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Qualcomm Teams With Verizon Wireless: TV Service to Launch Next Year

Posted on: Friday, 2 December 2005, 09:00 CST

By Kathryn Balint, The San Diego Union-Tribune

Dec. 2--Qualcomm announced yesterday that Verizon Wireless is the first wireless carrier to agree to offer the San Diego technology giant's broadcast television service to its cell phone subscribers.

Verizon, the country's No. 2 wireless carrier, expects to launch Qualcomm's MediaFLO mobile-TV service late next year in about half of the markets where it provides cell phone service. It did not identify specific markets.

Qualcomm, which makes chips that run cell phones and develops wireless technology, is spending $800 million on its MediaFLO technology on the assumption that people will want to watch television clips, including sports highlights and news, on their cell phones.

The technology would be capable of broadcasting 20 live TV channels 24 hours a day from a few large, central towers in each city to hundreds of thousands of cell phones at once. The system can send as many as 13 additional hours of video each day that will be stored on cell phones and updated regularly.

Verizon Wireless already offers a video service, called Vcast. But that service delivers video clips to each mobile phone individually over the cellular network.

By contrast, MediaFLO technology works more like TV. It can broadcast television shows to numerous cell phones at once. That could save wireless companies money because it would free up their cellular networks for more voice calls.

MediaFLO is competing with other technologies, such as digital video broadcast-handheld (DVB-H), which is backed by longtime Qualcomm rival Nokia.

The deal with Verizon Wireless represents a victory for Qualcomm.

"It's confirmation of the MediaFLO technology," said Jeff Lorbeck, senior vice president and general manager of Qualcomm's MediaFLO division. "It's extremely significant to us. Even in the face of discussions with DVB-H operators, Verizon chose to go with the MediaFLO network."

Verizon Wireless spokesman Ken Muche said the company wanted to give customers more video offerings.

"We want to give more choice to people so they can decide how they want to view the content," Muche said.

Qualcomm and Verizon Wireless did not disclose the terms of the deal.

However, Verizon Wireless is paying a wholesale price to Qualcomm per subscriber, Lorbeck said. Verizon has not revealed how much it will charge its customers for the service.

Michael King, a San Diego-based analyst for the Gartner market research firm, said Verizon's existing video service has not generated much interest by cell phone users.

"It's been pretty disappointing for Verizon," he said. "You've got to wonder how much effort and time and dollars they're really going to put into yet another video product. But, to be fair, I doubt it's going to cost them much."

Qualcomm is paying for the infrastructure needed to launch the network.

Two years ago, it bought Channel 55 in 80 percent of the markets throughout the country for $38 million in an auction of airwaves by the federal government. It purchased the airwaves for Channel 55 in the rest of the country through private transactions.

Now, Qualcomm is installing 50,000-watt transmitters, the equivalent of those needed for a small TV station and thousands of times more powerful than a cellular transmitter, in cities throughout the country.

In San Diego County, the transmitters are atop Black Mountain, San Miguel Mountain and one of Qualcomm's buildings in Sorrento Valley. Qualcomm said they were used to test the MediaFLO service on cell phones.

King, the analyst, is not convinced that wireless subscribers in the United States will want to watch TV on cell phones.

"This is all predicated on the assumption that consumers want video on their handsets," King said. "That's still a big question mark in my mind. It's a gamble."

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Copyright (c) 2005, The San Diego Union-Tribune

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QCOM, VZ, VOD,

Source: The San Diego Union-Tribune

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