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Monday, August 21, 2006

Cell Phone Nation: Can Mobile TV Deliver?

Stocks: (NOK)(VZ)(MOT)(S)(ERICY)

The large tech research firm IDC was quoted in USA Today as saying that US cellular subscribers using TV on their phones will move to 9.2% of the market by 2010. That will take usage up to 24 million handsets from the current 7 million. Revenue per year will also rise to $1.5 billion over that same period. The IDC research also indicated that only a very small percentage of current cell users were “very likely” to watch video of any kind at this point.

There are a number of network and battery life challenges for running video on cell phones, but the biggest challenge may be that so few people are interested in mobile TV at all.

Sprint Nextel’s revenue is at an annual run rate of $45 million. Then there is Verizon Wireless, Cingular, T-Mobile, and a bunch of smaller players. Does $1.5 billion a year spread across all of these companies matter enough for them to make a hard push for video? At this point, probably not.

The same holds true for handset manufacturers. Why would Nokia, Motorola, or Ericsson push features that drive up handset costs if customers will not use them?

The jury is still our on video use on cell phones. It will be for some time. But, the initial adoption projections are hardly encouraging.

Douglas A. McIntyre can be reached at He does not own shares in companies that he writes about.

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