British Telecom and Virgin Mobile introduce a mobile TV service in the U.K. using Microsoft-enabled cell phones.

February 14, 2006

BARCELONA—Virgin Mobile, British Telecom, and Microsoft said Tuesday they`ll partner on a mobile TV service that will start in the United Kingdom.

The companies announced the plan at the 3GSM World Congress wireless conference on Tuesday. During a speech, Microsoft CEO Steve Ballmer showed off a mobile TV service created by British Telecom, called BT Movio, that provides mobile TV and radio and is powered by Microsoft Windows Mobile-enabled devices.

British Telecom said at the convention that Virgin Mobile will be the first carrier for BT Movio and the first portable device will be the Windows Mobile-based “Trilogy.”

BT called the Trilogy, which was created by BT and Taiwan manufacturer HTC, “the world`s first mobile device based on IP delivered over a broadcast network.” However, Samsung and other manufacturers have also made mobile TV devices.

Virgin Mobile founder Sir Richard Branson joined Mr. Ballmer for the press conference in a video message to announce the service.

“Being able to watch your favorite programs on your mobile while on the go will soon be as natural as watching TV in your living room today,” said Mr. Branson.

While BT’s service will run on Microsoft Windows-enabled phones, Mr. Ballmer also took the opportunity to show off a new service from Microsoft called Office Communicator Mobile, which manages instant messages, voice, and emails for business customers.

Microsoft’s plan is to become an integral part of mobile communications, as it has for the PC. Yesterday Microsoft announced plans to go head-to-head with Research In Motion’s BlackBerry service with new technology (see Microsoft Aims at BlackBerry).

At the press conference Tuesday, Mr. Ballmer said the wireless industry needs end-to-end solutions and innovative services, and Microsoft will create those tools.

Microsoft works with 102 mobile operators in 55 countries with 47 device makers overall. It shipped more than 6 million Windows Mobile-based connected devices during 2005.

Shares of Microsoft rose $0.09 to $26.48 in recent trading, while shares of BT fell $0.28 to $37.11 and shares of Virgin Mobile rose 4.25 pence ($0.07) to 371.25 pence ($6.42).

Mobile TV

British Telecom has seen some success in its trials of BT Movio. BT found that two out of three subscribers said they would be willing to pay £8 ($14) per month for the total service, which includes both broadcast mobile TV and radio.

But at the same time, in the trial involving 1,000 cell phone users in London, consumers were interested in mobile radio more than mobile TV. Consumers listened to 1.5 hours per week of mobile radio and watched mobile TV for only 1 hour per week (see Brits Not Gaga for Mobile TV).

While Mobile TV is being touted as the biggest opportunity of 2006 for wireless operators, it is also facing significant unknowns.

Analysts say dueling standards, lukewarm consumer response, content-pricing issues, and digital rights management with media companies will provide hurdles for the much-hyped technology (see Mobile TV? Please Stand By.).

Standards Battle

BT and Virgin Mobile’s high-profile mobile TV service, backed by Microsoft, also adds a level of complexity to the global standards battle.

Several European mobile companies, like Nokia and O2, have chosen DVB-H (digital video broadcasting-handheld), though BT and Virgin will be using DAB (digital audio broadcasting), a competing standard.

In the United States, Crown Castle will run a service using DVB-H, while Qualcomm is building a network for its MediaFlo service that will use its own chipsets.

In South Korea and Japan, carriers use different standards, and analysts say the variety of options could fragment the market.