FLO TV Shut Down Confirmed

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New York - FLO TV confirmed that it will wind down its direct-to-consumer mobile-TV subscription service but said its white-label service resold by cellphone carriers "is unaffected at this time."

"We anticipate we will maintain the network so that current direct-to-consumer subscribers will continue to receive FLO programming into spring 2011," the statement said.

FLO TV "make appropriate refunds" that "will be communicated prior to discontinuation," the company added.

The company, a subsidiary of chipmaker Qualcomm, also said it has "been engaging in conversations with a wide range of partners for both the network and the [700MHz] spectrum," and is "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."

Both Verizon Wireless and AT&T offer a version of FLO TV's subscription service under their AT&T Mobile TV and Verizon V Cast Mobile TV brands through about a dozen cellphones combined. The phones are equipped with 700MHz FLO-TV tuners.

Representatives of AT&T, Audiovox and Verizon declined to comment. Audiovox markets several FLO TV consumer products.

FLO TV, a subsidiary of chipmaker Qualcomm, is dropping the consumer-direct service over concerns about the slow adoption pace and the high cost of marketing, customer service, product development, and customer acquisition, a source close to the company said. For FLO's white-label service, on the other hand, those costs are borne by the wireless carriers, the source said.

Discussions are underway with the carriers on FLO's future in cellphones, the source added. Qualcomm is also "looking at its options for the spectrum," which it owns. The company is considering potential partners, possibly to lease the network, to continue taking advantage of FLO TV's "unparalleled distribution platform," which the source called "a solution for any content provider" that wants to broadcast content wirelessly without creating cellular-network congestion.

Current FLO TV that receives FLO TV's direct-to-consumer service includes three products marketed by Audiovox. They are an installed in-vehicle FLO TV tuner to retailers, another version for car dealers, and a FLO-TV-equipped portable DVD player. For its part, FLO TV markets a handheld battery-operated personal TV.

Retailers have told TWICE that in part because of the economy, sales of the in-vehicle tuners have been slow, but one dealer also mentioned that picture quality was grainy on in-car displays larger than 7 inches in size. Sales through car dealers were also affected by the recession-induced decline in new-car sales. In addition, research analysts have said FLO TV's white-label service through cellular carriers has been slow to gain traction, in part because of the small selection of FLO TV-equipped phones.

For his part, Dr. Paul Jacobs, CEO of FLO TV owner Qualcomm, has previously said the company misjudged consumer interest in on-the-go viewing of TV episodes and other long-form programming compared to viewing short-form video.

The shutdown must have caught Audiovox by surprise, given the company's announcement last month that it was banking on a major price cut to its FLO TV in-car TV tuner and continued advertising by FLO TV to boost the product's sales during the holiday season. The cuts took the retail aftermarket version of the car tuner to $199 from $399, plus installation. The price of expediter version was also "substantially cut," the company said at the time.

FLO TV's direct-to-consumer service has been available since late 2009, initially through a FLO TV-marketed handheld personal TV, which was promoted early this year in a

Super Bowl ad

and was most recently priced at $149 from an original $249. Also late last year, Audiovox began marketing an Advent-branded FLO TV tuner through expediters to new car dealers for connection to a vehicle's existing DVD video system. Earlier this year, Audiovox shipped the Audiovox-brand in-vehicle tuner to electronics and car stereo retailers, and Mopar began offering FLO TV as a car-dealer-installed option in Chrysler, Jeep, Dodge and Ram vehicles. Audiovox's $199 DVD/FLO TV portable followed in the summer in limited distribution.

 At the NAB show in April, FLO TV announced plans in the second half to add interactive capabilities, pay-per-day and event passes, and time-shifted viewing options. The company also talked about adding datacasting capabilities to expand the subscription base.

By July, however, Qualcomm's CEO said at an industry conference that Qualcomm was willing to talk to potential buyers to take over the service-provider role, although he noted that the chip maker always expected to get out of the service-provider business after launching it to push the technology.

The 700MHz-band service launched through Verizon in early 2007, but service was initially available only in 20 markets where unused UHF spectrum was available. FLO TV gradually expanded service to 65 markets by early 2009, growing that to 85 in June when analog-TV stations turned off their analog transmitters during the terrestrial-TV conversion to digital broadcasting. By the end of 2009, service was available in about 107 markets reaching more than 200 million consumers. Service through AT&T started in mid 2008.

 FLO TV offers up to 20 channels of full-length simulcast and time-shifted programming from such content providers as ABC, ABC Entertainment, ABC Family, ABC News, ABC Sports, Adult Swim Mobile, CNBC and ESPN. A month-to-month direct-to-consumer FLO TV subscription costs $14.99/month for up to 20 channels.


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