Despite positive growth, many early adopters give up on mobile TV.

BARCELONA, Spain – The results of a survey of 34,000 mobile subscribers in Europe and North America indicated both good news and bad news for mobile televison. While the market achieved 36% growth last year, this number was outpaced by the 64% of subscribers who abandoned the service. The M:Metrics study, commissioned by Tellabs, confirmed what many have been saying all along – the market has significant revenue-generating potential, but it might not be achieved if operators fail to deliver a service that is reliable and of enough quality to be compelling for the price.

This is the second year M:Metrics and Tellabs have completed this study. Last year’s survey, also in conjunction with Mobile World Congress, did not include the lackluster North American market. But this year, as mobile TV adoption in the U.S. has begun to catch up with other countries, so too have the complaints and dissatisfaction. In total, 60% of U.S. and European responders indicated that they would pay to watch again only if quality and reliability improved in the next year. If operators can achieve this, they will take in what Tellabs and M:Metric said is a bucket of $270 million in additional revenue opportunities. ABI Research echoed this sentiment, predicting that the total number of subscribers will grow to 462 million in the next five years, due to the expansion of 3G networks, increasing prevalence of flat-rate plans for mobile video, build-out of mobile video delivery networks and an increase in the amount of available content.

Stu Bennington, director of portfolio marketing for Tellabs, said it is still too early to declare victory or defeat. “In the U.S., there is a demographic that over time will be favorable to this type of service if they believe they are getting what they pay for,” he said. “It is still a little bit early to say these guys are doing well, these are doing it poorly, because there is an ebb and flow of a lot of factors contributing to the churn rates that need to work themselves out first.

“Americans are a bit of a peculiar bunch,” he added. “It is a combination of two different service trends. In Europe, and international areas, the mobile adoption rate is higher in the U.S. in general, although the U.S. has been catching up. Conversely, the TV viewing habits in North America are generally higher than the rest of the world. So the question then is, how does one influence the other?”

The answer isn’t entirely that Americans are too lazy to leave the couch. Rather, the competitive environment for mobile TV is considerably more aggressive overseas. In the U.S., the market has been dominated by Qualcomm’s Media Forward Link Only (FLO) technology, deployed in Verizon handsets. While AT&T promised a MediaFLO launch in the fourth quarter of last year, that deployment has been delayed until early this year.

Verizon might dominate the mobile TV landscape, but the fact that they only have four handsets to date indicates that the market is not yet compelling. Motorola's launched its first FLO handset, the Motorizr Z6tv, alongside LG's Voyager, back in October, doubling the number it achieved in its first six month of commercial operation. At the time, Jan Lezny, vice president of business development for MediaFLO, said that consumers could expect to see more handsets on the market from several vendors by last year’s holiday season, but that has yet to come to fruition.

While lacking for customers, the mobile TV market is not lacking for standards. In addition to MediaFLO and DVB-H, A-VSB entered the scene at CES this year, designed to use broadcasters’ existing digital transmissions. Part of the dissatisfaction with mobile TV also stems from the fact that as a high-bandwidth service, the quality and reliability has suffered from a lack of bandwidth on carrier networks coupled with the increasing number of mobile users. Furthermore, at this point, most video streaming is still done from satellite connections rather than over the operator’s networks, which can cause latency. The majority of devices are still not conducive to displaying these video streams with a high degree of quality.