Crown Castle Abandons Modeo Mobile-TV Venture

After spending four years on development and initiating a wide-scale mobile-TV test in New York, Crown Castle International pulled the plug on its Modeo-branded service.

Crown Castle, which operates and manages more than 22,000 cellular-phone towers in the United States, announced Monday a six-year lease agreement for the spectrum it had planned to use for Modeo. The company is leasing the 1670- to 1675-megahertz spectrum to a venture formed by two investment firms, Telcom Ventures and Columbia Capital, for $13 million per year.

Crown Castle apparently cut its losses after failing to line up go-to-market partners for Modeo. Earlier this year, Qualcomm’s MediaFLO USA subsidiary locked up AT&T as a partner to carry live-TV channels, which, along with its deal with Verizon Wireless, gave MediaFLO distribution with the two biggest wireless carriers in the United States.

A Crown Castle representative did not respond to requests for comment by press time.

For now, the end of Modeo leaves one other mobile live-TV service provider in the United States besides MediaFLO: Aloha Partners’ HiWire, which last week announced a deal with satellite-services company SES Americom to provide 24 channels for its Las Vegas trial. MobiTV, which has signed content-distribution deals with several cable programmers, is geared toward on-demand wireless video.

Modeo’s beta test featured six cable channels -- CNBC, Discovery Channel, E! Entertainment Television, Fox News Channel, Fox Sports and MSNBC -- although Crown Castle said it had licensed more content than it included in the test.

Under the deal with Telcom and Columbia, Crown Castle will transfer all of the assets related to the Modeo trial in New York that had been initiated earlier this year to the new venture. Crown Castle will also be the “preferred provider” of tower infrastructure for the new venture.

Representatives for Columbia and Telcom did not respond to requests for information about how their new venture intends to use the spectrum. The lease runs from July 23, 2007-Oct. 1, 2013, after which the investment companies have the option to acquire the spectrum for $130 million or to renew the lease for a period of up to 10 years on the same terms with the annual lease fee increasing to $14.3 million.

Crown Castle said it will incur $10 million of operating and general and administrative costs in 2007 related to Modeo.

The Modeo service used the Digital Video Broadcasting-Handheld (DVB-H) standard to transmit signals over the 1670- to 1675-MHz wireless spectrum, which Crown Castle bought for $12.6 million in a 2003 Federal Communications Commission auction. HiWire is also using the DVB-H standard, while MediaFLO uses a proprietary broadcasting technology.