DVB-H rockets ahead in Italy
Makes the world rethink its sums
Comment One of the few successes to come out of the World Cup fever was the Italian DVB-H service from 3 Italia, which launched for real during the run up to the Cup.
Most other mobile TV services merely used the World Cup as a demonstration of what their service would look like.
3 Italia has this week filed a document at DVB Project saying that it already has 111,000 clients in the first five weeks (from 6 June to 11 July) after it was introduced on 6 June, making its take off even faster than the S-DMB service that was launched late last year in Korea – but then again Korea is a slightly smaller country, Italy has 58m people against Korea's 48m.
It took around three months to reach the first 100,000 users of S-DMB, and in Italy this has been achieved in under half the time. The key has been the wide availability of the network, with 1,000 transmitters supposedly covering 2,000 Italian cities (read towns rather than cities), and the idea that people can sample it by buying just a day or a week's TV at a time.
3 Italia has chosen to charge dramatically more than any other operator or supplier is suggesting, and higher than surveys suggested people thought mobile TV would be worth. One day's viewing costs €3 ($3.70), a week is €12 ($15) and a month €29 ($36.50), with the full service including all the mobile TV services, one hour of calls per day and one GB of internet downloads for to €49 ($61.65).
The service offers nine channels at the launch, plans to increase this to 20 at the end of the year and 40 for 2008 by using a second 8 MHz slice of spectrum. 3 Italia bought its spectrum from Canale 7 in channels 21 and 55. We're not sure which of the spectrum it is using today, but it has both 474 MHz and 746 MHz to choose from.
The company says that already its services reach 40m people, some 75 per cent of the country and it runs on LG U900 and Samsung Stealth phones, running an electronic service guide from Expway, using conditional access from Nagravision, with Gemplus smart cards.
We would estimate that the network rollout to date is likely to have cost it around €80m ($100m).
3 Italia reports that demand has not slowed down since the World Cup ended, and that usage has been mostly outdoors with much of it in office hours. Though we're not quite sure how 3 Italia knows when a user is indoors or not.
The company says it will have 500,000 users by year end and that the two Italian services (Mediaset is due to launch shortly) will have between them 10musers, around 17 per cent of the country's population, by 2010.
If that's anything like true, then everybody out there is going to have to revise their calculations rapidly on both the total number of subscribers to mobile TV globally, but more importantly on the value that this imputes for the 25 or so nascent services that are pre-launch right now.
Since Italy is part of the 100 per cent club, those handful of countries that have more mobile phones than people, then 17 per cent of the population also means 17 per cent of mobile users.
Clearly, what is going on is that 3 Italia has offered everyone a phone upgrade to the sexy new, highly graphical, DVB-H phones if they would take the service, and is getting good response.
In the Faultline report on Mobile TV we made all of out predictions on 15 per cent of mobile users taking mobile TV as the replace phones, paying something like €10 month. 3 Italia is looking to virtually double any revenue forecast made on those numbers.
Every business plan being used for funding for DVB-H networks will have the service price increased and the market penetration ramped to 17 per cent and a new degree of urgency pushed into it, once these figures are digested.
If they are sustained, and content costs are only 50 per cent of the subscription price, then 3 Italia could pay back its investment sometime in the its third year of operation and be profitable way before that.
Interestingly, US researcher IDC came out with a forecast this week based on mobile TV market penetration not reaching beyond 10 per cent of all subscribers by 2010.
With this kind of experience in Italy, IDC and other surveys like them, which interview people that have never seen the quality of mobile datacast TV, are wrong at worst, and misguided at best. IDC says that users of mobile TV or video content is expected to grow from seven million this year to 24m by 2010.
The firm said there were obstacles to adoption of mobile TV and video services including uneven operator broadband network deployments, handset limitations, business model complexities and indirect competition.
How come none of these are applying in Italy?
Copyright © 2006, Faultline
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