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If you suggested ten years ago, or even five, that people might soon be watching TV on their mobile phones, you'd risk having your sleeves tied behind your back. Yet today the buzz around mobile TV is at the pitch of a Boeing 747 set to take off. What's it all about? We'll find out in a three-part series starting today.

Do people really want to watch grainy, jerky video images on a screen not much bigger than a postage stamp? Some do. Sprint, Cingular and Verizon Wireless are all now offering video content services. According to ABI Research, almost a million subscribers worldwide pay for live TV and video on demand (VOD) services delivered to their mobile handsets.

The Japanese and Koreans, not surprisingly, were first. NTT DoCoMo in Japan launched the original video messaging service in late 2001 and video content services shortly after. KT Freetel and FK Telecom in Korea initiated video services in 2002. The first in Europe appeared in 2003. "Asia definitely leads the U.S. in this area, but probably not Europe," says Julie Ask, a research director at Jupiter Research and lead author of a recent study, "Video on Cell Phones." (The same company, JupiterMedia, owns Jupiter Research and this Web site.)

Sprint was first to offer mobile TV in the U.S., starting with its 1KTV service in early 2003. It reportedly has hundreds of thousands of subscribers today, though the company won't confirm numbers. Cingular and Verizon jumped into the fray earlier this year. Cingular launched a service from MobiTV, similar to Sprint's current Sprint TV offering, and Verizon introduced VCAST, available to users of high-end phones that work on its 3G EV-DO (Evolution-Data Optimized) network.

All deliver a similar mix of content: news, sports, weather and entertainment. Most of it is short video clips on demand, although the Sprint and Cingular offerings include live television content as well.

Technology
Each service uses the same streaming video technology that has been in place for years to deliver video over wired Internet connections. Digitally encoded video frames are sent over the carrier's data overlay network in IP packets. The mobile device at the other end reassembles the packets in the correct order, decodes them and displays their contents on its LCD screen.

Because of limits on network capacity and the processing power of mobile devices, the video is often poor quality. It's always less than full motion, which is 30 frames per second (fps). Frame rates for mobile TV vary from one to 15 fps depending on network conditions and techniques used by content providers. In the worst case, images break up into blocks of color, or subscribers see a series of still frames rather than true video. Images are never in full color either.

But it's a minor miracle that mobile TV is possible at all. A number of factors have conspired to make it happen. Faster 2.5 and 3G wireless packet data networks provide the network speeds minimally required for streaming media. The vast majority of new phones have color screens, and many now incorporate computers more powerful than the desktop PCs of 10 or 15 years ago.

Ratings & Revenus
Meanwhile, plummeting prices for cellular minutes and subsidized handset prices have put mobile phones in the pockets of more than half the nation's population—60 percent by the end of 2004, according to Cellular Telecommunications and Internet Association (CTIA). Given a market universe of over 180 million subscribers in the U.S. alone, it stands to reason that a significant number, however small the percentage, will be TV-addicted enough to want to watch on a cell phone.

ABI predicts the worldwide market for mobile TV will explode over the next five years, with as many as 250 million subscribers spending $27 billion by 2010. ABI is not alone in its bullish forecast.

IDC anticipates that by 2009, over 30 million subscribers in the U.S. will be consuming commercial video/TV content and services on wireless devices. In-Stat predicts mobile video services in the U.S. will generate revenues of $5.4 billion by 2009, with over 20 million Americans subscribing.

Jupiter Research is a little more cautious after surveying online consumers recently about their interest in mobile TV. It found that 44 percent are interested in viewing video on their cell phones - if it's free. Only 19 percent say they would be willing to actually pay for services.

The research firm won't hazard predictions on market size, at least for a few months, says Ask. "At a high level, I think we're looking at something like a 1 percent penetration in the short term. In the long term, maybe it'll reach the high teens. We're not putting a number on what we think revenue streams will be. Estimates [from other market researchers] have been all over the map."

Consumer Costs
That's partly because the issue of how much people will be willing to spend - if anything - is far from clear yet. Most carriers offering video services today use a cable TV model, charging a monthly fee for a range of basic content, and separate fees for "premium" or additional content.

Sprint, for example, charges $10 a month for Sprint TV, its basic service, which includes live news, weather and sports information, and monthly fees for premium content. Verizon is charging $15 for its basic VCAST VOD service, plus a per-clip fee for premium material.

Pricing is one of the key areas Ask believes will determine the level of success carriers have with video services. It's not just a question of content fees. The Sprint service, she notes, works even on mid-range color screen phones that the carrier sells. The Verizon service only works on expensive new phones designed to work on its EV-DO network.

"Sprint has done a good job with pricing," Ask says. "[The service] is not just available to a handful of elite users."

Live & Wide
The Jupiter Research study also seems to show that Sprint's (and Cingular's) decision to offer live TV from MobiTV rather than just VOD clips reflects what consumers really want. According to the survey, almost twice as many are interested in watching live TV as are interested in watching downloaded or streamed clips.

On the other hand, the wider bandwidths afforded by the superior data speeds of Verizon's 3G network mean that it should be able to deliver better quality video, and that too will be important. Verizon is promising data speeds of between 500 and 700 kilobits per second (Kbps) in its EV-DO coverage areas—comparable to low-end cable and DSL service. Sprint tells content providers to count on bit rates of between 40 to 45 Kbps on its 2.5G network.

The network bit rate has a direct impact on the video frame rate it can support. Ask believes that frame rates of 12 to 15 fps, producing fairly smooth motion, are essential to attracting a mass audience for mobile TV. Video over a 2.5G network is rarely more than 10 fps.

Verizon deliberately waited until it had a 3G network in place before offering video services, says Jesse Money, the company's director of consumer multimedia products.

"We could have offered a place-holder service using the 2.5G network, like some of our competitors," Money says. "But we made a conscious decision to wait, based on our belief that customers wanted a true video experience, not a slide show calling itself video."

Verizon's lead in 3G won't last for long, however. It has EV-DO network coverage in 30 markets with 75 million people today and will double that footprint under the current build-out plan. Sprint plans to start its 3G build-out in the second half of 2005. Cingular has said it would be in 16 markets with 3G coverage by the end of 2005. Only T-Mobile among the major national carriers has yet to announce a 3G initiative.

Sprint has every intention of maintaining what it considers its leadership position in mobile TV. "You'll see us make a corresponding step up in quality of video [with the build-out of its 3G network]," says Dale Koop, Sprint's manager of multimedia services. "It will be as good as or better than what you see with VCAST today."

So the battle lines are drawn. Mobile TV may not be quite ready for prime time, as the Jupiter Research study notes. But as it also says, interest among consumers is high for a service so new and that so few have actually seen.

How many at the end of the day will be willing to pay extra for mobile video depends very much on how the carriers roll out their services and networks.