TV On Your Phone: What Happens When It Happens

Includes: CMCSA, S, TWX, VZ
by: Paul Callahan

I'm not going to argue about whether TV on your cell phone — mobile broadband — is going to be big or going to be little. Fact is, TV on your cell phone will happen. Whether it happens quickly and is a smash hit, or whether it dribbles out at the very top end of the market, is a different discussion.

Comcast, Cox, Sprint, and Time Warner are doing a joint venture, and Verizon has already rolled out Vcast. Those activities are enough to cause a lot of money to move, if only to build out significant portions of the infrastructure to support spot markets. What happens as a result?

1. Rapid build-out gets more critical. Odd, isn’t it, using the word critical. TV on your phone is about as far from critical as you can get. So is PVR playback. But no one will pay for that candy — or even use it — if they can’t see not-freezing, not-disconnecting images on their tiny screens. Heck, they won’t even try it. Those factors argue for a fairly substantial deployment. But the biggest impact will be the need to address hotspots. Teenagers are a critical segment and they want what they want and they want it NOW. If coverage at your average high school is where the action is, the operators will need to jump on it quickly. That argues for relatively unencumbered, rapid deployment.

2. Little cells take hold. If you believe the argument that TV in your phone drives the need for better spot coverage and flexible deployment, then it’s logical to think that mobile operators are going to need an alternative to towers. With all those cable partners in hand, Verizon and Sprint could ride on that infrastructure with oodles of on-the-pole micro and pico cells versus big honking towers. Baby, what a new product opportunity.

3. Different pricing model is needed. For gadgets, the retail technology merchandising scheme is really simple. When Linksys or D-Link introduce a new product at CompUSA, the new doodad takes the top spot away from the previous doodad — let’s say at $129.99 — and pushes the previous doodad down to $99.99, which pushes the old doodad in that slot down to $69.99, and so on. In other words, new features are introduced to support the price point, not to raise it. TV on your phone should follow the same model. If all I’m willing to pay is $80 per month, and that’s my story and I’m sticking to it, then the price of my non-TV phone service should go down to $60. Customers are not going to buy an increase for TV on their phones.