Video delivered over telco infrastructure has traveled an ignominious path--moving from the peaks of glory into a vexing stream of disappointments and deficiencies that have stalled progress and undermined credibility.

Starting in the early 90's, video was only a whisper away. Just one more deal, a regulatory pen stroke and a modest technological advancement would give telco providers the foot speed they needed to catch up to cable operators. Here's a sampling of headlines from that optimistic era:

Roughly ten years have passed and the nation's top telecom providers have little or nothing to show for their grand dreams of distributing televised programming to the masses.

Many industry executives charge that the Telecommunications Act of 1996 unforgivably knotted up the video deployment plans of the largest incumbents. It was not until early this year when the FCC exempted broadband networks from line sharing requirements, that carriers could evaluate video service strategies without concerns over competitive access implications. Of course, the Telecom Act is not entirely to blame. Fundamental questions around bandwidth requirements and business models have hampered the rollout of video over DSL (VDSL), triggering more thorough assessments of what consumers will pay for and how to differentiate service offerings from the multichannel television platforms of cable operators.

"There is still a lingering feeling among the RBOCs that they've been burned before," says Michelle Abraham, a senior analyst at In-Stat MDR. "Telcos are taking their time making the decision to deliver these services." By the end of the year, Abraham estimates the nation's telcos, in most cases independent operators, will provide video services to about 200,000 households. That figure will grow to 3.5 million in four years.

Although the threat of cable providers offering the triple play of voice, video and data continues to surface, telcos seem to have an assortment of additional reasons to get behind their video strategies. The loss of access lines and price erosion for services like broadband are putting added pressure on large incumbents to not only pursue video, but also provide something different than cable players. Differentiated services may center on interactivity and "time-shifted" platforms that give viewers more choices of access to video content.

Telco video's resurgence almost automatically produces a concentrated form of skepticism because a central question still lingers: Can the telco networks of today deliver to consumers a video experience comparable to cable? The answer, generally, is no.

However, there is no doubt that the telco video movement is experiencing demonstrable momentum, fueled as much by technological improvements as a "let's get real" motivation of carriers to contain further market encroachments by cable operators. The rest of this report will focus on four key pieces of that momentum: advances in compression, IP innovation, Tier-three triumphs and access mixing.

ADVANCES IN COMPRESSION

While compression is not new to video, the impact its evolution will have on the telco market is viewed as seismic. Video codecs, or the format standards that use sophisticated software tools to compress multimedia content, have matured rapidly in the last few years.

The widely used MPEG2, an open standard developed by the Moving Picture Experts Group (MPEG), is giving way to the more advanced MPEG4, increasing the efficiency of audio and video codecs and enabling traditional telco service providers, among others, to expand the capacity of existing network infrastructure.

Although MPEG2 and MPEG4 are open standards, a host of others are proprietary, including Microsoft's newly developed format, Windows Media 9, and RealNetwork's Real Video 9. Compression technologies are widely used in multimedia applications in a range of formats for satellite, digital cable, DVDs and mobile handsets. The endgame for telco service providers is to leverage the strengths of compression, resulting in an increase in channels into the last mile and broadening service feature sets.

New compression standards will have a direct and positive effect on telco providers, says Abraham of In-Stat MDR. "The new codecs are definitely going to help them (service providers) in terms of delivering video, particularly over long copper runs," she says. Perhaps one of the most awaited advances will be equipment that supports H.264, a new video coding standard that trims the bandwidth of HDTV (high definition television). Over time it is expected that the open standard-based H.264 will become a larger part of the MPEG4 product set.

Telcos, particularly those that have already deployed video services, are closely examining the development of HDTV, says Abraham. "They are very aware of HDTV," she says, noting that set-top boxes enabled with H.264 will not likely hit the market until 2005.

Microsoft is building its IPTV initiative around the strengths of its Windows Media 9 compression platform, which company officials say outperforms MPEG2 by delivering the same content with two to three-times greater efficiency. Leading manufacturers of chips for set-top boxes have announced support for Windows Media 9, paving the way for what Microsoft believes will allow telco operators to deliver live and on-demand services in standard and high-definition formats.

