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The broadcasting of television and video clips to mobile phones may be the key to 3G's success, a report claims.

Research outfit Analysys has said that mobile operators offering television programming or video services over 3G may be able to generate significantly more revenues than peers that offer only voice and high-speed data messaging. In fact, the report goes as far as to say that TV and video over 3G could be as lucrative to operators as SMS and other current messaging services.

"TVs are found in almost every household and consumers spend far more time watching TV than they currently do using their mobile phone," says Alastair Brydon, the report's co-author. "However, the results of consumer studies and the rapid take-up of 3G TV and video services in some countries suggest strong latent demand for consuming this type of content over mobile networks. By focusing strongly on mobile TV and video on demand, South Korean operators have already managed to achieve nearly three times the 3G penetration of Japanese operators, despite the later launch of their services."

Still, video over mobile is by no means a sure thing. Analysys notes that the service could be prohibitively expensive for consumers to use, given the cost of current 3G services. "A two-hour movie, transmitted at 384kbps, would consume over 300Mb of data and operators would have to charge over $300 if they wanted to achieve similar margins to voice telephony," says report co-author Mark Heath.

"Making long programmes affordable would devastate their revenue per Mb and create network congestion," Heath commented. The trick, according to the report, is to offer short video clips that generate acceptable levels of profit, but are also affordable and in demand.

Another problem is the lack of capacity on 3G networks to accommodate large numbers of users. Moreover, current 3G networks are unable to transmit data at a rate that would consistently allow for high-quality streaming video.

But the research firm notes that new developments in video coding as well as 3G enhancements such as HSDPA (High Speed Downlink Packet Access) from the end of 2005 will, in principle, relieve some of the limitations of current 3G technology, reducing by a quarter the cost of carrying a given quality of video clips. "However," says Analysys' Alastair Brydon, "even with significant enhancements such as HSDPA, wide-area 3G technology will not be able to support extensive viewing of TV and video-on-demand services by a large proportion of mass-market users."

But even with all of the road blocks, Analysys claims that 3G operators will, in time, face more competition in the mobile video market, and as such should seek to launch services early. Much of that competition will come from emerging broadcasting technologies such as DVB-H (Digital Video Broadcasting: Handhelds), an extension of the DVB-T standard.

In reality, video broadcasting over 3G will require not only enhancements such as HSDPA, it may also rely on the use of multiple technologies in tandem, including DVB-H or satellite, the researchers say. What's more, billing and content delivery will become complicated and the market is liable to involve a mixture of delivery networks, owned by different organisations, requiring revenue-sharing arrangements between network operators, broadcasters, content owners and various intermediaries.

"It is vital for mobile operators to seize first-mover advantage and take a proactive role in defining the future value chain," adds Heath.

Copyright © 2004, ENN

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