Thursday, May 27, 2010


Not sure if you have heard of this company before... at least I hadn't until it was mentioned in a course on strategy in my MBA classes. MediaFLO is a wholly-owned subsidiary of Qualcomm. Below I present a quick overview of the technology and my view on their current strategy.


FloTV is a technology that enables "broadcast" of TV channels to mobile devices (similar to channels you receive on your TV through DirecTV or Dish). Unless you have signed up with ATT or Verizon FloTV service, today you cannot "browse" TV channels on your mobile and then watch a channel you like. FloTV enables this. Even though current 3G technologies permit broadcast of video, it is a non-optimal solution i.e., it uses substantial air resources. Given that cell tower load has increased substantially in recent years primarily due to popularity of smartphones, service providers like ATT can barely maintain their voice/data quality and as such using the airwaves for "always-on" transmission of video  is clearly not an option.

Note that FloTV is designed to work on a "separate" spectrum altogether (which is owned by Qualcomm of course) and as such FloTV will not impact voice/data quality on existing spectrum for service providers. This is the key advantage. 


MediaFLO markets their product as a "platform" that enables video content-delivery over air to be eventually seen on mobile devices (which is not only limited to cell phones - it could be purpose-built devices in your car to watch video etc.).


Verizon (April 2007)
ATT (May 2008)


1.  Marketing (red)

Its interesting to see how little ATT/Verizon spend on MediaFLO marketing even though this could be a revenue generating service for them. To me it seems, they jumped into this technology a little too early (peer-pressure?).

2.  Coverage (red)

As a subscriber, I'll not be happy if I paid $30/month for this service and it stops working when I travel to other cities.

3. Cell phone manufactures (red)

For reasons mentioned earlier, only limited phones have MediaFLO technology (iPhone for one does not have it).



DVB-H (European standard, backed by Nokia)
IMB (Integrated Mobile Broadcast; Endorsed by Vodafone, T-mobile, Orange, SingTel).
ATSC/NH (Advanced Television Systems Committee - Mobile/Handheld). 
ISDB-T (Integrated Services Digital Broadcasting - Terrestrial)

[I'm not including pros and cons of each here; if you are interested in knowing about this, please let me know]


Would MediaFLO be more valuable 
(a) as a division of Qualcomm vs. a standalone company vs. a division of a cellular network operator vs. a division of a cable/satellite operator vs. ???

My answer:  For now, being a division of Qualcomm and later maybe as an independent company (my initial answer was an independent company but I changed it while typing my answer :-)).

First, lets look at who is included in the ecosystem of MediaFLO  -- content-providers, wireless service providers, cell phone manufacturers and end-users (in that order).

Content is _the_ key in the current media world. As the margins on delivery medium (cable, satellite) are thinning out, the cable/satellite operators are moving towards owning the content (vertical integration). This was evident by Comcast's recent acquisition of NBC.

ISPs - they would love to enable any revenue generating service. Question for them is at what cost and how would it affect (if at all) the quality of their existing data/voice services.

Cell phone manufacturers could care less what technology they are embedding in the cell phone to enable mobile video as long as the technology is not expensive (could affect the manufacturer margin) and makes cell phone bulky. An exception to above is when cell phone manufactures have their own favorites (i.e., Nokia for DVB-H, a European standard). Amidst competing technologies, device manufacturers don't really know which technology to include in their product. This has been the biggest challenge IMHO so far in promoting broadcast video over cell phones and as such, I think this is the critical link in the value chain. 

End users could also care less whether the live feed they receive on their cell phone is by using MediaFLO technology or something else (similar to the way we don't care how the wireless TV signal comes to our home).  All they care about is following 3 things: content (which channels etc.), quality and price. 

Given above, ...

1. MediaFLO cannot be part of cable operators like Comcast. Even though it would give access to content, it won't work well with existing customers like ATT/Verizon. (Comcast/ATT/Verizon compete on Internet/Voice front). Similar argument holds for MediaFLO being part of satellite operators like DirecTV or DISH.

2. MediaFLO cannot be a division of any cellular network operator as then pretty much it cannot sell its technology to a competing cellular network operator.

3. MediaFLO is best not part of Qualcomm as then it may not be able to have its technology embedded in cell phones made by world's largest cell phone manufacturers -- Nokia/Samsung/Motorola who are clearly against Qualcomm's monopoly. [I contradict myself here but I'll explain why I decided to go with Qualcomm later].

4. I do not see advantages for MediaFLO being an independent company. The only advantage perhaps is the delinking from Qualcomm (which is seen as the bully in town). Another advantage could be more subtle though important, is that of culture. Qualcomm is a company with strong licensing bent and having a strong engineering and litigation culture… I am wondering what options are off the table due to this association (I do not have any evidence to support my claim).