Earlier this year, I told the one about the time I spent part of 2002--specifically, the part where the World Cup was being held in Korea and Japan--enjoying full-motion live video of matches on a mobile device. The punch line was that the "mobile device" was in fact a Casio JY-90 portable TV set. I also observed at the time that this was conceivably the ticket to bringing quality video to handsets--stick TV tuners in them.

And why not? We're already integrating all sorts of consumer electronics into handsets these days--cameras, camcorders, FM radios, etc. Why not TV?

It's already happening. The best known regional example is the satellite DMB project in Korea and Japan by Mobile Broadcasting Corp and SK Telecom, which aims to offer digital TV channels accessible by both a purpose-built satellite and terrestrial towers--all accessible by specially designed handsets fitted with DMB receivers.

Meanwhile, a number of vendors are gearing up for digital TV solutions that are completely terrestrial based. Inevitably, it's already shaping up to be a standards war between Europe, the US and Japan, with Europe represented by DVB-H (digital video broadcast for handhelds), Japan by ISDB-T (integrated services digital broadcasting terrestrial) and the US by--who else?--Qualcomm, which is planning to build a terrestrial mobile TV service called MediaFLO in the US based on its proprietary FLO (Forward Link Only) technology (which, for the record, uses OFDM, not CDMA). Of the three, Qualcomm is scheduled to get to market first, with commercial service planned by 2006. DVB-H and ISDB-T are expected to be available by 2007. All three reportedly permit synchronizing the video with 3G data services, thus allowing operators to place relevant interactive windows onscreen--say, U2 ringtone download offers when a U2 music video is playing, or an SMS U2 trivia game.

Time will tell which technology is left standing five years from now, though considering that no one's ever bothered to create a global standard for analog TV, harmonization is arguably not a requirement for the future of mobile TV. On the other hand, regular TVs aren't mobile, so there's never been a need for a global standard--it was easier to just make TVs that work on NTSC, PAL and SECAM.

The bigger question is whether or not there's a serious business case for mobile TV.

In search of $$$

By all indications, it's far from an easy dollar. For example, the experience with satellite DMB has already shown that mobile TV incurs potential regulatory headaches. TU Media--the Korean JV between SKT and MB Corp that will sell satellite DMB in Korea--was supposed to launch service in July but has been held back by regulatory hurdles. The latest one occurred earlier this month when the country's broadcasting regulator, the Korean Broadcasting Commission, barred SK Telecom from relaying terrestrial TV programs over the satellite until terrestrial broadcasters like Korea Broadcasting System and Munwha Broadcasting begin their own mobile TV services.

Assuming that regulators don't see any crossover issues with mobile IV, operators still have to work out how they're actually going to make money. Monthly subscription fees? Pay-per-view? Per minute?

The answer to that lies in figuring out just what end-users would do with a mobile phone if it could pick up TV signals. Watching broadcast TV during the train/bus ride to work sounds good, but you could do that with any old analog TV for free, though the quality would vary wildly. Some people might pay for a reliable signal.

There's also a cannibalization issue here. Time spent watching TV on a mobile phone is time NOT spent using other 3G data services. Like downloading video clips you want to see now rather than waiting for something good to come on TV. Wasn't this supposed to be an alternative to top-down broadcast television in the first place?

To be fair, 3G video itself is still in search of a business case. And in terms of picture quality, broadcast video beats streaming video in most cases. Notably, Qualcomm's MediaFLO network supports streaming video and video/audio downloads for extra value.

The trump card for critics of mobile TV is usually to point to the 2-inch phone screen and say, "No one will watch TV on a screen that small." What they really mean is, "I won't watch TV on a screen that small."

Fair enough. But many people will. Whether they'll pay money for it is another matter.

TALK TO TELECOM ASIA

Got a news tip, a press release, a comment, a complaint for Telecom Asia?

Contact the editorial team:

Group editor jwaring@telecomasia.net

Global technology editor tanner@telecomasia.net

Premiere editor Fiona Chau fchau@telecomasia.net

This week, mobile media company Enpocket released findings from its latest Mobile Media Monitor. The quarterly analysis from Enpocket Insight studies the changing patterns in mobile phone and content usage in the mobile industry. For marketers the findings continue to underscore the prodigious growth of mobile phone users and the opportunity for marketers to reach those users. Mike Baker, pres. and COO of Enpocket said via interview, “There exists a tremendous opportunity for marketing initiatives via mobile. 25% of the world’s population has a mobile phone. That’s close to 1.5 billion people, so that’s a huge reach for marketers.”



