Year in Review 2010: Qualcomm shuts down FLO TV as mobile TV sputters

Mobile television appeared poised for a breakthrough this summer during soccer's much-anticipated World Cup event. With the vast majority of play unfolding during weekday hours in the U.S., sports media giant ESPN made the decision to stream all 64 matches live across its ESPN Mobile TV channel, available via both the MobiTV and FLO TV broadcast platforms, and the payoff was huge: ESPN's mobile coverage reached 1 million unique viewers during the tournament and registered 93 million total minutes of viewing. But when the World Cup ended, mobile TV's momentum among U.S. subscribers dissipated, and by late July, Qualcomm (NASDAQ:QCOM) acknowledged plans to divest the FLO TV unit. At the company's Uplinq 2010 developer conference in San Diego a few weeks prior, Qualcomm chairman and CEO Paul Jacobs explained it was never Qualcomm's intention to become the service provider operating FLO TV, after previously acknowledging consumer adoption had failed to meet Qualcomm's expectations.

Qualcomm announced plans to shutter FLO TV in October, halting direct-to-consumer sales of new devices; it will officially terminate service on March 27, 2011. Jacobs later said only about a million subscribers signed up for the FLO TV service, explaining that when consumers were offered a flat-rate price, usage surged--and video streams began clogging network bandwidth. But when a per-minute rate was instituted to solve the problem, usage went into freefall. "Nobody wants a TV when it's time-based," Jacobs said. (This month, Qualcomm agreed to sell the wireless spectrum underlying FLO TV to AT&T (NYSE:T) for $1.92 billion; Qualcomm reportedly spent $683 million acquiring the spectrum, and anticipates its exit from the FLO business to incur charges between $125 million and $175 million in fiscal 2011.)

Mobile TV's future appears bleak, but the category isn't dead yet. MobITV states it is on pace to deliver close to 1,400 live events in Q4, and Mobile Content Venture, the nationwide mobile DTV effort launched in mid-April by a dozen broadcast groups including NBC, Fox and Cox Media Group, says it will deliver services to more than 40 percent of the U.S. population by late 2011, with at least two ad-supported free-to-consumer channels in each market. Even so, the next World Cup is four years away--unless a host of other must-see events come along in the interim, it's unlikely mobile TV providers will still be around to broadcast it.