DMB and is now exporting the technology to countries interested in trying mobile TV — recently striking deals with Vietnam and Cambodia.

“Going abroad is the only solution,” said Chung.

The new American standard has a strong South Korean link, combining two systems developed by leading cell phone manufacturers Samsung and LG. The perennial rivals are now launching the first ATSC-M/H receivers in the U.S., getting a quick start in the hardware sales that are the cash cow of mobile TV.

South Koreans had bought 20 million handsets by the second quarter of 2009, double the number from the first quarter of 2008 and eleven times the number of handsets sold when mobile TV was first launched.

Without subscription fees, those numbers are the closest the country comes to counting its terrestrial users — and as the price of mobile TV technology has dropped in recent years, the feature has become more standard in cell phones, making it more difficult to gauge actual viewership.

The Korea Communications Commission (KCC) in 2008 estimated it at 1.6 percent.

Advertisers shrugged, buying mobile airtime worth just $6.2 million in 2008, with prime-time-commute advertising costing about 20 times less than its traditional television equivalent.

Tight control by the Korea Broadcast Advertising Association, which sells TV advertising time on behalf of broadcasters, has also kept prices low.

“Advertisers did not believe that mobile TV would be an effective medium,” Chung said, because mobile TV lacked a fixed environment to keep the viewers’ eyes trained on the sales pitch.

Contrast that with a study by BIA Financial for the National Association of Broadcasters, which predicts that mobile digital television advertising will provide an extra $2 billion annually for U.S. broadcasters by 2012.

The Open Mobile Video Coalition, which has worked to develop the ATSC-M/H standard and lobbied for mobile digital TV in the U.S., now counts more than 800 member stations.

Thirty stations will consumer-test the new standard in April after taking on the new technology for about $75,000 to $150,000 and a longer-term expense of “a few hundred thousand dollars,” says Dennis Wharton, the NAB’s Executive Vice President of Media Relations.

“It’s not like making the transition from analog to digital television which cost a minimum of about $2 million per station,” Wharton told CNN.

Unlike South Korea, where free mobile TV is mostly simulcasts from the country’s largest TV stations, the U.S. rollout is local programming. Wharton predicts this will draw in both viewers and advertisers, citing the “once-in-a-century” snowstorm that blanketed Washington D.C. earlier this month.

“People wanted to know whether their kids were going to school, whether their work was going to be closed,” Wharton said. “That’s the type of intensely local programming that only broadcasters can provide on these sorts of handheld devices. We’ve got a great franchise there.”

Local and premium seem to be the two business models to follow.

The 2006 Football World Cup and the 2008 Beijing Olympics were hits on South Korean mobile TV, hinting that must-see-live programming could be lucrative.

U.S. West Coast viewers are furious with NBC’s coverage of this year’s Winter Olympics because they must watch the contests with long delays — hours after news outlets have reported the results.

The premium content has so far been the core of Qualcomm’s subscription-based FLO, which delivers shows from major networks ABC, CBS, NBC and Fox, along with specialized channels like ESPN and Disney.

Mazen Chmaytelli, a Senior Director for Business Development for MediaFLO, sees the new ATSC-M/H service as a way to get mass viewership and introduce more people to mobile TV, noting that cable TV was first driven by local channels in set-top boxes.

“When they started offering that, customers started demanding premium content,” Mazen told CNN. Qualcomm is positioning FLO as a complementary hybrid specifically designed for a mobile TV experience.

“Every phone has a camera right now but a lot of people still own their own digital camera to complement it,” Mazen said.

Online viewing, video downloads and peer-to-peer file sharing remain mobile TV’s toughest competitors. In a 2009 survey by the Korea Communications Council, 70 percent of respondents said they watched re-runs of shows on the TV stations’ Web sites, a field in which Hulu and TV.com are U.S. leaders.

Only 6.9 percent said they used their cell phones to download or stream video.