On a related note, MediaFLO announced recently (see their 2009 10K excerpt at the end) that it will be marketing directly to the consumer (presumably due to lack of marketing by ATT/Verizon). To me this strategy seems flawed, as I see MediaFLO as just an infrastructure service and it does not currently fall into customer criteria (content, quality and price) for using any broadcast video service. Quality perhaps. One can, however, argue the very successful "intel inside" marketing campaign -- a criterion that was used by consumers to buy intel-chipset based computers. But that situation was different in the sense that Intel had the bargaining power (vis-a-vis computer manufactures) whereas in this case arguably the cell phone manufacturers have the bargaining power (vis-a-vis MediaFLO). 

5. This leaves us with following choice --  part of another company (couple of more options here: cell phone manufacturers or content providers).  

First, I'll explore on the MediaFLO and cell phone manufacture angle…

As mentioned earlier, I strongly believe cell phone manufacturers are critical part of the value chain. Now, I don't know how feasible it is to package a "combination" of broadcast technologies in one device (my suspicion is that this choice is not feasible) and as such, in absence of a de-facto standard, most of the cell phones being shipped today do not have any such technology embedded in them. Moreover, certain manufactures may have personal preferences (e.g., Nokia for a non-qualcomm standard) which may be impeding growth of MediaFLO. To address this issue, MediaFLO could partner with Taiwanese cell phone companies such that it is able to put its technology on some of the best selling devices on each of ATT or Verizon networks. This implies partnering with iPhone (ATT), HTC (Verizon) and may be even Blackberry (both ATT and Verizon). This synergy will be most valuable for MediaFLO. This strategy can be executed best IMHO being as part of Qualcomm i.e., by leveraging Qualcomm's leadership in wireless space -- one option is to reduce the licensing fees charged to cell phone manufacturers). Very likely, cell phone manufacturers will jump at this offer as now their margins will improve. This, along with working with ATT/Verizon on pricing will very likely result in surge in customer uptake. With customers now considering support for ATT and Verizon's video service (aka MediaFLO) while buying new cell phones, it will put considerable pressure on Nokia/Motorola/Samsung who may then have to concede to this technology otherwise it will impact their cell phone sales in US.

The only reason it may make sense for MediaFLO to partner with content providers is that it would increase value proposition of MediaFLO solution. I believe that is best done outside Qualcomm rather than within Qualcomm (I do not have strong reasons to support this claim though).

(b) selling a bundle of device + transport + service direct to consumers vs. wholesale bundles to existing network operators (cellular or cable/satellite)?

Based on my argument above that MediaFLO is an infrastructure service, I believe they should not sell directly to consumers. I think they should focus on getting their technology be included in cell phones first.

(c) offering standalone mobile devices vs. converged mobile devices vs. targeting the automotive market?

I'd say for now its best if MediaFLO focuses on cell phones -- needless to say, more and more services are being provided through cell phone (email, browser, games) and as such it will be a natural extension to be able to see TV on such devices. 

Borrowing from a Forrester Report in 2005 on the topic of mobile TV, the problem with MediaFLO is - 
"misalignment of the service launch, handset availability, and user uptake." 


900 or so television stations (part of Open Mobile Video Coalition) that implemented ATSC mobile TV standard instead of FloTV. 

Well, the fight is still on. 

Our FLO TV Business. Our subsidiary, FLO TV Incorporated (FLO TV), formerly MediaFLO USA, Inc., offers its service over our nationwide multicast network based on our MediaFLO Media Distribution System (MDS) and MediaFLO technology, which leverages the Forward Link Only (FLO) air interface standard. This network is utilized as a shared resource for wireless operators and their customers in the United States. The commercial availability of the FLO TV network and service on wireless operator devices will continue, in part, to be determined by our wireless operator partners. FLO TV’s network uses the 700 MHz spectrum for which we hold licenses nationwide. Additionally, FLO TV has and will continue to procure, aggregate and distribute content in service packages, which we will continue to make available on a wholesale basis to our wireless operator customers (whether they operate on CDMA, WCDMA or GSM) in the United States. In fiscal 2010, FLO TV expects to offer the FLO TV service on a subscription basis directly to consumers in the United States. FLO TV plans to provide the services for use in personal television devices, automotive devices and other portable device accessories. These devices are expected to be sold through various retail and distribution channels.
Our MediaFLO Technologies (MFT) division is developing MediaFLO technology and marketing it for deployment outside of the United States. The market for mobile TV remains nascent with numerous competing technologies and standards.

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