Qualcomm has preparing to halt sales to consumers of mobile 3G-based TV devices, called “Flo TV” by the company, with service to the devices being halted in spring of next year. Flo TV content provided to handset phones (such as Verizon’s VCast) is “unaffected at this time,” but the company is holding talks with various other parties for use of the technology, service or spectrum used by Flo TV.
The company said in a statement that it will maintain the mobile broadcast TV network to ensure current customers can use the service until the spring of 2011. But after that, it appears the company will discontinue the service and refund customers. Qualcomm didn’t say for sure what it plans to do with the valuable wireless spectrum it used to build the network and service. But it looks like it might try to sell the spectrum, which could be used by wireless service providers to build wireless broadband services.
The devices, originally launched in 2006, never attracted a sizeable base of consumers with its separately-billed $15/month service charge. The content’s main subscribers have been handset carriers and automakers, who offered the service as part of add-on or incentive packages. The mobile TV device offered by Qualcomm directly sold for $250 and included a six-month subscription. Channels included Adult Swim, NBC2Go and other NBC owned networks, MTV, ABC, CBS, Disney and Nickelodeon among others. The device could not time-shift nor save TV programs, making it less competitive against video-on-demand services or outright rental or ownership as services like iTunes offer.
Cars.com tested Flo TV and liked that it offered more content than Sirius Satellite TV. But Flo’s signal strength and picture weren’t so great. That’s because Flo TV uses over-the-air frequencies once used by analog television to broadcast its digital signal. The frequency spectrum that Flo TV uses is reportedly worth $2 billion, another potentially enticing reason for the company to cut its losses on what has arguably been a commercial failure in a short time on the market.
Flo TV’s “MediaFLO” broadcasting technology uses the band of radio frequency spectrum formerly known as UHF channel 55 (716-722 MHz), which may prove more valuable to buyers than the service itself. Qualcomm has said that some employees would likely be laid off due to the discontinuation of sales and service.
Qualcomm is blaming the lack of MediaFlo handsets, though previously it conceded that users were more interested in bite-sized video than episodic drama – earlier this year the company said its service would move towards a caching model, providing video on demand from locally-cached content. But once you do that, the advantage over 3G data becomes minimal, while the cost of running an entirely separate network remains considerable.
Qualcomm’s CEO has previously pointed out that even if MediaFlo goes titsup, its US spectrum holdings are worth somewhere in the region of $2bn – far more than Qualcomm paid for them, which is good news now the tits are distinctly skyward-pointing, but bad news for all the other money Qualcomm poured into mobile TV.
Qualcomm built the mobile broadband TV network using analog TV spectrum it acquired several years ago. The company struck deals with mobile operators AT&T and Verizon Wireless to resell the live mobile TV service. But the service, which has been available on Verizon since 2007 and on AT&T since 2008, never took off. But even after TV broadcasters moved off the channel 55 analog spectrum, sales of Flo TV were still slow, leading many to question whether people really want to watch TV on their phones. But the real question may be whether people want to pay to watch TV on their phones. Verizon charges $15 a month for the service. And last year dropped the pricing of its service from $15 to $10 a month.
An analyst quoted by the Wall Street Journal suggests that Qualcomm could get at least $2 billion for the spectrum. The company spent about $125 million for the spectrum it uses today, and it spent another $558 million in 2008 for additional spectrum in five major metropolitan areas.
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