South Korean broadcaster MBC announced in January it would make all its content available for free peer-to-peer sharing after a small download fee per show, expecting gains from better exposure to the mostly young peer-to-peer users.

Yesterday (15 Sep. 2009), I got very excited from early morning. It was due to a TMT related conference held in Seoul, Korea. The conference was officially called ‘Telefonica Global Project Conference’, organized by KOTRA (Korea Trade-Investment Promotion Agency).

[Global Collaboration between Telefonica and KOTRA]

Telefonica (if you don’t know this company, just Google it!) in fact came to Korea to find potential business partners in Korea. The conference was structured mainly in two sessions: 1) Understanding of Telefonica (the company, its global business, and technology/service); 2) Private meetings between Telefonica and potential Korean partners. Since Veyond Partners is not mobile service provider, we attended the first session only.

Kim Faura, the CEO of Telefonica, Cataluna, gave presentation on ‘Where does Telefonica come from’, ‘Where Telefonica is now’, and ‘How Telefonica is evolving’ to give big picture of the company and its strategy. Followed by this, Dr. Gerard Mula, Area Manager for Internet and Multimedia Technologies at Telefonica I+D (R&D center). He focused more on ‘How they innovate their technology and services’, ‘How they collaborate with global partners’ and ‘What areas they want to collaborate with potential Korean partners’.

[Presentation by Kim Faura]

They seem to visit Korea because Korea’s mobile tech companies have so advanced technologies and services. They are basically highly flexible in terms of business partnership area but their hypothetical fields of interests include mobile 3D video, mobile contents download, User profiling services, mobile advertisements, mobile social network, u-Health, etc.

There were less than 100 attendants in the conference. But next conference in 10th November by KOTRA seemed even more interesting. The ambitious conference was called ‘Global Mobile Vision 2009’ (www.globalmobilevision.com) Next time, I expect to meet not only Telefonica but also many other global companies (113 companies) such as T-Mobile, Sprint, NTT DoCoMo, Nokia, etc in one place.

I am also going to post the summary of interview with Kim Faura with one of Korea’s leading newspapers soon.

There is a swedish saying was that goes, ” Worry gives a small thing a big shadow”. This saying rings true, considering the recent cyberattacks on Korea. The current shadow is quite ominous despite no serious harm nor data-hacking was committed, but fear of an hidden North Korean aggression is overwhelming . However, Korea can seize this mishap to increase population’s level of awareness to cybersecurity.

As one of the most wired country of the world, Korea is exposed to an unprecedented extent. 93% of households are connected to Internet through HighSpeed Broadband, with an average PCs per 1000 population of 442. According to public statements of country’s biggest online security firm executive, the digital convergence of Korea carries even more threats : “Televisions and phones today are connected to the network and are designed with the same structure as computers, so you have to say they are potential targets”. Thus, a smartphone may become a Zombie and be included into Botnets, the vast group of infected PCs from where DDOS are launched.

The country is poorly prepared to ever growing cyberattack scale. By nature, the average customers are not inclined to spend money into expensive antivirus software. The government itself is reluctant to do so; budget for cybersecurity is 2 to 3 percents of IT-related amount.
Even financial organizations reacts only when threaten. Banks are now equipped since a cyberattack in February. It’s not the case for all others financial organizations : “Only a handful of major securities firms are equipped with systems to overcome DDoS attacks, and the rest are known to be vulnerable to such cyber terrorist attack”, leaked anonymously security firm source.

[Korea’s No.1 Anti-virus software]

Awareness is increasing . The government now engages structural plans to enable to separate local governmental network with civilian Internet if needed. The Ministry of Strategy and Finance will provide a cybersecurity center for financial and economical institutions within this year. More importantly, companies now purchase defense systems for their self protection. Sales reports record a boom for this range of products, pictured as a “flood” by an official of a security lab adding “After these attacks, DDoS blocking programs will see a rise in popularity”.

Korean situation is a warning for all countries walking toward digital age and ubiquitous society. One must prepare himself before danger is coming, not after, and the first step is self-awareness