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Latin America: Proliferation of 3G Networks Will Drive Adoption of Mobile TV

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In some Latin American mobile markets, such as Argentina and Chile, voice service has begun to reach saturation levels. As such, Value Added Services (VAS) like Mobile TV represent an alternative that allow operators to increase both revenues and customer loyalty. This situation has gained even more potential thanks to the roll out of 3G networks in the region.

The Mobile TV offering provided by Latin American mobile operators is focused on Unicast services running in 2.75G networks (Oi - Brazil & Telcel - Mexico) and 3G networks (Entel PCS - Chile & lusacell - Mexico). Signals defines Unicast as those Mobile TV transmissions that are distributed only via the use of operator data networks and 2.75G networks as those offering EDGE services.

This impedes the implementation of this type of service on a massive scale. Signals points out that as long as the Unicast type business model, running in 3G networks, is the only Mobile TV alternative in the marketplace, this type of service will not generate significant revenues for the mobile market. As such, by 2013, Mobile TV revenue would reach US$ 1.8 billion in the seven largest Latin American telecommunications markets, a figure that would represent just 2.7% of total sector revenues.

The launch of 3G networks as from 4Q07 has acted as a new opportunity for the roll out of Mobile TV services. Signals Telecom Consulting believes, however, that said offering is still in the development stage and it is unlikely that such can be offered on a massive scale due to the following:

  • The focus on high consumption users. This is demonstrated by high access costs, both for handsets as well as for the service itself.
  • The absence of easy to understand user plans. As of 1Q08, there was no uniform type of invoicing among operators which offer this product as a 3G bonus (TIM - Brazil), per time of use (Entel PCS - Chile) or per KB downloaded (Digitel - Venezuela).
  • Programming that isn't very attractive, without a defined target market, with few channels available and lacking exclusive programming for mobile.

Moreover, the service has not received a significant push by operators. America Movil, for example, does not have Mobile TV available via all its regional affiliates (Claro Chile, for example, doesn't offer the service and it could in order to compete with that offered by Entel PCS) and Telefonica does not make a point of pushing this service in its most important markets (only Uruguay has a Mobile TV offering running on UMTS/HSPA). As such, Signals believes that the development of Unicast Mobile TV will be tied to coverage gains and 3G network scales and will only see real growth possibilities as from 2010 - 2011. Prior to this, operators will not encourage its use via alternative mass offerings because this would suppose a strong usage of trunk broadband which could cause possible network congestion problems.

The service is however taken advantage of by operators in order to improve their image as innovators (something achieved by Entel PCS - Chile) and give them greater chances of incorporating new 3G users by giving the service away free of charge as a bonus for 3G use. Moreover, the launch of new handsets, with multimedia capacities (like 3G iPhone), suppose an opportunity to increase the demand for Mobile TV.

With this scenario in mind, growth expectations for the service are based on the possible roll out of dedicated networks, because these do not input spectrum resources used by mobile telephony (although they do obligate operators to acquire UHF bands). Signals believes that mobile operators, mainly those enjoying a regional scope (like America Movil and Telefonica) will possibly end up acquiring UHF bands in order to develop dedicated networks. They will do so in order to reach positions that are coordinated on a regional level with main world markets in order to lowers service costs via the scale they hope to reach with this type of service.

Signals points out that the development of Mobile TV on dedicated networks still poses many questions for the region. This is mainly due to the fact that only a small group of countries have decided on a TDT norm (Brazil - ISDB, Honduras & Mexico - ATSC and Uruguay - DVB), something which is fundamental for operators who need to know where they stand in the face of the possible development of Mobile TV on dedicated networks. Moreover, of the markets which have chosen a TDT standard, only Uruguay (with the possibility of deploying DVB-H) has a technology that has a business model appropriate for mobile operators with experiences that could be repeated in the region.

Even supposing a roll out of Mobile TV dedicated networks, Latin American operators will have to adjust some points of how they present their corresponding offering to include programming oriented exclusively to mobile services, the possibility of offering lowers cost handsets, and the implementation of service invoicing models that are easily understood by the user.

Mobile TV Revenues, 2007 – 2013

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