Verizon Wireless tests the mobile TV waters

Cingular (now AT&T) may have the iPhone, but Verizon Wireless managed to wring its own victory at the Consumer Electronics Show this month. It's first out of the gate with multicast mobile TV services. Using Qualcomm's newly built MediaFLO network, Verizon Wireless plans to start flooding the airwaves with its own branded version of TV in the coming months. Like it or not Verizon Wireless will be mobile TV's canary.

With the other mobile TV providers still a ways off from commercial launches (Modeo also announced the launch of its rival digital video broadcast-hand-held network at CES, but only as a beta trial in New York), Verizon Wireless's exclusive agreement with MediaFLO will make it the sole TV provider for the near future.

Sprint and T-Mobile also have agreed to trial the service, but Verizon signed up long ago. Depending on what kind of service it launches under the VCast TV banner and at what price point it offers its phones and monthly subscription, Verizon Wireless could gain a huge lead in this still virgin market or it could merely do the heavy lifting for its competitors, said Ranjan Mishra, analyst for Mercer Management Consulting.

“No doubt this is a good thing for the mobile TV market,” Mishra said. “But what will be interesting to see is how the business model for this whole thing works.”

If Verizon Wireless enters the market with a high price point on its FLO phones — which are most certainly expensive to manufacture — and a high monthly subscription fee for TV services — which, with revenues split between Qualcomm, a dozen content providers and Verizon Wireless, also can't be cheap — it will likely only attract early adopters and the most gadget aware, Mishra said.

Yet it alone will face the burden of educating consumers about mobile TV and marketing the idea of such a service in the most expensive media market in the world. But if it sets a low price point for the phones and the service, it may get more customers to justify those marketing costs, but fail to make money on the service itself, Mishra said.

“The wireless industry is such a moving target,” Mishra said. “It's hard to nail the right business model. In situations like these, maybe it's best to think of new pricing models entirely.”

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