Vodafone Italia this week announced plans to step up development of its mobile terrestrial digital TV rollout, as competition in the market heats up.

The operator has partnered with Italian broadcast network, Mediaset, for the commercial deployment of mobile digital TV over Digital Video Broadcast – Handheld (DVB-H).

Vodafone expects to be able to launch commercial services by year end, making Italy the first country in Europe to offer mobile TV over DVB-H.

Although DVB-H is at the forefront of the dominant technologies for mobile TV deployment in Europe, even gaining the backing of the European Telecommunications Standards Institute (ETSI) in 2004, commercial availability is being stalled by the lack of available spectrum. Countries will only be able to free up spectrum for mobile broadcast TV when the switchover to digital TV happens, which in the UK is not likely to be until 2010.

Italy and Spain are more advanced in terms of switchover however, with commercial mobile digital TV services expected to appear in both countries within the next two years.

A Vodafone spokesman told telecoms.com that the strategy in Italy was a direct response to specific market conditions, and does not necessarily reflect the path the rest of the group will take with regards to the development of mobile TV.

Vodafone Group already has a uniform global offering of mobile TV services which it operates over its 3G networks. But in Italy, the company’s rivals are both focusing on digital broadcast technologies for mobile TV.

Telecom Italia Mobile (TIM) also has an agreement with Mediaset, to use the provider’s network to deliver services over DVB-H. 3 Italia meanwhile, bought regional broadcaster Canale 7 last year, giving it a network that covers 40 per cent of the population and a license for the spectrum.

Vodafone said that the DVB-H service in Italy would be offered as a complementary offering to its 3G-based service, which it also expects to be given a new lease of life with the deployment of High Speed Downlink Packet Access (HSDPA). However, the operator is evaluating around 12 potential technologies for its broadcast TV offerings elsewhere within the group, a spokesman said, including Multimedia Broadcast Multicast Service (MBMS), which can be rolled out in existing 3G FDD/TDD spectrum.

Nokia is to take on QPass, Motricity and the rest with its own hosting solution, which it launched today.

The Finnish giant has observed the growing trend of operators outsourcing the management of their entire content services operations to third parties – and it wants a piece of it. The company promises its Nokia Hosting solution can give customers a chance to launch quickly while offseting the huge investment costs associated with multimedia services.

Although Nokia has always been involved in ‘back end’ infrastructure, this is a major new direction for the organisation. It simply believes data services are at a turning point. Patrik Sallner, Nokia Networks’ head of hosting service line, told ME: “After a tough ferw years, operators are starting to invest again. But they want to offset risks. And they recognise that their focus has to be on the customer experience, not technology.”

Nokia is not alone in this market. In recent months T-Mobile, for example, outsourced its content operation to Qpass while 3 Scandinavia did the same with Ericsson. Sallner believes Nokia’s global reach, consumer understanding and existing relationships (with operators) will help it compete.

Nokia will announced its first customer wins soon. It already works with Mobilkom Austria (hosting push to talk services), TIM (on IMS and device management) and others.

With Mobile TV touted as this year’s 3G Holy Grail, operators are carefully evaluating their role in the nascent business models that are forming. Mobile TV will in most cases involve a broadcaster as an additional entity between MNOs and Mobile TV programming, meaning additional mark-ups before content reaches the operator.

“With subscribers potentially paying less than $10.00 per month for a mobile TV subscription, and with content costs in the region of $5.00 to $6.00 per subscriber, any additional entity in the value chain will have a significant impact on operator margins,” comments Nick Holland, author of Pyramid Research’s report “Rescuing 3G With Mobile TV.”

This would explain why some MNOs are reaching up the value chain. Late last year, 3 Italia took the dramatic step of purchasing a regional Italian TV broadcaster; Canale 7. This has a number of advantages for the operator:

3 Italia can develop their own TV programming – driving down their content costs and allowing their content to be resold to other MNOs.
By understanding the TV broadcasting industry, 3 Italia is in a far stronger position to negotiate third party content than operators that are not directly involved in content creation, production and aggregation.
The purchase provides 3 Italia with a Digital TV broadcasting license. 3 Italia now has the potential to also enter the broadcasting element of the value chain.

While an interesting tactical move by 3 Italia, it may not come to be fully realized as they will face stiff competition from the Telecom Italia/Mediaset joint venture to also roll out national DVB-H broadcasting in Italy. Nonetheless, 3 Italia may be the first of many MNOs that decide they are a little too divorced from the mobile TV opportunity and would like a larger slice of forthcoming revenues. In March, Dutch telco KPN purchased Nozema Services, a company that specializes in providing technical services to broadcasters. This move will likely accelerate the rollout of digital TV services for KPN, including mobile TV.

“We may be seeing the start of a new gold rush” concludes Holland.