Qualcomm (NSDQ: QCOM) is rethinking how it operates its mobile TV service in the U.S., and based on their early experiences, is radically changing course for how the company will approach the international market. Chem Assayag who heads up business development for MediaFLO Technologies in Europe, said in an interview today that rather than be a service provider in new markets, like MediaFLO is in the U.S. today, the company will play an integral role in bringing players to the table, and will only supply the technology — it will not buy spectrum, build towers, or source content. In addition, the company is eager to change the business in the U.S. from a subscription to a hybrid model, where most of the content is free and users pay to access additional content.
The interview provided a rare glimpse into Qualcomm’s broader strategy for mobile TV services. At Mobile World Congress, they announced that a standards body in Europe, called ETSI, has approved the use of FLO technology, making it easier to roll out abroad. Excerpts from our talk after the jump…
– Rejiggering services in the U.S.: Today, Qualcomm’s MediaFLO USA subsidiary reaches 150 million people. Qualcomm has a capital intensive model that requires buying the spectrum, building the towers, sourcing the content, and then reaching distribution deals. End users pay about $15 a month for the service. Assayag: “Where we have networks deployed, operators are struggling to ramp up their service.” He said to speed up adoption, they are exploring the idea of using a hybrid model, where users will get free content, and then some additional content, like a sports channel, or HBO, would cost more. Also, with a free model, an advertising model is more effective with a larger install base. “It’s what people are used to in traditional broadcast TV.” Because MediaFLO works with AT&T (NYSE: T) and Verizon Wireless (NYSE: VZ), the two will have to endorse any changes.
– Determining the international approach: Assayag said Qualcomm will not buy spectrum or build a network in international markets. Instead, it will help bring the operators and the content providers together — Qualcomm will be the technology vendor. That differs from what the company set out to do initially, since last year it bought a significant chunk of spectrum in the UK for $16.6 million. He said it’s still an attractive swath because they aren’t required to roll out mobile TV on it and it will be good for conducting trials. But “if we go to implement services there, we’ll do that with partners in the UK.” In Japan, they’ve formed a joint venture with KDDI called MediaFLO Japan Planning Incorporated that will explore the roll out of MediaFLO (however, the regulators still need to release the spectrum for such a service).
– Learning from mistakes: I asked Assayag if the approach they are taking internationally are based on the mistakes made in the U.S. “I think the U.S. was the first experience, so we wanted to show it was a good technology and that it was really efficient. Today, we cover 150 million people, which makes it the largest mobile video network worldwide…and since we are expanding the U.S. to 200 million by the end of the 2009, it will make it the largest network by far. So, we wanted to…initiate an ecosystem around devices. Now we have strong cooperation with *LG*, Samsung and *Motorola*, and then in 2009 we