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Saturday, April 1, 2006

BUSINESS MODEL STILL TENUOUS

TV programs go mobile as One Seg services begin


Staff writer

Starting Saturday, many cell phone users may find their beloved handsets even more indispensable. In addition to tapping out messages to their friends and surfing the Net, people will be able to see digital broadcasts of their favorite TV shows wherever they go, on their mobiles.

News photo
Shoppers check out NTT DoCoMo mobile handsets equipped with TV tuners at a Bic Camera store in Tokyo's Yurakucho district Thursday.

The new service, called One Seg, short for "one segment," takes its name from the one frequency segment out of 13 allocated to terrestrial digital broadcasting that is reserved for mobile phones.

Users with a TV tuner-equipped cell phones, car navigation systems and portable game players will be able to watch the broadcasts free of charge.

An outlet of major electrical appliance chain Bic Camera Co. in the Yurakucho district of Tokyo said NTT DoCoMo Inc.'s new tuner-equipped handset, which went on sale early last month, sold 1.5 times to twice as many handsets as other new models on its debut day.

But wireless carriers are cautious over whether the convergence of TV and the Internet will be a moneymaker.

"If users just watch TV programs, we will not be able to gain a profit," said Kazunori Higuchi, a spokesman for NTT DoCoMo, the country's biggest mobile phone service provider. "We hope users will visit sites related to the TV programs," which would allow the telecommunications carrier to charge users for data services.

According to Higuchi, here's how it might work: A viewer is watching a drama and decides she likes the dress the lead actress is wearing. At the bottom of the screen is a link to an online shopping mall. She clicks on the link and buys the dress. Or maybe she just likes the show's catchy theme song and downloads a ring tone of the opening bars.

One obstacle standing in the way of this vision is that handsets with tuners are still scarce and expensive. NTT DoCoMo offers only one such handset and KDDI Corp., operator of the au mobile service, sells two. All of them cost about 10,000 yen more than conventional handsets.

Vodafone K.K., which Softbank Corp. agreed to purchase from the eponymous British mobile communications company in mid-March, is expected to come out with tuner-equipped cell phone sometime in April.

"We will continue to provide (tuner-equipped) handsets, but we do not plan to build it into all of them," said Satoru Ito, spokesman for KDDI.

The reason for their reluctance appears to be that mobile phone carriers may not have much to gain from One Seg, which, depending on how mobile TV junkies spend their time, could even cut into their data transmission revenues, according to industry experts.

Tomoyoshi Kuzushima, a telecom consultant at Nomura Research Institute, said users may watch the free digital broadcasts and spend less time (and money) on e-mail or the Internet services.

Nonetheless, NRI predicts the One Seg market will grow to 50.2 billion yen and attract 24.8 million users by fiscal 2010. The World Cup soccer tournament taking place in Germany in June will encourage people to purchase the tuner-equipped handsets, Kuzushima said.

But he warned that companies have yet to create a business model that will profit both mobile phone companies and TV broadcasters, and motivate them to provide better content.

"New technologies are being introduced and there are other ways to watch moving pictures besides digital broadcasting on a mobile device," said Kuzushima, citing "podcasts" on Apple Computer Inc.'s iPod MP3 player and MediaFLO, a live video streaming technology for mobile phones developed by Qualcomm Inc. of the U.S.

"If such technologies prove to be more profitable, (mobile phone carriers) may decide to replace One Seg service with a different one."



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