The latest survey asked consumers what type of applications they would be interested in using via their mobile phone. Half of all surveyed said they are interested in sharing pictures with friends and family. 33% would like to use their mobiles phones to make or receive video calls, a wish that may become reality with faster data rates on the horizon. 29% want to use their phones to download songs.As Multimedia Messaging Service (MMS), an extension of SMS that allows mobile users to exchange messages including a combination of text, color pictures, video and audio becomes more mainstream, so does the opportunity for branding. In the 25-34-year-old demographic, MMS usage is now at 20%, a six-month growth rate of 100%.



Baker sees mobile growth in auspicious terms in regard to pioneering marketing via mobile. “The upside is that mobile is at the fulcrum of broader development for marketing. There exists an unbelievable opportunity. Everyone carries one in their pocket, it’s a very personal device. It has a reach way beyond TV, yet you can target the individual. And you can even time target them, for instance to remind them that the History Channel is airing a certain show they want to watch.”



The downside or rather the challenge for marketers according to Baker is “How do you create mobile messaging valued by the consumer? Marketing messages have to offer valuable content. The common theme is that you have to entice consumers now to respond. The solution for the mobile medium is defining how a marketer gets the consumer to welcome brand messaging.”



With increased interest in MMS and photo sharing, many brands are looking to applications like mBlogging and peer-to-peer photo sharing, applications that best leverage camera phones.



For Baker the goal is to continue to find innovative ways to market via mobile. One of the Enpocket success stories is with Match.com and Enpocket’s creation and support of Match Mobile, which currently is in 12 countries and continues to grow. “We’re building branded communications and communities. We’re creating communities for the brand to extend the interactive (Match.com) to mobile. So for instance with Match Mobile, you can find someone via your mobile that matches all your criteria for a dating match. Mobile is the ultimate converged consumer device. Its possibilities are endless.”



Baker sees 2005 as the year of “marketing pictures. With the improved accessibility and affordability of picture messaging, 2005 will be the year when marketers start to target consumer segments with mobile applications that take advantage of camera phones."



Enpocket provides compelling entertainment and marketing services to more than 50 operators and 400 brands across Europe, Asia and the Americas. Enpocket clients include: Vodafone, Cingular, TIM, Sprint, Verizon, Orange, Telefonica, Singtel, Nokia, Motorola, Microsoft, Sony, BBC, Fox, Discovery Channel, Time Warner, Universal Pictures, Time Out, Match.com, Snapple, Levi's, Hallmark, and Nike.

Business Editors, High-Tech & Automotive Writers

PLANO, Texas--(BUSINESS WIRE)--Nov. 12, 2002

Delphi's Vehicle Multimedia Systems, Integrating Microtune's RF

Silicon Technology, Deliver Premium Radio and Rear-Seat, In-Car

Television and Video

Microtune(R), Inc. (Nasdaq:TUNE) announced today that Delphi Corporation's (NYSE:DPH) Fuba Automotive GmbH subsidiary plans to use Microtune's MT1110 broadband amplifier in its redesigned Gen II TV Diversity Reception System. The MT1110 amplifier, ruggedized for automotive applications, enables improved video reception quality in Delphi/Fuba's mobile TV/multimedia system. It delivers robust, cost-effective amplifier performance, while providing for seamless integration in and interfacing to Delphi/Fuba's existing Gen II platform architecture.

The MT1110 will debut this year in Gen II TV Diversity Reception Systems slated for two European models, with future migration planned for the U.S. market. "This MT1110 design win marks a significant milestone for Microtune and for our expanded efforts in the transportation electronics market," said Douglas J. Bartek, Chairman and CEO of Microtune. "First, it extends the successful Delphi/Fuba collaboration that was announced last year when we teamed to develop a compact, high-performance TV tuner for Fuba's innovative mobile TV reception system. Second, the MT1110 represents the first design-in of a Microtune RF silicon amplifier component into a vehicle application, demonstrating the flexibility of our RF integrated circuits to support multiple markets. In the process, we provide customers like Delphi/Fuba significant competitive advantage."

