Qualcomm to sell FLO TV directly to consumers

Once the analog TV waves clear next week, Qualcomm (NASDAQ:QCOM) will be free to launch its FLO TV mobile video service unimpeded throughout the country. But Qualcomm has more than just a nationwide launch planned after the digital TV transition’s extended deadline expires June 12. FLO TV is coming out from behind AT&T (NYSE:T) and Verizon Wireless (NYSE:VZ, NYSE:VOD) later this year and selling its mobile TV service directly to consumers.'

Currently Qualcomm wholesales its live TV channel line-up to wireless operators, who essentially act as mobile virtual network operators (MVNOs) reselling the FLO TV service. But new FLO TV president Bill Stone plans to augment that wholesale strategy with a direct-to-consumer offering, in which it markets FLO TV devices and services to customers under its own brand. Stone said FLO TV will initially target two areas: the automotive in-car entertainment system with embedded and stand-alone FLO receivers and the mobile market with what amounts to a modem accessory that can transmit FLO content to and WiFi-enabled media device like the iPhone. Eventually, as the mobile TV market grows, Stone hopes to see FLO technology embedded directly into media devices such as portable DVD players, netbooks and Internet tablets.

Stone emphasized, however, that FLO TV was not abandoning its wholesale business model or its partners. AT&T and Verizon focus solely on the mobile TV on the mobile handset, a business FLO TV has no intention of competing in, Stone said. The potential market for mobile TV, though, is much bigger than operators—melding the TV and phone is just a single use case, Stone said. Because of the broadcast nature of the Qualcomm-developed Forward Link Only (FLO) technology the network uses, growing FLO TV’s subscriber base doesn’t detract from the experience of AT&T and Verizon’s customers.

“The FLO network is built for scale,” Stone said. “As you add more subscribers, your costs from a network perspective don’t increase. Once were’ deployed in a market it doesn’t matter how many customer are signed up.”

Qualcomm has already announced many of the key steps in its consumer strategy. At CES in January, Qualcomm announced a partnership with Audiovox to provide in-car FLO receivers through auto dealers and other retailers. The move will put it in direct competition with partner AT&T, which earlier this week announced the launch of its CruiseCast in-vehicle satellite TV service with partner RaySat Broadcasting. At CTIA Wireless, Qualcomm demoed a peripheral that picks up the FLO TV signal and distributes it to a media device like the iPhone through WiFi. Perhaps the most public step Qualcomm has taken toward a direct-to-consumer service is the rebranding of the business division from MediaFLO USA to FLO TV, which Stone said more accurately portrays the service to the average consumer.