Mobile DTV Merger Discussions Continue, Issues Remain

Talks between the two broadcaster groups have been going on for a year, industry officials said. And while the two sides appear to be in agreement on technical issues, such as a need for software-based conditional access, MCV has so far resisted the Mobile 500 request that its members get equity in a combined group, industry officials said. Mobile Alliance 500 Executive Director John Lawson declined to comment on that rift. MCV officials declined to comment.

The discussions come after mobile DTV failed to make its expected nationwide arrival in the U.S. in 2011 and as the Mobile 500 Alliance prepares for a test in Seattle in the spring. Suppliers from LG Electronics and RCA to Vizio demonstrated mobile DTV devices at CES last year, but only a small amount of product made it to market. RCA’s mobile product with a seven-inch display was sold through Nebraska Furniture Mart in Omaha, where a local Gray Television station is transmitting mobile DTV, Lawson said. A combination of Mobile 500 and MCV could be aided by both groups having developed technology, including conditional access, to a common standard.

"We feel that the next three to six months is going to be the critical time” for mobile DTV and “we feel very optimistic about it,” said Ronen Jashek, co-founder and vice president of marketing at receiver chip developer Siano. The Mobile 500 and MCV “are going in the right direction and they have to come to an agreement, resolve all the differences and work together eventually. Everything was supposed to happen in 2011 and if something doesn’t happen in the first half of 2012, I really don’t think by the end of the year or 2013 we will be discussing ATSC-MH [Advanced Television Systems Committee-Mobile/Handheld] again."

Any combination would likely face several challenges that would need to be addressed, including antitrust issues, Lawson said. Consumers also have shown a preference for “multiple applications,” he said. The Mobile 500 and MCV could “co-exist in the marketplace” separately, but “it would be even better” through a merger.

Mobile 500’s test in Seattle will likely include at least three broadcast channels, including Fisher Communications’ NBC affiliate KOMO-TV, said Brian McHale, vice president of technology at Fisher. Other stations expected to participate include KING5 TV and KIRO-TV, he said. The tests will be run using an ATSC tuner dongle that will likely retail for about $99 containing Siano’s SMS1530 receiver chip that features a 100 MHz internal clock speed and was released in October 2010. The dongle will attach to an iPad or iPhone as part of the test, which will likely include focus group and vendor participants, McHale said. The iPhones and iPads will get access to the programming through Elgato’s TV application software. TitanTV will provide the electronic program guide. The local stations will promote the service and Mobile 500 will seek local retailers to sell the dongle, Lawson said.

In addition to local stations, Mobile 500 wants to add some premium channels as part of the test. For a market to be successful, a mobile DTV service will need about 20 channels, five or six of which will be free-to-air with the remainder being premium and video-on-demand, Lawson said. Content in Seattle will be delivered using Expway’s servers installed at Fisher stations, he said. The test is also expected to include audience measurement revenue-generating strategies, including local advertising, Lawson said. Mobile 500 had approached investors over a six-month period in 2011, but most wanted to see operating results before committing to funding, Lawson said. Mobile 500 includes 47 broadcast companies with 427 stations.

MCV signed an agreement with Belkin to develop products for its Dyle mobile DTV service that’s expected to be available through 72 TV stations in 32 markets in reaching 50 percent of the U.S. population, MCV said. MCV represents 15 broadcast groups, including Belo, Cox Media and E.W. Scripps.

Siano, which has its chips produced using a 90-nanometer process at several Chinese suppliers, including SMIC, has had success in China. Siano has a half-dozen receiver chips in China, where the market is expected to grow to 45 million units this year from 25 million in 2011, Jashek said. Mobile DTV in China is based on the CMMB standard. Siano claims a 50 percent market share for mobile DTV in China, about 90 percent of which is delivered through handsets, Jashek said. Siano chips have been installed in Lenovo, LG Electronics, Nokia, Samsung, ZTE and other handsets, he said.

Meanwhile, Siano will likely weigh a U.S. initial public offering late this year or in 2013, provided the mobile DTV starts to emerge here, Jashek said. While privately held Siano doesn’t disclose its finances, revenue has been growing at a “very high percentage,” Siano said. Having raised $20 million last year, Siano is funded for continued chip development, but in being a venture capital-backed company, “the default plan is for us to go with an IPO,” Jashek said. Siano has 100 employees, including 60 at its headquarters and R&D facility in Israel and another 25 in China, Jashek said. It has a two-person sales office in Dallas, he said.