Dean Bubley: Mobile TV... I'm in two minds

Dean Bubley at the Disruptive Wireless blog provides his thoughts on Mobile TV. Here are a few of the issues he sees:

• Spectrum
• good indoor coverage may also be an issue - at low frequencies (sub 1GHz), it may be do-able with a 50% premium in infrastructure spend vs. "outdoor + best-efforts indoor" coverage. But at higher frequencies like 3G-band 2.1GHz, this is likely to be much worse.
• Handset. Looking at some early devices, it seems that typically they have to have 30-70% larger batteries than ordinary 3G phones (which lets face it aren't the most power-efficient in the first place). Various commentators have said that they can get 2-4 hours viewing time, although this presumably excludes people using the devices for other 3G stuff like music downloads or serious gaming as well.
• user interface design, and integration with all the other bits of software on the phone. Unless we have a "velcro-type" (trademark acknowledged...) solution, it seems likely that we'll have to have a huge amount of integration work knitting in the various bits & pieces. Want interactive viewer-response? OK, customise the SMS client to behave in the right way. Want to have a Tivo-like experience? Get some more software (& memory). Want the TV to pause when you get a call coming in? Or maybe picture-in-picture when you get an MMS?

Bubley thinks handset costs will be higher to accomodate the additional hardware bits & pieces. He states it will obviously "depend on volumes, but I reckon that by the time you've done additional software work, added in a TV chipset / antenna / better screen / more memory / clever hinge etc, done some "useability" consulting and so on, it may add $50-120 to the price of a handset." He then calculates the customer acquisiton costs and what consumers are willing to pay:

Now, supposedly people are prepared to pay a monthly fee of $10 / €10 for mobile TV. Some trials bear this out, although a speaker from Finland (ie pretty affluent mobile-centric country) thought €5-8 was more likely. I'd be surprised if massmarket punters would be willing to pay much more than €5 (ie roughly what they pay now for SMS per month). €60-100 per year, maybe. And unless you can persuade them to pay more for a device (€50 was mentioned as being acceptable), operators will need to subsidise it - so probably an extra €10-€50 per sub per year, given a 18/24 month upgrade cycle. Then there's the capex/depreciation cost of the network, marketing & sales & support, opex for the backhaul network, revenue-share with content owners or broadcasters etc.

He concludes that:

I'm getting sceptical about the business model ever working, even at €10 / $10 per month. Unless there's a hefty wedge coming from advertising - maybe $30-50 per sub per year. (I've got no idea what the comparative figure is for TV advertising although that would need to be multiplied up by average # of viewers per household subscription anyway)