Many of us have experienced TV to mobiles, but this unicast experience is suboptimal -- the images break down easily and the proposition is untenably expensive for the large majority of potential users. In contrast, broadcast TV to mobile phones, which does not suffer these problems, has been commercialized already elsewhere, but is just now reaching US shores in force. For example, such services became commercial in Korea three years ago, now including both satellite and terrestrial services, and most recently adding mobile phone PVR (personal video recorder) to the handsets. So will this phenomenon make a splash here? Will it scale?

The US mobile TV market is forecasted to grow to over $2B by 2012, but no model has yet proven to exploit the key success factors for mobile TV. Broadcasters, content-right holders and mobile operators are each waiting for the right inflection point. Competing standards, lack of cooperation and vision for a successful business model have kept them on the sidelines. While MobiTV has gotten its start on 3G unicast services as an aggregator, and sometimes producer of content, Verizon has been surfing on Qualcomm’s MediaFlo TV service for the broadcast portion of its V-Cast offering. Both are favoring a limited offering focused on national TV channels. Local broadcasters making up a major part of the US broadcasting industry have so far hesitated to join the game. Local distribution of TV to mobile handsets is still in its infancy in the US, despite broadcasters enjoying some clear competitive advantages. Uncertainties from licensing, content rights limits, carriage, and early technology limitations are driving this hesitation.

So what will it take for local broadcasters to “catch the wave” for mass market success?

• Partnering with Mobile Operators: Only partnerships of TV broadcasters and mobile operators will guarantee mass market success and hence financial viability. Highest barrier to overcome is to agree on the fair scheme for value sharing between broadcasters and mobile operators. Mass market penetration requires mobile broadcast TV, at the same time, only mobile unicast and satellite based mobile broadcast have proven economic outside high density areas. Operators and broadcasters are competing to offer value, so picking the right spot on the mobile TV value chain will be critical for broadcasters. Broadcasters acting alone are limited to a very small bouquet of channels without unicast VOD and a lack of handsets compatible to their spectrum.
• Join Forces with Other Local Broadcasters: To make mobile broadcast TV a success, US local broadcasters have no choice but to join forces, as they have started to do within the Open Mobile Video Coalition on technology standards. Handset related issues as well as network sharing and broadcast issues need to be resolved. Business models also must be worked out, as fully advertiser supported models have not proven to be profitable so far.
• Play to the Strengths: Keeping CAPEX cost down and leveraging existing assets will be critical success factors. Here, broadcasters are well positioned as they can use a portion of their DTV signals directly to mobile handsets. Sharing of infrastructure with ATSC mobile TV should offer substantial synergies and might be a key lever to minimize investment risks. They also have lower cost access to content, which may give them economies of scale and operations, and they have relationships with primary sources of revenues – the advertisers.
• Ensure Cellular Phone Diversity: Mobile operators control their cellular phone diversity through subsidies, which drive handset acceptance and take-up rates of services dependent on them. An operator independent uptake is unlikely to be successful, however watch out for handset players. Nokia and Apple have already proven that they can change the game. Think iPhone and OVI.

Looking across the ocean to France, Japan and Korea shows that progress to mass acceptance and a viable business models has been made and US players can learn a lesson. French broadcasters have embarked on a collaborative approach to ensure the launch of DVB-H based mobile TV services under very favorable conditions, and so to create a new industry eco-system, and reach mass market success. In Japan there are more than 10M mobile TV viewers already, and in South Korea more than 7.5M viewers to date, with adverting-based business models that have not fully delivered to expectations yet, causing strong considerations of a shift to subscription based business.

In the US however, local TV broadcasters and mobile operators still need to take their surf-board out a few more times before riding the wave to the masses. Collaboration and partnerships will point the way.

Bernhard Kickenweiz is Principal in A.T. Kearney’s Communications, Media and High Tech practice in New York.