With its Gen II TV Diversity Reception system, Fuba integrates four in-glass antennas and its ScanDiv(TM) technology with multiple Microtune MT1110 amplifiers and MT5102 in-car TV tuners into a receiver subsystem. This multiple-antenna, multiple-tuner configuration automatically switches to the best video antenna and signal path, helping avoid signal disturbances in the mobile environment and enabling superior color TV reception.

The MT1110 is designed for applications that require excellent linearity and low noise. With extremely low distortion, 75-ohm matched input-output impedances, and 5-volt operation, the MT1110 conditions the RF signal received from multiple antennas and boosts it for distribution across the multiple tuners. Developed in a cost-effective silicon germanium process, the MT1110 delivers superior price/performance, particularly when compared to alternative solutions.

The Fuba Gen II TV Diversity Receiver System is designed to support international television standards, including PAL, NTSC and SECAM. With the Microtune tuners and MT1110 amplifiers, it provides a versatile platform that can deliver a variety of TV formats today, while evolving to future telematics, wireless Internet and digital broadband services.

ABOUT DELPHI AUTOMOTIVE SYSTEMS

Multi-national Delphi Corp. (NYSE:DPH) is a world leader in mobile electronics and transportation components and systems technology. Headquartered in Troy, Michigan, USA, Delphi's three business sectors -- Dynamics & Propulsion; Safety, Thermal & Electrical Architecture; and Electronics & Mobile Communication -- provide comprehensive product solutions to complex customer needs. Delphi has approximately 191,000 employees and operates 179 wholly-owned manufacturing sites, 41 joint ventures, 53 customer centers and sales offices, and 32 technical centers in 41 countries. Regional headquarters are located in Paris, Tokyo and Sao Paulo. For additional information about Delphi Automotive Systems visit our Web site at www.delphiauto.com.

ABOUT MICROTUNE

Microtune, Inc. is a leading silicon and systems company that designs, manufactures and markets radio frequency (RF)-based solutions for the global broadband communications, automotive electronics and wireless connectivity markets. Inventors of the MicroTuner(TM) single-chip broadband tuner, the Company offers a portfolio of advanced tuner, amplifier, transceiver and wireless products that enable the delivery of information and entertainment across new classes of consumer electronics devices. The Company currently holds 22 U.S. patents for its technology, with more than 50 applications pending approval that span its RF and wireless products, containing more than 2000 supporting claims. Founded in 1996, Microtune is headquartered in Plano, Texas, with key design, manufacturing and sales centers located around the world. The Web site is www.microtune.com.

Microtune is traded on the NASDAQ Stock Exchange under the symbol TUNE.

EDITORS NOTE: Microtune is a registered trademark and MicroTuner, MicroStreamer, and MicroModule are trademarks of Microtune, Inc. All other trademarks are the property of their respective owners.

TU Media, a unit of SK Telecom, said it will launch a trial of its much-awaited mobile television service via satellite.

The affiliate said it will broadcast the first signals for the Seoul test run. The new service promises to offer high-definition digital TV programming for handsets and in-vehicle mobile equipment, TU Media said.

The service requires subscribers to buy new handsets equipped with the antenna and computer chips needed to receive and process the satellite signals.

Currently only one handset, manufactured by Samsung Electronics, is available that can receive the broadcasts. TU Media will begin selling the handset, the SCH-B100, from next month with a price tag of between 700,000 and 800,000 won ($660-$754).

TU Media, a joint venture between SK Telecom and Toshiba Corp, plans to roll out commercial mobile TV services offering up to 14 video and 24 audio channels early this year, according to the company. While the prospects for commercial success remain unclear, TU Media forecasts that by 2010, it will have over 8 million customers and earn 1.2 trillion won ($1.1 billion) in annual sales from the venture.

One of the biggest hurdles facing the venture is a delayed decision by the Korea Broadcasting Commission, the country's broadcasting regulator, over when it will allow TU Media to relay terrestrial TV programming.

SK Telecom wants the broadcasting commission to let it rebroadcast the conventional TV broadcasters' programming via its new mobile TV network to help guarantee the project's commercial viability.

However, the commission has said it will not allow SK Telecom to relay terrestrial TV programs until broadcasters such as Korea Broadcasting System and Munwha Broadcasting Corp begin their own mobile TV services using terrestrial broadcasting networks.