News : China mobile TV hangs its hopes on Olympics

By Michael Wei

BEIJING (Reuters) - Many Chinese unable to catch the Olympics on television will watch national hurdling hero Liu Xiang retain his 110 meter crown next week by simply switching on their cellphone.

That, at least, is the dream outcome for the backers of mobile TV, for whom the Games are a golden opportunity to burnish the reputation of a medium that has failed to live up to its potential since it was launched in 2004.

"For certain events, the most important thing is to learn the result instantly," said Yun Weijie, president and chief executive of Telegent Systems, a Silicon Valley semiconductor maker.

"The quality of the images doesn't matter sometimes," he said. "That's exactly the case with mobile TV and the Olympics."

Telegent produces chips that let cellphones receive TV signals free of charge. By the end of 2007, the firm's chips were in use in five million handsets throughout Asia, the Middle East, Europe and Africa, Yun said.

China accounted for half of the total.

"TV will become a standard feature for cellphones in China by the end of this year, just like cameras," Yun said.

Watching TV on a cellphone is already routine in Japan and South Korea, auguring well for the industry's prospects in China.

But mobile TV in China has long been criticized for a lack of eye-grabbing content and bandwidth restrictions that have left viewers frustrated waiting for their screen to light up and -- as Yun admitted -- disappointed by the poor quality of the image.

But things are changing.

In April, China Mobile (0941.HK: Quote, Profile, Research, Stock Buzz), the country's largest mobile operator, launched trials of third-generation (3G) mobile services based on TD-SCDMA, a home-grown standard, in eight cities, including Beijing.

Eager to show off 3G, China Mobile has bought some 40,000 mobile TV-enabled handsets and is handing them out to staff and guests for the Games.

ZTE Corp (0763.HK: Quote, Profile, Research, Stock Buzz), China's No. 2 telecoms network gear maker, won a contract to provide about 8,000 of the phones.

"The original plan was to distribute the phones after the games," a ZTE official said. "However, China Mobile decided to do it before the games kicked off, because they think the development of mobile TV technology has already reached a satisfactory level."

The official declined to be named as he is not authorized to speak to the media.

GROWING FAST

China had over 600 million registered mobile phone users as of June, by far the largest market in the world.

Only 12 million, or two percent, of the users currently subscribe to mobile TV, bringing in 4.6 billion yuan ($670 million) of revenue a year, according to CCID Consulting in Beijing.

But the private consulting firm reckons both subscribers and revenue could grow tenfold by 2012.

Studies by In-Stat China, a high-tech market research firm headquartered in Arizona, show that over 60 percent of existing cellphone users are interested in mobile TV.

"Nowadays, people's attention and time is segmented, so they want multi-functional converged handsets," said Kevin Li, In-Stat China's telecoms research director.

The cost of receiving TV is low, if not free, and television is traditional family entertainment, Li noted. "So copying TV content to mobile phones is attractive to many people," he said.

Among foreign investors seeking to tap the China market is Sheikh Sultan Al-Qasimi, chairman of Gulf Holdings. The United Arab Emirates firm has already invested in mobile TV in six countries, mostly in southeastern Asia.

One of Al-Qasimi's investments, Movaio Pte Ltd in Singapore, has forged a partnership with China Teleformation, a mobile TV content provider in China.

For Al-Qasimi, the attraction of mobile TV in China is that it is largely protected from swings in the economic cycle.

"If you have a boom, people'll have money to spend, so you have customers," he told Reuters on the sidelines of a recent conference in Beijing. "When you have a downturn, you have more customers, because they have nothing to do."

Whether Chinese will flick their mobile TV phones back on if Liu loses his hurdles crown is another matter.

($1=6.860 Yuan)

(Reporting by Michael Wei; Editing by Alan Wheatley and Louise Heavens)