Costs will dog HK mobile TV operators

Hong Kong authorities will auction off mobile TV spectrum licenses in 2009, but operators may find it hard to translate opportunity into revenue, says Gartner.
Written by Sol E. Solomon, Contributor

While competition among mobile TV service providers in Hong Kong will be keen after the government auction of the frequency spectrum for such services, operators there may not find it profitable, Gartner has warned.

Broadcasters and telecom operators will find it challenging to translate the opportunity into revenue, the technology research analyst said in a statement Wednesday.

Hong Kong's Commerce & Economic Development Bureau announced earlier this week, the plans for the auction of the mobile TV licenses in the middle of next year. The Bureau expects services to be formally launched in 2010.

Nick Ingelbrecht, research director of consumer services at Gartner, highlighted that the costs involved make it very difficult to make a good business case for mobile TV.

"The demand side is still quite uncertain despite trials around the world," he said. "If people do use it, they tend to want it for free, which makes it difficult for the carrier or the broadcaster to make money."

Ingelbrecht added: "The level of competition and small market size will tend to work in favor of mobile TV being deployed in Hong Kong ahead of other markets, but that does not mean that it will be profitable for the carriers and broadcasters unless they can gain some useful competitive advantage out of it."

Gartner expects global mobile TV subscribers--defined as mobile subscribers who have signed up for a TV service or receive TV as part of their mobile data subscription--to remain limited in the next four years. "It expects mobile TV services penetration to reach 8.6 percent, or 477 million subscriptions, in 2012.

Mobile TV services, according to Gartner, are popular in Japan where the service is free-to-air and in South Korea where operators offer a mix of pay and free-to-air services. In other countries, uptake has so far been quite modest, Gartner said.

Over in Italy, the analyst firm noted that operators saw a good uptake during the service's launch which coincided with football's World Cup. But things have slowed down considerably since then, to the extent that during the recent European Cup, mobile operator 3 offered it for free--a drastic measure that Gartner said provided little success.

While the research company expects mobile TV to eventually make it as a mass market service, it said the reward for the operators' efforts in deploying it will be minimal.

Service providers, said Gartner, will have to turn to advertising as a revenue source as free-to-air services will remain the most popular business model. But this requires a critical mass of subscribers, as advertisers will not be interested in targeting a niche market.

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