One of the biggest proponents of mobile digital TV is ION Media Networks chairman and CEO Brandon Burgess, who last spring convinced major station groups to form the Open Mobile Video Coalition to jump-start the process of creating a new technical standard for delivering mobile services through the DTV spectrum.
As the industry stands just one year away from the end of analog broadcasts, Broadcasting & Cable senior editor Glen Dickson spoke with Burgess -- who serves as chairman of the OMVC in addition to running the industry’s largest station group -- about the OMVC’s progress and the business potential of mobile DTV.
Q: Why do you think mobile DTV is so important to broadcasters?
A: Frankly, broadcast is the ultimate mobile-delivery vehicle. You know, broadcast was wireless before wireless was cool. And so, in some sense, doing DTV without the wireless component is a lot less exciting. If we're not going to be able to pull the signal off the air in a mobile setting, DTV loses a lot of its capability. It doesn’t lose everything, because obviously, high-definition is a great feature of DTV, and multicasting is a great feature of DTV. But those qualities only accrue to the existing [113] million [Nielsen] homes. If you open up mobile, you open up another 400 million devices and places over the coming three to five to seven years that currently and historically have been unavailable to broadcasters. In my personal opinion, I think mobile is the game-changing part of DTV. You've heard me talk about the DTV triple play …
Q: Right.
A: Without mobile, it's a two-legged stool. You have high-definition, which is great for certain programs, and you have multicast, which is great for certain people who have the content and want to put it out. But I think mobile is a whole other dimension that really adds a third dimension to the DTV transition.
Q: When did you first get the idea for the OMVC and how do you gauge the group's progress in making mobile DTV a viable business opportunity for broadcasters?
A: I think we have come a lot further than people would've expected. That is my impression. It’s a very diverse group, a very diverse industry. These companies compete all day long in their day jobs, but that said, I think the way the industry has rallied around this idea of mobile has been surprising to most, including the manufacturers. As to when I first started focusing on this, it was couple of months into my current job, which I took in late 2005, so I guess about the middle of 2006. We started saying that we really have to focus on this mobile [opportunity] and, while we're the biggest spectrum-owner in the country, we're not going to do this on our own. We need everybody to have an agreement on how we're going to do this. And then I started going on the road and started preaching about this opportunity.
Q: The National Association of Broadcasters and BIA Financial recently released a report projecting that mobile DTV could generate as much as $2 billion per year in revenues by 2012, with roughly one-half of that going to local stations -- some $1.1 billion. But the report also warned that delaying the adoption of a standard could significantly lower that upside. Privately, some members of the OMVC have suggested to me that BIA gave a low-ball estimate of the revenue potential, as the report didn't address subscription services. Can you talk about the BIA numbers and the potential of subscription-based revenue for mobile DTV?
A: That’s an important question. It’s also an open-ended question -- you can get into a lot of topics there. I would make two comments. One is that if there is a $2 billion ad business out there, there's probably going to be some level of subscription business out there also. Because there's probably going to be some structure that is akin to the cable [programming] model, which is some basic, some premium. And I would say that if the ad piece alone is of the size BIA estimates, then the industry is in very good shape, because chances are that the model has worked and consumers are prepared to actually attribute value to this and some consumers will be willing to pay for certain products. So does that mean it's a low-ball estimate? I suppose you could say that. The second point, though, is I think that one sure way to prevent a new market from opening up is by being too price-sensitive early on. I think Steve Jobs makes a good point when he says to people, ‘Look, when you're trying to launch a business, you want to focus on two things -- velocity and adoption.’ One thing that MediaFLO [Qualcomm’s mobile-TV service, marketed by Verizon Communications] is learning the hard way is that they've priced themselves out of the market. And we have the opportunity to make this a much lower-cost proposition. Our build-out cost is de minimus -- well, it’s not de minimus, but it's a fraction of [MediaFLO’s] from an installation standpoint. And from a consumer perspective, I think we can just deliver a more economical product because we own the content, or a lot of us own content. And the infrastructure is less expensive. So I think we don't have to be as sensitive to pricing as we get going on this thing.
Q: And what about the projections BIA gave on the negative impact on the standard being delayed? What did you think about that?
A: Well, I'm on record as being very outspoken and adamant that if we don't agree on a standard as an industry, this business will not materialize. It's as simple as that. There's no gray zone. If we don't come together and install similar equipment so that the consumer has a reliable level of service and the consumer doesn't have to worry about what type of phone they have to buy and all phones, all laptops have the same receiver technology … The products might be a little bit different, the content may be different, but the underlying technology has to be one standard if we want to have this type of a scale opportunity. I concur with that wholeheartedly, and I think we're making pretty good progress. And everybody, I believe, on both sides of the aisle -- the broadcasters and the manufacturers -- I think agrees with that basic premise.
Q: The field trial for the various mobile-DTV systems, known as the Independent Demonstration of Viability, is supposed to begin this week. Can you briefly describe what the trials involve and what the OMVC hopes to learn?
A: At a high level, this is testing of the physical layer, which is basically the hardware component on the transmission and on the receiver side. And we're basically testing the hardware functionality between a few proponents, depending on how many of them actually submit hardware. This is about the hardware -- this is not yet about the software on top of it, what's known as the application layer and the user interface. All of those things are going to be developed a little bit later. But the underlying transmission standard of the hardware, from the transmission end hardware to the receiver end, is what we’re trying to understand better.
Q: What has ION learned from its own field trials in mobile DTV? I know you've been conducting your own ad-hoc testing in the past year.
A: We have learned that there is technology out there that is inexpensive and it works and it can be implemented swiftly. It’s just a matter of deciding which technology to use. In fact, there are at least two technologies out there that do the job.
Q: You also announced at the 2008 International Consumer Electronics Show that you’re going to do some of your own testing, with SES Americom and others, which is more consumer-oriented and focused on the business prospects.
A: Yes, it’s important to differentiate that. That is not part of the technical evaluation as part of the ATSC [American Television Systems Committee standard process], but it’s a commercial trial. We’re going to put some product packages together to get a little bit of consumer insight. We haven’t announced yet what markets we’re going to do and what the packages will be.
Q: Some broadcasters are skeptical that you can continue to deliver a quality
HDTV
service while also supporting a standard-definition digital subchannel, such as NBC Weather Plus, and a mobile-DTV service. Do you think it’s possible to support all three streams in the current DTV pipe?
A: I do, I know it’s possible. People need to think outside of the box on this and think of every local city as a spectrum marketplace [where spectrum can be aggregated and shared]. If there is one affiliate station that wishes to broadcast in super high-def, if there’s an NBC or CBS station that is completely maxed out, then we may be able to help each other out through an economic sharing solution … The highest and best use of the spectrum will ultimately prevail. If the bigger income stream is going to come from mobile, it should go to that; if it’s coming out of multicast, then we should shift the allocation of resources over to that. I think anything we can do to make the spectrum scarce is exactly the point.
Q: You have mentioned the importance of not having a delay in creating the mobile DTV standard. How confident are you that the ATSC will be able to create a single standard by next February?
A: Highly. There’s no reason not to. I don’t want to oversimplify it, but there is such a high demand among all the broadcasters now that it would be very unusual to not respond to that. The alternative -- to all march forward without an ATSC standard -- would be awkward. We as broadcasters are fairly agnostic in terms of which technology -- it’s just a matter of figuring out the best one and to pick one. There’s really no reason to not get that done. Certainly, we should be able to have a beta launch in relatively short order.
To read more about broadcasters' mobile DTV trials, click here.
