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TV on a mobile is the latest offering from phone operators trying to encourage customers to pay for more data services. But is anyone watching?

For the operators it is vital that they do, says David McQueen, a principal analyst and consultant for Informa Telecoms and Media, the analysts.

“Mobile TV at the moment is a nirvana. The operators tried to over-price music, and TV is the next way forward,” he says, arguing that voice revenues are set to drop, so they need revenues from data services to fill the gap.

So if phone users are to watch TV on their mobiles, how are they going to do it? And how is the service going to make money?

“Usage right now tends to be for fairly short periods because the customer is out and about,” says Deborah Tonroe, head of commercial development at Orange.

“We have had some customers watching at home but we suspect that’s primarily the market for the second TV, where they don’t have the same channels at home.”

The average viewing session for mobile TV is between seven and nine minutes, says Ray DeRenzo, head of business development for MobiTV in the EMEA region. This suggests users are catching short snippets of TV in the bus queue or at the shopping checkout.

Most use so far is on 3G networks which allow for live streaming TV (for channels such as CNN) and short downloadable clips, such as music videos for “snackers”, who only watch in short bursts. The latter is ideal for tailored mobile content, explains Mr DeRenzo.

The more complicated and expensive technologies allow for a broadcast-like service and can incorporate interactive functions for the user.

“We’ve built in the ability for consumers to interact both with TV and radio stations from simple one-click red button service on the phone through to a service that might let them vote on Big Brother or place a bet on a football match,” says Emma Lloyd, managing director of BT Movio, which will be providing Virgin Mobile’s TV offering when it launches this summer.

Interactive TV is likely to be more effective on mobile phones than on traditional TV, because watching TV on a mobile phone is a more personal experience and the interactivity controls are immediately available.

Still, most companies are holding back from providing too many mobile commerce and other interactive services alongside mobile TV.

This is ostensibly for fear of overwhelming users, but the technical difficulty of tackling mobile payments and co-ordinating billing with suppliers of third-party products and services might also be a factor.

Making money from mobile TV is also at an early stage. Operators are being conservative about advertising. Recent trials did not give users the option to opt out of the adverts, for example.

Subscription models are being used. Orange users, for example, pay £10 a month for the chance to watch 20 channels of content for up to 20 hours. And O2 currently charges up to £2 for each video clip downloadable over its 3G-based O2 Active service.

Operators have faced challenges around offering and pricing compelling mobile content in the past, and TV presents them both with a golden opportunity and fresh challenges.

Given the propensity for “snacking“ content, they will be battling with the likes of Apple (with its video iPod) for space in the customer’s pocket – and an advantage of using a separate video device is that it saves battery power on the phone.

If operators can resolve the technical challenges around mobile TV and encourage users to adopt, it will be a catalyst; another step on the long road towards higher data revenues.

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