New York If everything goes as planned, the telephone industry will be all about television in 2005.
TV over your home phone line. TV on your cell phone. Few topics have been as popular this past year among phone companies and their technology partners.
"There's one application knocking on the door and consumers are truly hungering for it: real-time TV and streaming TV," said Anssi Vanjoki, multimedia general manager for cell phone maker Nokia Corp., during a recent investment conference.
Similarly bold pronouncements have been emanating from a growing list of powerful names, from local phone giants Verizon Communications Inc. and SBC Communications Inc., to wireless chipmakers Qualcomm Inc. and Texas Instruments Inc., to Walt Disney Co., News Corp. and none other than Microsoft Corp.
Such talk is hardly new. But this time telephone companies are backing their words with billions of dollars to upgrade their networks.
Both wired and wireless players are intent on moving beyond simple phone calls, a business where revenues and customers are being lost to price wars and new rivals -- especially with the arrival of cheap voice-over-Internet phone services from cable TV companies, AT&T Corp. and dozens of smaller players.
While the strategy includes video games and other interactive offerings, the biggest revenue target is the cable TV market: In 2004, consumers paid more than $36 billion for their cable TV, and that programming generated nearly $19 billion in ad revenue, according to the National & Cable Telecommunications Assn.
The challenge in grabbing a share of that pot, or expanding it with newfangled services, is very different for residential phone companies compared with cell phone carriers.
On the wired side, the question is more about competitive edge than technology, though there are few similarities in how Verizon and SBC are retooling their telephone networks to deliver video.
Both companies are expected to introduce TV services in at least a few markets by midyear without much of a hitch. Less clear is whether their version of TV will feature enough new bells and whistles on top of the usual cable fare to set it apart and lure customers away from traditional providers of such programming.
There's no doubt that the fiber-optic cables and digital technologies they are deploying are robust enough to deliver interactive services such as Caller ID on the TV screen or more heavy-duty offerings like video-on-demand without the current limitations on selection.
But neither Verizon or SBC will be specific thus far about what they'll offer right out of the starting gate.
Both, however, have asserted that they'll be very competitive on price -- a promise that bodes well for snagging customers but not so well for a speedy recovery of the billions of dollars it will take to upgrade their networks and buy programming from cable channels, movie studios and other content providers.
If they're too aggressive with pricing, Verizon and SBC will risk triggering the same price wars that have devastated the telephone industry.
By contrast, cell phone TV faces multiple barriers.
Although mobile service providers are rolling out next-generation technologies that are speedy enough to deliver a TV signal, there are limits to how much network capacity they can divert away from phone calls and wireless Internet access. And just as they interfere with calls, gaps in network coverage may disrupt a TV feed.
On the device side, while screen quality has improved, TV presents a challenge in terms of battery life, processing power and storage capacity.
And then there's the pesky question of whether people truly want to watch TV on such a tiny screen and would be willing to pay much extra for it.
Nevertheless, the buzz on cell TV has been coming in loud and clear on multiple fronts, with many proponents pointing to strong demand for mobile video services in South Korea. Usage became so heavy on one Korean carrier's network that it withdrew an all-you-can-eat pricing plan and switched to a pay-as-you-go approach.
Sprint Corp. already offers two premium TV services to its cell phone customers, using MobiTV from Idetic Inc., though the quality is crude compared with real television. Sprint won't disclose how many subscribers have signed on, but says the positive response to its first service was a driving force in launching the second this past summer.
Among content providers, Fox recently announced plans to produce one-minute episodes of its "24" television series for Vodafone Group PLC, the world's biggest cell phone company. Disney plans to launch an ESPN-brand cell phone company in 2005 featuring a wide range of sports content including streaming audio and video.
Qualcomm and Texas Instruments also appear to see potential in cell TV. The two rivals are developing competing wireless chips to receive and process TV signals in an efficient, high-quality manner.
Qualcomm is even hoping to address other obstacles to mobile TV beyond its normal expertise.
The company plans to launch a national cellular TV service in 2006 over its own spectrum, broadcasting up to 20 channels for wireless carriers to sell their customers.