Qualcomm Seeking Divorce From Needy MediaFLO
Qualcomm CEO Paul Jacobs said on Wednesday that the company is looking at ways to drop MediaFLO, its money-sucking mobile television unit.
This isn't too much of a surprise. During its recent quarterly earnings call, Jacobs noted, "With respect to our FLO TV business, we’re engaged in discussions with a number of partners regarding the future direction of the business. We are considering a number of alternatives and we will update you as appropriate."
The company is looking to get rid of the mobile TV unit that it has spent a fortune building. He expects some sort of sale to take place within the next year, though he wouldn't provide any details.
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Live mobile television just hasn't gotten the traction that Qualcomm hoped it would. The company spent hundreds of millions to obtain the spectrum and build the network to deliver live television to mobile phones. The first markets went online way back in the spring of 2007. Despite a reasonably large service footprint now, no one seems interested in mobile television. Why not?
First, the money. AT&T and Verizon Wireless offer Qualcomm's FLO TV mobile television service, but at a monthly cost above and beyond normal cellular service. For example, AT&T charges $10 per month for the right to watch TV on a handset. It doesn't matter if you subscribe to a $30 unlimited data plan, $20 unlimited messaging plan, and a $60 voice plan -- mobile TV still costs $10 extra.
Second, the devices. Handset makers have churned out perhaps only a dozen models in the last three years that are able to access FLO TV's mobile TV service. That's not a whole lot. None of the FLO-capable handsets fielded by AT&T and Verizon Wireless were appealing. They haven't sold all that well.
Third, it isn't ubiquitous. FLO TV got off to a slow start. FLO TV service was only available in a handful of widely scattered markets though 2007 and 2008. It wasn't until June 12, 2009 -- more than two years after launch -- that Qualcomm was able to get its hands on a good portion of the 700MHz spectrum it needed to expand MediaFLO's footprint. By then, the novelty of mobile TV on a handset had come and gone.
Fourth, it doesn't help that nearly all the carriers offer a mobile video alternative that can be used under the safety of the $30 unlimited data plan. Now that many devices can also store vast amounts of content, users are free to load their own movies or television shows without a monthly commitment.
That's not to say that live mobile television -- and FLO TV -- has no value. It does. In an interview with GigaOm, Jacobs said, "We want to see FLO continue so it’s not like we’d want to sell the spectrum, but there are certainly people who would buy it for the spectrum. The spectrum is extremely valuable. So what that means is there's a high bar. The business that’s generated through that spectrum, by the broadcast system needs to be valuable too."
"Whether it's an operator, a content player, a web company — there's a wide range of companies that could make use of [MediaFLO] and deal with the business model where they are trying to get a lot of content down to a lot of people and they can't really afford to do it on the cellular network. The rationale for doing it is still there. The data networks, the carrier networks are getting overloaded by data — and a lot of it is video so that idea was right. Now it's just a question of did we get the right business model and the right go-to-market strategy."