Mobile operator to launch next phase of Oxford trial in February or March 2007.

O2 said on Wednesday that the next phase of its U.K. mobile TV trial would focus on interactivity and possible advertising models as the mobile operator investigates the potential of using its 3G network to complement a broadcast mobile TV solution.


The move could be seen as something of an about-turn by an operator that has always stressed it sees DVB-H broadcast technology as the only real solution for mobile TV, and has largely dismissed 3G as unsuitable for streaming video services.

Combining broadcast and 3G networks has been cited by other companies in the industry as the best strategy for the provision of mobile TV as it would provide operators with more flexibility for service differentiation, and enable more interactivity such as TV voting.

But Peter Erskine, CEO of Telefonica O2 Europe, told Total Telecom at an O2 media day in London on Wednesday that the company is still fully committed to its original strategy of offering DVB-H services, and commented that he thinks 3G is "only really good enough for video clips".

However, Erskine conceded that there are still considerable "frustrations" in the U.K. over spectrum, with the required UHF spectrum only set to be available following the switchover to digital television.

"If we don't get [the required spectrum] it's not going to be viable," Erskine told journalists and analysts during his presentation on Wednesday.

He added that even if the spectrum were made available there would probably only be room for one or maybe two networks in the U.K. providing broadcast services based on DVB-H broadcast technology.

O2, which recently reported healthy financials for the third quarter of this year, said the next phase of its Oxford, England-based mobile TV trial will start in around February or March next year and will deploy 3G mobile technology alongside DVB-H to test two-way interactivity and advertising models.

A spokesman for the operator said it's likely that the same partners will be used for handsets and network, although no agreements have been reached as yet. Both Nokia and broadcast infrastructure company Arqiva worked with O2 in the DVB-H-only trial that ended earlier this year.

As for other mobile broadcast technologies, Dave Williams, chief technology officer of Telefonica O2 Europe, said the operator is "watching" developments of T-DMB and MediaFLo, but has no plans to implement these technologies at present. He added that the company sees no business case for Digital Audio Broadcasting (DAB), the technology being used by BT Movio for its mobile TV service.

Williams also commented that O2 is not planning to make use of its TDD spectrum, which like most Western European operators O2 obtained when it acquired its UMTS licences, although he said the operator "would like to" make use of this spectrum.

When asked if O2 would consider using solutions developed by companies such as IPWireless for deployment in TDD unpaired spectrum bands, Erskine more or less dismissed this as an option, saying such services were "a bit of a lame duck, it seems to me".

IPWireless has developed a solution for mobile broadband services as well as a mobile TV service called TDtv for deployment in the TDD band.

Meanwhile mobile TV is just one of several services being developed by O2, which recently launched DSL services in Germany and is planning to do the same in the U.K. via its newly acquired ISP Be.

Erskine said Be now has 30% population coverage in the U.K., and is aiming to increase this to 60-70% in the coming year. However, Erskine stressed that O2 is in no rush to jump on the broadband bandwagon and would only roll out its own DSL offering once it felt that the customer experience would be a good one.

Matthew Key, CEO of O2 UK, commented that customers in the U.K. "are rebelling against free" because of recent experiences with new so-called free offerings from the likes of Carphone Warehouse and Orange.

"So that's not where we're going," said Key. "We are watching and learning now."

But Erskine stressed: "We are getting into fixed broadband. We see a lot of opportunities there."

According to Williams, O2's future focus will be on the launch of HSDPA and eventually HSUPA; the implementation of smaller GSM and eventually 3G base stations in homes to help improve indoor coverage and network coverage in general; and IMS. The operator also plans to investigate UMTS 900 technology, which it is currently trialling in the Isle of Man, and UMA technology for fixed-mobile convergence.

However, Williams said the company has no plans for any major investment in WiMAX as it believes HSDPA and the future evolution of 3G technology will more than meet its requirements for wide area mobile broadband services.

O2 will also adopt different approaches in its markets since each market has different requirements. For example, so-called homezone services launched under the Genion brand have been hugely successful in Germany, but such services, where a user is able to make cheap mobile calls at home, are not really available in the U.K.

Key commented that it's difficult to achieve the same level of success with this service in the U.K. "because the amount of differential you can drive in the U.K. is not the same".