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Companies feel DTV transition delay pain

Feb 17, 2009 9:53 AM, By Carolyn Schuk

             

Pushing the switch to digital TV back to June 12 will pinch many industry toes and purses, but QUALCOMM’s MediaFlo might have one of the biggest reasons to cry “ouch.” In its reach for nationwide scale, the company had planned to launch its TV broadcast service in four new markets on the original switch date.

The broader launch would let MediaFLO and its carrier partners, Verizon Wireless and AT&T, to roll out nationally rather than its current scattered campaigns to gain consumer awareness and create more momentum for the service. Now those plans are on hold.

"We are encouraged that several congressmen and senators who supported the delay stated that this would be a one-time delay only. In light of the fact that the legislation, as amended and finally passed by Congress, allows TV stations to transition voluntarily between now and June 12, we cannot determine the specific impact of the final bill's passage on our MediaFLO business," the company said in a prepared statement.

How might the company lose? Assuming it could go live on the old date, QUALCOMM built out the targeted markets, paying $550 million on the spectrum that was vacated by the broadcasters, according to a Jan. 28 story in the “Wall Street Journal.” It further paid broadcasters to vacate the analog signals early to facilitate its launch. Those early fees are even earlier now and will continue.

And, of course, QUALCOMM is also losing anticipated new revenue from Boston, Houston, Miami and San Francisco.

But even worse, from QUALCOMM’s point of view, is that MediaFLO loses its early-mover advantage as broadcasters prepare to launch their own mobile TV services using existing digital airwaves and infrastructure. Considering that the MediaFlo-anchored division's operating expenses were $102 million during Q1 2009, mobile TV is clearly a money-losing proposition for QUALCOMM at this point. This derailing of their plans is another kick in the teeth.

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