Expect broadcasting to make a comeback this year and beyond in the mobile and wireless world. Particularly in the global market, the smart money in 2008 is on free-over-the-air digital TV and radio.
The key here is "free."
Of course, iPod and other MP3 players are everywhere, and Internet radio is here to stay. Consumers want choices. And content is king. We get that.
More important, cell phones continue to be the most sought-after mobile design socket for applications and services, whether audio, video or data. If you are not in a handset, you've already lost much of your potential total available market. We get that, too.
In that context, the free-over-the-air broadcast model seems counterintuitive--particularly in the United States, where consumers are conditioned to shell out for subscription services and premium content, delivered via cable or satellite to a TV or radio.
But if you probe consumer desires--not what technologists push or what service providers allow--free over the air still holds as much appeal as free over the Internet. Consumers always see the value in "free." In a few years, if providers are smart and consumers are given the choice, free-over-the-air broadcast will be an integral element of mobile service offerings--perhaps even in the United States.
The trend is already taking hold in Asia and Europe. South Korea, Japan and Germany have successfully launched free-over-the-air broadcast digital TV and audio service on mobile handsets and portable devices. South Korea uses DMB-T (derived from DAB, Europe's digital audio broadcast system), Japan has opted for ISDB-T (free terrestrial digital TV), and several European companies are pushing DVB-H (a mobile version of DVB-T, Europe's free-over-the-air terrestrial digital TV spec).
In contrast, the U.S. cell phone broadcast model foundered last year.
Consider cell phone tower company Crown Castle International, which scrapped its plans for Modeo, a mobile TV startup running a test network in New York City, and leased its spectrum to private equity firms.
Modeo had its own nationwide spectrum. The company chose a mobile TV standard proven in Europe. It even aligned itself with Microsoft to jump-start the mobile TV business.
It wasn't technology choices that buried Modeo. Rather, the startup, lacking affiliation with any established free-over-the-air broadcaster or owner of premium content, couldn't get cellular network operators to sign up for its service. As its parent company lost patience with the slow-developing market, time ran out on Modeo.
But the moral of the story isn't that broadcast can't work in the cell phone market. Rather, it's this: If broadcasters can't offer free premium content or even free regular programming, they face a long, hard sell.
On the audio side of mobile broadcast, free-over-the-air digital radio, such as the HD Radio platform promoted by iBiquity, stands a chance in the United States, not only for car audio but for portable and mobile devices as well.
IBiquity is neither content owner nor broadcaster, but its HD technology lets radio stations simulcast compressed digital audio and traditional analog audio without shifting to new frequency bands. As of today, according to iBiquity, 1,500 HD Radio stations are on the air, with 700 offering new FM multicast channels exclusively to HD Radio listeners, subscription-free.
IBiquity has devised a set of winning strategies: commitments from existing radio stations that produce or own content; a broad audience reach (80 percent of American listeners); and multicast programming channels, broadcast on a single FM frequency, to increase choice.
The company also expects to participate in the growing "iPod economy." It is rolling out a feature called iTunes tagging that it claims will make it easier to preview and purchase music. As a song is played on the air, the radio station broadcasts a metadata transmission of the iTunes store ID for the selection. A special iTunes tag button on the HD Radio receiver lets users flag the song for subsequent preview and purchase on iTunes.
Robert Struble, iBiquity's CEO, said the company had found it an advantage to "go last" into digital audio broadcasting. DAB's success, although still largely limited to the United Kingdom, taught iBiquity a few lessons, including the need for electronic program guides and the value of the reference designs that have helped proliferate affordable, low-cost receivers built in Asia.
But iBiquity has its own set of worries. Foremost is the competitive pressure from satellite digital radio providers Sirius and XM. "HD Radio does not have commercial-free content or breadth of coverage like satellite radio," said Frank Dickson, chief research officer at MultiMedia Intelligence. "One additional impediment to [HD Radio] adoption is that the early adopters and audiophiles have already made an investment in premium satellite services."
Dickson predicted that "HD Radio will suffer the same plight as its video brethren."
But that wouldn't necessarily doom free-over-the-air digital radio. "Sirius and XM surely compete [with each other] for subscribers. However, the biggest competitor for each is 'free,' " Dickson said. "Virtually every market has free radio entertainment."
The larger question, at least in the States, may be whether mobile handsets will embrace digital radio.
In Europe, more than 70 percent of handsets come with FM radio (usually Bluetooth-integrated in high-end and midrange models). But the U.S. market offers a very limited number of FM-equipped handsets.
The reason for the difference, observed Dickson, is that "in Europe, the choice of handset and the choice of wireless operator are decoupled. In the U.S., the carrier subsidizes the handsets and chooses which handsets to offer."
Thus, many observers do not expect terrestrial radio receivers like the HD Radio platform to find their way into cell phones anytime soon.
Then again, don't bet against any service that looks free to consumers.
In its current, digital reincarnation, lowly radio can offer services never before imagined. Beyond iTunes tagging, radio stations can provide real-time, detailed traffic reports, broadcast by local stations and displayed on a navigation system. On-demand capabilities are also available for instant access to news and weather updates. And TiVo-like store-and-replay functions are emerging for digital radio.
These capabilities could encourage two-way data over cellular networks, rather than work against it.
