AT&T launching mobile TV service, but who will watch?

March 28, 2008, 4:39 PM UTC

By Michal Lev-Ram

America is known as a nation of TV watchers, but viewers have not embraced the small screen as enthusiastically as they have the big one in their living room.

Just 4.6% of U.S. wireless customers have watched TV or videos on their cell phone, according to research firm M:Metrics. Verizon Wireless (VZ) has yet to release subscriber numbers for a mobile TV offering it launched last year, but Paul Jacobs, the CEO of Qualcomm (QCOM), which provides the live television service, recently said that adoption has been slower than he would like.

Now Verizon rival AT&T (T) is gearing up for the May launch of the same Qualcomm service, called MediaFlo. The question is, will subscribers to the country’s largest nationwide network want to watch?

Analysts say that while U.S. consumers love their TV, it’s not clear there is a huge demand for full-length programming on the go. For one, most Americans commute by car, not on public transportation.

“Without a clear block of time like commuting on the subway it’s just not clear there will be that many people willing to pay for the service,” says Tim Farrar, president of research firm Telecom, Media and Finance Associates.

But Farrar says that even in countries like Japan and Korea, where consumers watch mobile TV on the train, the business model remains unproven. Korea’s TU Media, the company that runs local carrier SK Telecom’s ad-sponsored mobile TV service, acknowledges it is losing money due to poor ad sales and reportedly laid off about a third of its staff earlier this year.

Although AT&T says it won’t disclose pricing information until the service launches, Verizon currently charges $15 per month for access to eight channels, including Comedy Central and MTV. That fee doesn’t include the cost of a data and voice plan.

Another problem, says Farrar, is that Qualcomm’s live mobile TV network doesn’t yet blanket the entire country and doesn’t work on a wide variety of devices. Only those consumers who live in a select number of markets can get the service and must purchase a new phone to use it. AT&T says it will initially offer only two TV-compatible devices, the LG Vu and the Access by Samsung.

Of course, another possible reason for the slow uptake of mobile TV is that many consumers don’t even know it exists.

“When people haven’t tried a service before you need to educate them and show them how much fun it will be,” said AT&T spokesman Mark Siegel, who declined to comment on how the carrier plans to market and advertise its upcoming service.