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Mobile video might make carriers, providers clash

Stephen Lawson | Nov. 15, 2011
As mobile video finally starts to take off, making money from it remains a challenge, and content providers and carriers may clash over economics before they find a way to share the costs and benefits.

As mobile video finally starts to take off, making money from it remains a challenge, and content providers and carriers may clash over economics before they find a way to share the costs and benefits.

Mobile video initiatives led by carriers, network builders and local broadcasters in the past few years have stumbled or been slow to take off. In the U.S., Qualcomm shut down its dedicated FLO TV network earlier this year, and the commercial launch of Dyle Mobile TV, a national service offering local digital TV to phones and other devices, has been pushed back from late this year to early 2012. But as an extension of Web-based programming, mobile video is beginning to explode, executives of media companies said earlier this month at the Open Mobile Summit in San Francisco .

Consumers play YouTube videos 400 million times a day on mobile devices, said Francisco Varela, YouTube's global head of platform. The flow goes the other way, too: YouTube's customers upload as much as two hours of their own video content every minute. Executives from ABC, CBS, Hulu and the BBC also said the mobile Internet looks poised to change their businesses. About 20 percent of people in Britain watch BBCi, an online service of the national broadcasting agency, and tablets are among the hottest platforms for it, said Daniel Danker, BBCi's general manager of Programmes and On-Demand. He hopes to see 80 percent watching BBCi in five years.

However, the content providers said it's less clear how they will make a lot of money from mobile viewing. Carriers face the same challenge, which could lead to a fight for revenue between the two parties.

Carriers have occasionally hinted at charging third-party content providers for priority on their networks, which video channels depend on to reach consumers. But popular videos can also help to make lucrative mobile services popular, and in other businesses, such as cable TV, the providers of video charge the networks for the privilege of using it. Exactly how things will balance out in mobile is not yet clear.

In 2006, former AT&T CEO Ed Whitacre raised the specter of the carrier, asking OTT (over-the-top) service providers to help cover the cost of building out its wireline broadband network. This raised strong objections on the grounds of net neutrality. But in the mobile arena, U.S. net neutrality rules are considered less strict. Meanwhile, mobile network management tools now exist that could prioritize traffic from specific providers. Verizon and AT&T were not able to provide executives to talk for this article.

Video providers say they already spend a lot of money bringing their content to Web and mobile users, a distribution channel with a far less certain return than traditional broadcasting.

 

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