The Race for a Mobile TV Standard

Nokia and Qualcomm are competing to supply a new global norm. The winner could reap billions in new business

by Jennifer L. Schenker

Consumers have been down this road before. A heated battle to provide the communications standard for your cell phone is breaking out between U.S.-based Qualcomm (QCOM) and Finland's Nokia (NOK). Only this time, instead of a war over voice signals, the fight is over mobile TV signals for cell phones. And billions of dollars' worth of business hangs in the balance.

Live TV on mobile phones is a nascent market, but one that is expected to grow swiftly, reaching up to $8 billion by 2011. The intense jockeying for position looks a lot like the battle between GSM, the mobile phone standard backed by European governments and later adopted by much of the rest of the world, and a standard Qualcomm promoted called CDMA, short for code division multiple access. GSM has become the standard in Europe and in much of the world, while CDMA is used mostly in the U.S. and a few other places, such as South Korea.

The decision by European governments in the 1980s to push GSM catapulted Europe ahead of the U.S. and helped Nokia to become the world's biggest handset maker and Sweden's Ericsson (ERIC) to become the dominant telecom equipment maker. Now Europe hopes to repeat that success by once again encouraging governments, rather than the market, to decide on a single technical standard for mobile broadcast TV services.

EU Makes a Bold Move

On July 17 the European Commission jumped into the fray. That's when Commissioner Viviane Reding said she is recommending—and could later mandate—that all 27 European countries adopt a standard strongly associated with Nokia called Digital Video Broadcasting for Handhelds (DVB-H), rather than mobile broadcasting TV standards being tested in Europe by Qualcomm or one being promoted in Europe by South Korea, the first market in the world to launch mobile TV.

"We can either take the lead globally, as we did for mobile telephony based on the GSM standard developed by the European industry, or allow other regions to take the lion's share of the promising mobile TV market, " Reding said in a statement.

Reding's tough talk has put many industry players on alert—from broadcasters to chip makers—who argue governments should let the market decide, and that there is room for more than one standard. Many argue that a more free-wheeling approach would serve consumers better, allowing them to choose among a wider array of products and video delivery devices, including pocket TVs and in-car devices.

For Now, Lots of Contenders

For now, those set against setting a standard are getting their way. There are at least six different contenders competing in the European market and still others emerging globally. Japan has developed its own standard, and China appears to be going its own way. But none of the mobile TV standards is compatible and all require significant infrastructure investment.

So, say industry observers, the EU is hoping its stance will reduce fragmentation and spur economies of scale, just as it did with GSM. Given the €40 million of EU research money invested in DVB-H's development and heavy lobbying by European companies, Reding's decision comes as little surprise, says technology consultancy CCS Consulting.

Qualcomm is clearly in the other camp. "We don't have to decide on a single standard, " says Qualcomm Europe President Andrew Gilbert. Qualcomm makes chips based on its own technology called MediaFlo, but is also hedging its bets by producing chips based on the DVB-H standard. "The industry has to live in a multi-standard world, which is a good thing, because the more choices you have the better it is for consumers, " he says.