MDTV now appears unlikely to be free

For the past few years, I’ve been predicting that Mobile Digital Television (MDTV) would be the salvation of broadcasters, but I’m beginning to have my doubts. The broadcast standard has been agreed upon and portable devices are being made with the chip, but there are things taking place behind-the-scenes (or not taking place behind-the-scenes) that threaten the main competitive advantage that broadcasters would have in the MDTV space — that it would be free.

According to a new study from market research firm iSuppli that’s being reported today in Multichannel News, 17.6 million television systems for automobiles will ship in 2015, up from 8.2 million this year. That would seem to be great news for the MDTV future, but there’s a major competitor standing in the way.

For broadcasters, the major mobile TV play is being led by the Open Mobile Video Coalition (OMVC), which represents more than 800 local TV stations that plan to use the ATSC’s mobile digital TV broadcasting standard. The OMVC has lined up device manufacturers that plan to sell products that work with the DTV specification, and the group plans to launch a customer trial in Washington, D.C., in 2010.

Also hoping to crack the market is FLO TV, Qualcomm’s mobile television subsidiary, which has a deal with Audiovox to offer an in-vehicle entertainment system delivering live TV service through more than 12,000 new car dealers in 85 markets. FLO TV is currently available through AT&T Wireless and Verizon Wireless and via a Qualcomm-developed handheld device with a lineup of more than a dozen live channels, including CNBC, ABC Mobile, Disney Channel, Fox Mobile, MTV, NBC2go and Nickelodeon.

The difference between FLO TV and the OMVC is that the latter is over-the-air via bandwidth assigned by the FCC and, therefore, free. Verizon’s V‑Cast, on the other hand, costs $14.99 a month. So far so good for broadcasters, right?

However, The AP is reporting today that the whole idea of free TV is up for grabs, as the networks that provide the programming for broadcasters are increasingly looking for a revenue stream besides advertising.

That will play out in living rooms across the country. The changes could mean higher cable or satellite TV bills, as the networks and local stations squeeze more fees from pay-TV providers such as Comcast and DirecTV for the right to show broadcast TV channels in their lineups. The networks might even ditch free broadcast signals in the next few years. Instead, they could operate as cable channels — a move that could spell the end of free TV as Americans have known it since the 1940s.

“Good programing is expensive,” Rupert Murdoch, whose News Corp. owns Fox, told a shareholder meeting this fall. “It can no longer be supported solely by advertising revenues.”

So if the people who create the programs want subscriber fees, that will certainly drift over to MDTV, and broadcasters will either have to come up with a system that pays for programming — and charge consumers for it — or they’ll turn the whole mobile television space over to companies like FLO TV. Perhaps there will be a combination, but it’s seeming less and less likely that broadcasters will be able to arrange programming combinations that will appeal to “free” MDTV. Programming wants to be paid, and if what Murdoch says is true, advertising won’t fill the bill.

If, however, broadcasters could persuade their networks to provide cable and other programming that would be broadcast for free via MDTV, this would seriously threaten the business model of the paid (such as in “cable”) portable TV industry and give local broadcasters a much needed breath of fresh air. I think advertisers would love it, and everybody would win. However, the more people like Murdoch bitch about needing that “second” revenue stream, the more doubtful a free MDTV with quality programming becomes.

We need to continue to watch this carefully, for the future of local broadcasting may be at stake.

Comments

  1. Terry,

    Don’t you think you will end up with a mix of free and premium (paid)? Based on how broadcasters approach things now, it would seem most publishers will start out with free to increase adoption and then experiment with various paid models as the audience grows. It seems like the most likely scenario for publishers online now and for the MDTV signals, no?

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