Overview

1
Overview
Value net of mobile TV
Platforms and solutions
Factors shaping market evolution
DMB in South Korea
Lessons and outlook
2
Value net of mobile TV

• Value-chain of mobile voice services
• Few players (equipment manufacturers, network
  operators, service providers)
• Standardization sufficient to coordinate
• Value-net of mobile TV services
• Larger number of players
• Mobile operators
• Content providers
• Service providers
• Application providers
• Broadcast companies
• Network operators (mobile and broadcast)
• Equipment manufactures
• Challenges of coordination and service integration

3
Platforms and solutions
Platform/Solution Platform/Solution Features
In-band Digital Video Broadcasting Handheld (DVB-H) Unicast, existing handsets usable, opportunity costs of bandwidth
In-band Multimedia Broadcast Multicast Services (MBMS) Multicast, existing handsets usable, higher efficiency of bandwidth use
Either Sling Media User-driven and user-configured solution, 2.5G, 3G, WiFi
Out-of-band Terrestrial Digital Media Broadcasting (T-DMB) Additional broadcast frequency needed (T-DMB 170-230 MHz, 470-862 MHz, 1.452-1.492 GHz) new handsets investment in broadcast infrastructure increased coordination needs between players
Out-of-band Satellite Digital Media Broadcasting (S-DMB) Additional broadcast frequency needed (T-DMB 170-230 MHz, 470-862 MHz, 1.452-1.492 GHz) new handsets investment in broadcast infrastructure increased coordination needs between players
Out-of-band Media Forward Link Only (MediaFLO) Additional broadcast frequency needed (T-DMB 170-230 MHz, 470-862 MHz, 1.452-1.492 GHz) new handsets investment in broadcast infrastructure increased coordination needs between players
4
Status of deployment
Platform/Solution Platform/Solution Deployment
In-band DVB-H Italy (3 Italia, TIM, Mediaset, Vodafone, all 2006), Finland (Digita/Nokia, 2006), U.S. (Modeo, HiWire Mobile TV, planned for 2007), Germany (planned for 2008), Spain, France (planned)
In-band MBMS Not yet commercially deployed
Either Sling Media 10 countries, including U.S., Canada, Brazil
Out-of-band T-BMB South Korea (six providers, 2005, limited coverage), Germany (Mobiles Fernsehen Deutschland, 2006)
Out-of-band S-DMB South Korea (TU Media, 2005)
Out-of-band MediaFLO U.S. (Verizon, 2007)
5
Factors shaping market evolution
6
South Korean DMB infrastructure
7
Technology issues of mobile TV
S-DMB T-DMB
Frequency Ku band (12-13GHz) , S-band (2.630-2.655) - As power output is not limited by international regulations, the S-band is well-suited for broadcasting to small handset antennas VHF band III , L-band (1-2GHz) - Multiplexed T-DMB uses only 1.5-1.7 MHz making it easier to accommodate than the 6-8MHz needed by DVB-H
Standardization System E Uses CDM, similar to the CDMA technology ( Korea competitive advantage) System A (Eureka 147 standard) Backward compatible Allowing use of the DAB (Stable and Mature technology)
Equipment Gap filler - To cover areas not reached by the S-DMB or T-DMB signals, a gap filler system of repeaters is used. Gap filler - To cover areas not reached by the S-DMB or T-DMB signals, a gap filler system of repeaters is used.

• When making technology adoption, policy makers
  considered business as well as technology
• Influencing criteria such as the cost
  effectiveness of the infrastructure, equipment,
  and standards
• Closely linked to and co-evolved with technology
  and firm strategies

8
Policy toward mobile TV (1)

• Licensing Policy

• Korean Broadcasting Commission KBC adopted RFP
  (Request for Proposal) for provider selection
• For T-DMB in Korea, there are three T-DMB service
  providers (KBS, MBC, SBS) and three
  non-terrestrial service providers (CBS, YTN DMB,
  KMMB)
• TU Media took a license as the first S-DMB
  service provider (in Dec. 2004)
• Before licensing, TU Media had already invested
  substantial capital in launching a satellite (97
  million), the installation of gap fillers (230
  million) and the establishment if a DMB
  broadcasting center( 60million)
• The circumstances of policy in which government
  should support to DMB service were created
• ? Korean DMB was developed by a leading mobile
  providers technology-push to market rather than
  by market-pull

T-DMB T-DMB S-DMB S-DMB
Date Description Date Description
Jan 2005 Call for service provider application Mar 2004 Launching of the satellite for S-DMB service
Feb 2005 End of application acceptance period Nov 2004 Call service provider application
Mar 2005 Service provider selected (6 providers) Dec 2004 Service provider selected (1 provider)
Dec 2005 Commercial service May 2005 Commercial service
Source MIC
9
Policy toward mobile TV (2)

• Retransmission of terrestrial TV programs via
  S-DMB

• S-DMB provider has insisted on retransmission
  (consumer needs, fair competition with T-DMB, )
• KBC left the issue to contractual agreements
  between providers
• Terrestrial TV broadcasters have not signed
  retransmission contracts

• Pay service to T-DMB

• At least initially, advertising revenues would be
  too fragile and volatile to cover the costs of
  gap fillers and other start-up expenses
• Users wanted to maintain T-DMB as a free service,
  also VHF channels are regarded as a public asset
• Up until now, KBC has had difficulties in finding
  solutions to the T-DMB cost problem

• The profit structure of the industry could be
  changed according to
• how policies for competition are designed

10
Business aspects of mobile TV

• Business issues

Business aspects Business aspects S-DMB T-DMB
Supply Cost structure 500-800 million 50-80 million
Supply Cost structure As T-DMB will mainly have to invest in a gap filler infrastructure, its costs are lower As T-DMB will mainly have to invest in a gap filler infrastructure, its costs are lower
Demand (Consumer perspective) Rate 13/month Free
Demand (Consumer perspective) Channels A higher number of channels A lower number of channels
Demand (Consumer perspective) Coverage Nationwide Regional coverage ? Nationwide ( 08, 2007)
Public Policy regime
Technology development

• Competition in business environment will change
  due to future technology development and
• public policy regime
• T-DMB pricing policy (Free rate ? Monthly flat
  fee, per channel fees, or charges for specific
  contents)
• S-DMB Public policy (Contents ? Allowing
  retransmission of terrestrial TV programs)

11
The Korean experience

• In addition to high initial cost, market demand
  has fallen short of expectations
• At the end of 2006, S-DMB reached an estimated
  one million subscribers. But due to initial
  investment cost and high fixed cost still
  loss-making
• Below 50 of short-term break-even goals of 2.2
  million subscribers
• Optimistic predictions
• 6.6 million S-DMB subscribers by 2010 (TU Media)
• 10 million T-DMB subscribers by 2010 (ETRI)
• However, there are many issues awaiting solution
• Policy issues and conflicts waiting to be
  addressed by government
• Pay service for T-DMB
• Retransmission for S-DMB
• These issues will be repeated when Korea
  introduces other convergence services, already
  visible in IPTV and Wibro
• Solutions to these issues could lead to major
  changes to DMB business environment in the future

12
Lessons and outlook

• Important technical and economic differences
  between platforms/solutions
• Factors shaping market evolution
• Frequency allocations (in-band, out-of-band)
• Eligibility for a mobile TV license
• Rules governing competition among providers
• Revenue model (pay, ad-financed, hybrids)
• Ability of providers to bundle with other
  services
• Competition by substitute services (e.g.
  vodcasting)
• Policy and market rules should eliminate
  bottlenecks and facilitate experimentation