Jarich: What's the real agenda behind mobile DTV?

Last month, I took some time to attend the National Association of Broadcasters (NAB) annual trade show. If you haven't been, it's worth a visit. Unlike your typical wireless show, content takes center stage at NAB. And where content - including video - is driving traffic over mobile networks, NAB's intersection with the wireless world is easy to understand. Content owners, after all, want to monetize the mobile distribution channel. Carriers want to carve out content relationships. Broadcasters want to leverage their spectrum to get into the mobile game, or, at least, build out the capabilities in order to shore up their value and spectrum positions.

Beyond content, NAB's broadcaster members have suddenly found themselves playing a pivotal role in the future of U.S. mobile broadband due to an asset they hold: spectrum. The specifics have been laid out many times before. The broadcasters' spectrum is seen by the FCC (and cellcos) as critical to supporting mobile broadband services going forward. "Incentive auctions," where proceeds are shared with broadcasters, are seen as a way for getting them to free up that spectrum. Broadcasters, therefore, relocate the spectrum of holdouts to ensure contiguous blocks and nationwide allocations.

FCC Chairman Genachowski's comments at NAB around the meaning of voluntary auctions make this point clear: "voluntary can't mean undermining the potential effectiveness of an auction by giving every broadcaster a new and unprecedented right to keep their exact channel."

Against this backdrop, you might guess that the broadcasters worry about the value of their spectrum. Anyone who has made it through the first week of Econ 101 knows that the scarcity of a commodity drives its value. To this end, the FCC expects to earn substantial funds from future spectrum auctions and is prepared to compensate broadcasters for giving up spectrum. Of course, the potential for a broadcaster to lose its spectrum (or have it relocated) impacts its current value. A future relocation, for example, limits an ability to build out new services in the near-term. Lacking new services, the enterprise value of the broadcaster is impacted, along with its chances at raising funds to build out those services.

Thus, we have the recent focus on Mobile DTV.

Built on the ATSC-M/H standard, Mobile DTV (mDTV) is a solution allowing broadcasters to repurpose their spectrum and infrastructure to deliver content directly to mobile devices. After years of product demonstrations and test market launches, the industry came together at NAB to position 2011 as the year in which the technology becomes a commercial reality. The Open Mobile Video Coalition - a broadcaster association aimed at driving mDTV in the US - sponsored the Mobile DTV Pavilion to highlight the breadth of the technology's ecosystem including infrastructure, device and back-office players. PBS announced plans to launch an mDTV-based emergency alert system.  Keynotes were scheduled to expound on the bright future of the technology, including an expected coverage of 77 million households within 12 months. Days after the show closed, the Mobile Content Venture - a broadcast group JV - announced plans to launch an additional 12 markets. The educational and PR efforts behind the technology (if not the foot traffic in the Mobile DTV Pavilion) were palpable.

To be fair, the technology's proponents managed to make a compelling case for it:

• After trials and testing, a transmission standard has been agreed upon.
• Estimates suggest that turning up Mobile DTV is relatively inexpensive for a broadcaster.
• Mobile DTV devices ranging from portable TVs, to DVD players, to USB receivers and car tuners are available.
• Mobile devices are being prototyped.
• Content groups - including the Mobile Content Venture and Mobile500 Alliance - promise mDTV programming.
• Where mobile broadband networks are facing congestion concerns, the one-to-many nature of broadcast technologies was (rightly) evoked as efficient for delivering popular or critical (emergency alert) content.

Yet, as compelling this might all seem, it is difficult to see mDTV living up to its promise in the U.S. From an ecosystem perspective, the mDTV market is focused on dongles and peripherals - and maybe netbooks - at a time when smartphones and tablets are driving media consumption. Silicon players with the clout to drive mDTV into mainstream devices aren't particularly active in the space. The content side of the ecosystem is being driven by two different organizations which can't explain how their efforts compete. From a business perspective, these same organizations repeatedly note that the mDTV business model is a, "work in progress."  Neither, however, was able to explain how broadcasters would effectively move forward on simulcasting content to mobile devices when distribution rights to mobile devices might be owned by other parties or how a service would be compelling if only one or two stations in a market were up and running.

It is much easier, however, to see the real agenda at play.

If Mobile DTV can be transformed into a commercial reality, the value of the spectrum hosting mDTV services will grow. Broadcasters operating services on that spectrum will have a better chance at avoiding relocation. Even if those services never get launched, mDTV as a viable option for broadcasters raises the value of their spectrum, much like the potential relocation of spectrum licenses lowers it. This doesn't mean that all of the arguments for mDTV are specious. Some make sense (its efficiency for one-to-many communications). Some seem like nothing more than attempts to exploit the latest market trends (mDTV-based couponing). Playing up the value and viability of Mobile DTV at a time when the FCC is working to get access to the spectrum, with a business model that is unclear, however, is too much to be a coincidence.

Peter Jarich is the Service Director leading Current Analysis telecom infrastructure practice. Follow him on Twitter: @pnjarich.