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Qualcomm: Complete FLO TV Shutdown An Option

11/04/2010 12:16:39 PM Eastern

San Diego -
Qualcomm is keeping all options open for the future of its FLO TV network,
including a change in FLO TV's wholesale business model as well as a complete
shutdown of service and sale of the network's 700MHz spectrum, chairman/CEO
Paul Jacobs said during an analysts' conference call.

In early
October, Qualcomm's FLO TV subsidiary announced
plans
to shut down its consumer-direct service, likely in the spring,
because of low adoption and the high cost of marketing, customer service,
product development, and customer acquisition, a source close to the company
explained. No decision, however, has yet been announced about the future of FLO
TV's white-label service under which cellular carriers Verizon Wireless and
AT&T buy the service on a wholesale basis for resale to consumers who buy select
FLO TV-equipped handsets.

Qualcomm has
already launched a restructuring plan "under which we expect to exit the
current FLO TV service business," the company said in a statement. That plan
will incur restructuring charges of $125 million to $175 million in fiscal
2011.

 In continuing to evaluate FLO TV's future, Qualcomm
said its options "include, but are not limited to, operating the FLO TV network
under a new wholesale service; sale to, or joint venture with, a third party;
and/or the sale of the spectrum licenses and the discontinuance of the
operation of the network."

In its October
announcement, FLO TV said it had "been engaging in conversations with a
wide range of partners for both the network and the [700MHz] spectrum" and
was "seeing strong interest in using the FLO TV network or spectrum to
capitalize on the growing imbalance between mobile data supply and demand, the
growth of tablets, consumer demand for high-quality video and print content,
and a richer user experience."

During its conference
call, Qualcomm did not reveal details of how it would compensate current FLO TV
subscribers. In early October, it said only that it would "make
appropriate refunds" that "will be communicated prior to
discontinuation."

The factors that impeded FLO TV's consumer adoption
aren't factors that would hamper the success of ATSC Mobile/Handheld (M/H)
service, some
analysts and ATSC M/H proponents contend
.

 

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