A message from Qualcomm to Broadcasters

MediaFloQualcomm’s decision to shutter its once-vaunted mobile television product, FLO TV (a.k.a. MediaFlo), ought to send a clear message to the broadcast industry that subscriber fees for Mobile Digital Television (MDTV) are perhaps not the right way to go. Staci Kramer of PaidContent.org reported Monday that the service will “wind down by the end of the year.”

The company is in discussions with AT&T and Verizon about the future of its white-label wholesale service, which continues for now and includes the majority of its TV customers.

Qualcomm CEO Paul Jacobs acknowledged the consumer service’s problems earlier this summer and suggested the company might be better off focusing on using its spectrum and network to distribute other content. This shift places the emphasis on leasing the network, not programming for it.

According to Ms. Kramer, that spectrum is worth $2 billion, so don’t feel sorry for Qualcomm.

That may be comforting when it comes to dollars overall but it doesn’t make FLO TV less of a failure or MediaFlo so far less disappointing. Founded in 2004, the costly mobile TV venture attracted Verizon and AT&T as distribution partners but has been hampered by limited availability on devices and an inability to achieve full distribution. It launched direct-to-consumer FLO TV in 2008 but the marketing message was muddy and consumers weren’t as interested as the company thought in acquiring a separate device and paying a subscription for mobile TV. (emphasis mine)

What people want with their portable device is unlimited texting and unlimited Internet. They’ll buy apps and pay for services like GPS Navigation, but, as Staci says, consumers aren’t interested in paying $14.99 a month for mobile TV. The one thing that Jacobs said might work is live sports, which brings me back to MDTV.

TV broadcast directly to your portable deviceRight now, the broadcast industry is split over whether MDTV should be subscription or free (advertiser-supported). I have been saying it should be free since I first heard of the concept, because it is the only way that local broadcasters can assume a role of relevancy in the new world. Some broadcast groups, however, want that “second revenue stream” as provided by subscriptions, but this will kill it. Firstly, any subscription fees would be split with either the phone manufacturer or the carrier or both. Secondly, there’s no demand for it. None. But portable, advertiser-supported broadcasting could be significant. It would garner a new type of video advertising, because, well, as Nexstar’s Perry Sook said last week at the Borrell mobile conference, if your portable device becomes your wallet (it will), then “your wallet will be in your TV, and your TV will be in your wallet.”

Broadcasters should accept the MediaFlo message for what it is — clear directions for the future of MDTV. Think about it. A broadcasting license would actually mean something again, because it would restore scarcity to an important facet of the digital video distribution system. We must get off the subscription bandwagon and unify with a “free” model.

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