Tuesday, December 07, 2010

Why Telecom Operators Should Love, Not Loathe Broadcasting

A lot of telecom operators are afraid, or seem to be afraid of broadcasting as a technology. They fear losing control of their users who may then use another network than the telcos own telecom networks (i.e. GPRS, 3G or 4G) for access to radio and TV.

At the same time the telecom operators experience a big challenge. Their telecom networks are filling up. That means that existing customers will get lower bandwidths and worse quality of service. Sometimes they are not even be able to make a phone call through the network. And a lot of potential new customers will certainly pick up on that, and remain just that, potential customers.

One way of improving the situation is by improving the telecom network. Of course there is always a new solution that will solve everything just around the corner. As we have seen over and over again. We started with GSM that could only do phone calls and text messages (plus very slow line switched WAP). Then GPRS came about (opened up for packet switching and increased bandwidths). EDGE was a slight improvement before 3G came about to save the world (despite costing millions or billions in licences, depending on the country). And now LTE is the new kid in town.

LTE stands for Long Term Evolution and will come in various versions. Of course, this is yet another three letter abbreviation to keep track of, so they prefer to call it 4G in order to easily make people understand that it is the next thing after 3G, only better. The problem is that it is not quite fast enough to be legally labeled 4G, something that creates a marketing problem. 3.9G doesn’t quite sound as fast, nor as new, groundbreaking or sexy.

I have earlier earlier covered some problems with LTE under point 7 in the blog post “Why the Internet Won’t Solve Everything”. LTE is very expensive, has far lower bandwidths than what is being marketed (only the theoretical capacity is mentioned) and not suited for broadcasting-like content and services.

Another way of improving the situation is by moving some of the traffic to another network. And what would then be better than moving the most traffic consuming traffic of them all, capacity hungry streaming of radio and TV? ¨

Broadcasting can save the day
A broadcasting technology such as DMB (which also includes DAB and DAB+, making all three compatible) can take a heavy load off telecom networks without any cost to the telecom operator. All live consumption of radio and TV can be moved from the telecom networks, thus making them faster for other kinds of Internet usage via your phone or mobile broadband enabled computer or tablet. That could enhance the experience of those engaged in e-mail usage, social network updates, news consumption, on demand viewing of TV shows, gaming and internet banking. And by introducing interactive touch screen services you can initiate a lot of potentially revenue driving activities from DMB to the telecom networks. A few examples (please feel free to add more ideas through comments):

  • Touch screen shopping (touch the sun glasses of Johnny Depp, change the colour and buy them, 199 USD)
  • Voting (vote for your favourite Idol singer, 0.99USD).
  • Social media (like or dislike programmes and share your opinion with your friends, 0,05USD).
  • On demand programming (chose to watch the next episode of your favourite show (via 3G/4G) after an exciting broadcasted cliffhanger, 3USD).
  • Touch the screen while listening to radio (DAB/DAB+) to see the cover, read news about the artist and to buy and download the song or the album 0,99/9,99USD)
You would think that removing data traffic from the network, making sure that every customer watch and use the screen several additional minutes extra every day and increasing chances of consumer spending would be very appealing to most telecom operators. But up until recently there has not been a lot of interest from telecom operators to go down the broadcasting route (with the exception of DVB-H, a network which they owned and controlled). There are a few exceptions which I will come back to.

Then and now 
Two years ago I was Director of New Media Developments at NRK (Norwegian Broadcasting Corporation) and we were in close talks with the Norwegian telecom operators. Telenor, which is the biggest, was particulary keen on mobile TV via 3G. So much so that they almost demanded that we gave them all our content so that they could make money via their 3G network. I have exemplified this below through their CEO, Mr. Jon Fredrik Baksaas (who we didn’t talk directly to).

Only two years later (in 2010), the message seemed to have changed quite a lot, again as exemplified through Mr. Baksaas below. The 3G networks were struggling and Telenor had to do something. They are now only involved in mobile TV to a limited degree.

The main challenge
The biggest problem is currently the lack of mobile phones with built in DMB. In Korea almost 40 million devices have been sold, most of them phones from famous brands (Samsung, LG, Motorola), but none of these players have yet entered other markets with DMB phones. This is strange, and a lost opportunity for them to eat market shares. After all, millions of people live in coverage areas of DMB, DAB and DAB+ and it would be convenient and natural for them to have access to their preferred radio and TV stations in the one device they carry around. I believe that the first major player to launch a DMB phone outside Korea will seriously benefit, and lead the way for others. The question is just who it is going to be. Will Apple again have to lead the way and have everyone else chasing them, or will a competitor make the table change?

We will soon see which brand will be first thanks to the growth of DMB, DAB and DAB+ , the fact that telecom operator will benefit from this and that consumers wish and demand such services in their phones (and tablets).

The DMB, DAB and DAB+ market worldwide is increasing on four continents (Europe, Asia, Oceania and Africa), and we are, through IDAG (International DMB Advancement Group), involved in discussions with telecom operators as well as phone and tablet manufacturers internationally to ensure better terminal availability. To the benefit of broadcasters AND telecom operators (and of course the manufacturers themselves).

Network Norway
Norwegian Mobile TV Corporation (NMTV) has signed an agreement with Network Norway to cooperate on DMB and related services. Network Norway is the 4th biggest telecom operator in Norway. The hunger to grow and a seemingly natural curiosity for innovation make them open to new ideas and exciting new business opportunities. They understand that broadcasting can help them both save and make money. After all data traffic is expensive (even to the telecom operators) and too much of it can take down your networks.

NMTV is also in discussions with other Norwegian telecom operators, whereas IDAG and it’s members are in discussions or have signed with telcos elsewhere.

Partnerships between broadcasters and telecom operators are being prepared in some countries, and need to be agreed in others to make exciting things happen faster than what we have seen in the past and what can be feared yet again.