Seeking Alpha analyzes the “Block E” segment of the 700MHz auction. They don’t see a big upside for Qualcomm:
In nearly every scenario we see Qualcomm suffering.
- Qualcomm Wins, But Pays too Much.
- AT&T (T) Wins and Competes With MediaFLO by shutting it out.
- Verizon (VZ) Wins and Dilutes Qualcomm.
- Someone else wins and a new competitor surfaces.
After 88 rounds, the current price for the entire block E is at $1.2 Billion or $0.70/Pop/MHz. While bidding for about 30 of the 177 sections of block E continues, the bidding for the majority of block E is complete. We continue to believe that Qualcomm has participated in bidding for the top 50 markets. These 50 represent 75% of the pops and approximately 85% of the dollars ($1B).
This is well below the $1.06 that AT&T spent to acquire 12MHz from Aloha Partners last fall. However, the company will have spent somewhere in the range of $1B as compared to the estimated $50 million that they spent for their original 6MHz.
This would also be in contrast to the $800M that the company has indicated they spent to secure the spectrum and build out their nationwide mobile TV network. With our concerns about Verizon’s limited success with Qualcomm’s MediaFLO mobile TV offering, we believe investors will perceive significant incremental expenditure negatively.
Should AT&T emerge as the winner of the majority of block E, concerns will grow that they will develop their own mobile TV initiative. Aside from losing AT&T as a potential customer for MediaFLO, they would gain a potential competitor with 18MHz of spectrum as compared to Qualcomm’s 6MHz. Without AT&T as a customer and alternative standards to MediaFLO emerging outside the US, MediaFLO would be likely doomed to failure.
MediaFLO currently has only one 6 MHz channel. With hopes for AT&T becoming a partner fading, DVB-H, DVB-SH, Sirius’ Backseat TV, and broadcast based technologies are becoming more viable. AT&T may be waiting until the end of the 700Mhz auction so that it can discuss the situation with Qualcomm, says stock site Seeking Alpha.
MediaFlo and MobiTV, used by both AT&T and Sprint (over their cellular channels), are monthly subscription services that cost $10-$15/month. But free, ad-supported mobile video is now available through YouTube Mobile and Nokia’s Medeo.
“Today, mobile video aggregate viewership is only about 2% of U.S. wireless users. And I don’t see its promise fulfilled for another 18 months,” said Seamus McAteer, senior analyst at researcher M:Metrics. Just two years ago, some analysts were predicting 10% adoption by 2008.
In related [bad] Qualcomm news, a December decision against Qualcomm will stand, Nokia said Wednesday. Qualcomm brought an ITC complaint against Nokia in June 2006, alleging patent infringement.
Related Mobile TV on DailyWireless include; Where’s MediaFLO?, ICO Wants Its Mobile TV - via DVB-SH, Italy Testing DVB-SH Mobile TV, Motorola Does DVB-H, YouTube Mobilizes, The War on Mobile TV, Mobile/Handheld TV: Killer App?, The Free Triple Play, AT&T Delays MobileTV Launch, Original Content on Sprint Mobile TV, MobileTV: Modeo KOed by Crown, HiWire: 24 Mobile TV Channels, AT&T Buys 700MHz from Aloha, Qualcomm Buys Flarion, AT&T’s WiFi TV, Hiwire Moves on Mobile TV, Mobile TV War at NAB and NAB 2007: Dead Man Walking?.
