Qualcomm wants to sell a slick 3.5-inch mini TV device for $249. But if you look at this a little closer, you have to wonder about the value proposition here. It doesn’t receive digital television (DTV) signals, but rather, picks up the old analog UHF channel 55. And, you now have to pay a $9 / month access fee. What content can it receive? You get NBC properties including NBC sports, plus MTV and Nick on a take anywhere mobile platform (as in car, train, bus, trolley, ferry boat, canoe…you get the idea.) Maybe this works for someone who can’t get enough OOH (out of home) live mobile video streaming, but for the rest of us, it just doesn’t make sense. Are they drinking the Kool-aid?

Steve Sechrist
Senior Analyst and Editor

Can you imagine killing your iPhone / iTouch local broadcast news feeds, which are free over 3G or Wi-Fi, for the analog MSNBC feed, which you have to pay for? Heck, I can install MSNBC on the iPhone for no fee at all. So what is Qualcomm thinking? Truth be told, the company is already on the record as saying MediaFLO isn’t making the numbers they need to pay off the $800M investment in spectrum and build-out of its own nationwide mobile TV delivery network. COO Len Lauer said, "We’re not where we need to be. We’re not meeting our expectations," as quoted by Stacey Higginbotham of newteevee.com in her interview last month.

According to Lauer, a dearth of MediaFLO handsets is part of the problem, so the company is launching a direct-to-consumer device it calls the Handheld TV with a 3.5-inch diagonal touch-screen that weighs-in at just over 5 ounces and offers 5 /300 hours of full-on/standby power for mobile viewing. We think this is perhaps a last ditch effort to kick-start the subscription-based mobile TV space. But as we’ve said in past columns, it’s very hard to beat the economics of free-as in ad based mobile TV delivery.

But the folks over at Qualcomm didn’t get to be the dominant market player in the hyper competitive cell phone chip market by not doing their homework. And the large network build-out for mobile TV delivery may just have another valuable (very valuable) purpose - serving as an alternative delivery network (or "platform" as Higginbotham likes to call it) for broadband-constrained wireless carriers. Data usage is up by 400% with YouTube downloads leading the way, so more bandwidth is needed now, she said.

"The reason we built this, and we’re starting to get more and more interest from network operators, is for network offload," Lauer said. And that certainly is one way to look at it. From the beginning Qualcomm justified a separate mobile TV network because the existing wireless network wouldn’t scale up to handle the bandwidth needed.

But to us it looks more like the paid subscription mobile video business model (that proved difficult even in good times) is catching up to Qualcomm’s MediaFLO. Now, they have an opportunity to repurpose this infrastructure to serve a much higher need. That making lemon-aid from lemons. But no matter how you drink it, it tastes much better than the Kool-aid. - Steve Sechrist