For $$, AT&T Will Let You Squint at TV on Your Cell Phone

Would Dick Tracy watch TV on his wristwatch? AT&T and Verizon hope so. AT&T Mobile TV is the latest offering in what the telcos hope is an emerging market for cell phones — and the subscription fees that come with them.

Running on Qualcomm‘s MediaFLO service — which also hosts Verizon’s V Cast Mobile TV — AT&T Mobile TV will offer 10 channels of streaming TV content for $15 a month. MediaFLO broadcasts over an unused television spectrum.

The AT&T service will be available in 58 markets, including Los Angeles, New York and Chicago, but only on two phones: the $300 LG Vu, a new touch-screen phone, and the $200 Samsung Access. In addition to the pricey new phones and the monthly subscription fee, users will need to sign up for a two-year contract. On the other hand, AT&T is offering a $100 rebate on the phones.

Subscribers to either the Verizon or AT&T plans will get broadcasts from CBS, Comedy Central, ESPN, Fox, MTV, NBC and Nickelodeon. AT&T is also offering movies from Sony Pictures and content from CNN.

Weak Appetite

But do people really want to watch television on their cell phones? In a word, no, said Greg Sterling, principal analyst with Sterling Market Research. While a recent study from the Yankee Group estimated that five percent of cell subscribers would be willing to pay for a TV subscription, “I think that number is high,” Sterling said in a telephone interview. “The appetite for mobile TV is a very small one right now, especially as a separate item you have to pay for.”

While MediaFLO is a superior experience to downloading video clips over a cell network, it is still “generally a poor user experience,” Sterling said. That plus the additional fee and the lack of supported handsets “means there is not much hope of near-term success,” he said.

The screen size isn’t the only difference from watching TV at home. MediaFLO offers specialized content for cell-phone viewers. In a review of AT&T’s service, a PC World reviewer noted the basic content offerings are “remixes” of broadcast content. While that description smacks of the prepackaged fare seen on airplanes, AT&T is also offering a “fun movie channel” called PIX, the reviewer said.

If the current market is so small, why are AT&T and Verizon investing in Qualcomm‘s technology? “Maybe these guys are just laying the groundwork,” Sterling said. “It’s almost like AT&T is compelled to do this because Verizon is and Wall Street is saying it’s a new growth opportunity. They’re also looking it as a way to distribute advertising on phones.”

Video in Context

The investment could take a generation to pay off. Carpool drivers may notice 12-year-olds happily watching favorite TV episodes on iPods, but that is fundamentally different than MediaFLO. “iPods and the iPhone are different because of the quality of the resolution and the fact that the video is resident on the device,” Sterling said. “There’s none of the stuttering you see with broadcast-to-device.”

But if MediaFLO’s broadcast model isn’t likely to succeed, that doesn’t mean there isn’t hope for handset video. “There is an appetite for bite-size chunks of content like YouTube and music videos,” Sterling said. One approach that makes more sense is the AP’s Mobile News Network, announced last month, that will deliver news and video — and advertising — to the iPhone and potentially other smartphones.

“In that context, video makes sense. You’re reading a news story and you want to watch the video,” Sterling said. “But the idea of long-form TV just doesn’t work.”