WTRS Executive Interview

Interview with Yoram Solomon, Senior Director Marketing, Industry and Standards, for Mobile Connectivity Solutions Group in Texas Instruments.

June 1, 2006

1. Can you tell us a bit about your background?

My official position right now is as the Senior Director for Strategic Marketing, Industry and Standards, for Mobile Connectivity Solutions Group in Texas Instruments. A bit about my own personal background, I moved from Israel eight years ago after having a startup in Israel in the VoIP space. I moved to silicon Valley. That is where my wireless career started. I joined a little wireless company called Voyager Technologies that was building probably the first components in Bluetooth. We sold this company after about a year and a half to a public company called PCTel. I worked in PCTel, still in Silicon Valley, for about two years as the vice president and general manager of the advanced communications business unit. Left them to join Texas Instruments, initially in wireless LAN. After a while I became the general manager of the consumer electronics connectivity business unit where I was responsible for the 1394, USB, and even the initial efforts in Ultrawideband. That was until about a year ago when I moved to the biggest business in Texas Instruments, which is wireless terminals business unit that builds components into wireless cellular handsets. And this is the business that today at TI is a 4.5 billion a year business for us, at least in 2005. Personally, I have an engineering degree, a law degree from Israel, an MBA from the university of Colorado, as well as some strategic marketing programs at Stanford. I am on the board of the Bluetooth SIG Marketing Committee, on the board of the WiFi Alliance, WiMedia, and obviously on the board of the Mobile DTV Alliance. I am also the president and chairman of the board there, and the vice chair of TIA's TR47.2. Also I am a mission pilot in the Civil Air Patrol Auxiliary of the U.S. Air force. And I still sleep eight hours a night.

2. What is the Mobile DTV Alliance?

Several things on that. One is that I started talking to a few of the companies that became board members in November of last year. And so I gathered a group of six companies. They included, obviously, TI, Intel, Nokia, Motorola, Microsoft, and Modeo. I talked to them about the importance of creating an alliance that supports DVB-H. In front of us, what we saw is Qualcomm with a proprietary specification MediaFLO (or forward link only) with a very concerted and organized effort to drive this. On the other hand there is a huge group with more than a hundred companies that support DVB-H, and yet are not organized enough to provide interoperable products and to provide some marketing background on DVB-H here in the U.S. So we got together and decided to launch this alliance. The alliance was formed in January of 2006, officially. And the six founders are the six board members: TI, Intel, Nokia, Motorola, Microsoft, and Modeo. Last week we had 27 members including Samsung and Sony Ericsson, but I know that there are more joining on a daily basis at this point. They are all available on our web site which is mdtvalliance.org.

3. How do you differ from the DVB Project with its DVB-H standard?

The DVB project and the DVB-H standard which was created by the DVB project is now standardized through ETSI and eventually through the TIA (telecommunications industry association) here in the U.S. under the committee called TR47, are all standardization organizations. or even specifications organizations. The relationship between the Mobile DTV Alliance to the DVB project is similar to the relationship between the WiFi Alliance and the IEEE. IEEE creates standards, and the WiFi Alliance assures interoperability.

The alliance is really focused on the U.S. market. The reason for that is because the U.S. market has its own specific challenges, whether through spectrum, whether through the way the operators work here in the U.S., the way that they own spectrum here in the U.S. compared to Europe and other places in the world, and how the business models work here in the U.S. compared to other places in the world. Just for an example of the cellular side, here in the U.S. is probably the only place I know on this earth where you pay for calls that you get, not only for calls that you place. Other places in the world you only pay for calls that you place. There is no reason to penalize you for calls that you get, for instance people dialing the wrong number. So there are unique challenges here in the U.S. and therefore we thought that it was really important that we address the U.S. market initially. Eventually we are going to branch out to other countries where such organizations do not exist; probably not to a place like Japan or Europe or Korea, where they do have their own good organizations that address similar things.

So what is it we are doing? We are doing several things. One is education and marketing. Education includes the government, it includes consumers, it includes the handset manufacturers, and it includes the operators. We need to educate them on DVB-H being an open standard, mobile TV as a business model. There are a lot of very interesting models that just talking to the operators, showing them the interesting things they can do with mobile TV enabled on their phones, you can see that some of them didn't think of that before. The second aspect, which is more tactical but equally important, is assuring interoperability. Now in order to assure interoperability, you have to do several things. If we go back to the first days of 802.11b, which is when wireless local area networking really started taking off, the first products claimed compliance with 802.11b. They did not claim any interoperability, the WiFi Alliance did not exist and when we formed the WiFi Alliance it was called WECA. Products claimed compatibility with the 802.11b standard, yet they were not interoperable with one another. Why did that happen? for two reasons. One is that there is more beyond 802.11b. There are all kinds of things that need to be standardized, or at least harmonized, from all the different manufacturers. But even within the 802.11b, there are a lot of options you need to choose from, draw a line in the sand, and claim that this is what you are going to have to support in order to claim interoperability with 802.11 standard. Taking that to the MobileDTV Alliance, we decided that DVB- H only addresses the air interface, or the physical layer, if you will. What about digital rights management? What about media players? What about user interfaces? electronic program guides? What is the interface to which you drive the content? All this needs to be defined. It is important to understand that this organization is not planning on creating standards or specifications. It is our intent to just reference standards and specifications and say, for example, digital rights management we are going to chose this, for a media player we are going to choose that. DVB-H has a lot of options and we need to specify which options will be required and tested for interoperability between vendors. So in a sense its very similar to what the WiFi Alliance has done. This tool we are creating is not really a specification. We call it a reference set. This reference set defines the entire broadcast network. >From the point at which content gets introduced, but not the content itself, all the way through towers and transmitters and handsets, and silicon and software that go on the handsets.

4. What are the top applications adopting Mobile DTV today? What are the value propositions to the End User and the OEM?

#1 is watching TV on mobile devices. If I go a level deeper, there are different types of content and different types of viewing habits. There are different ways to deliver mobile TV down to handsets. The two major ones are 1. Unicast, using the cellular infrastructure right now which is 1:1, and then there is broadcast, which is what mobile TV is about and DVB-H is about. I know that a lot of people are asking me, what is the difference? are they going to cannibalize each other? are they competing? and in fact I don't think that they are competing because this goes back to the way we use content. If you think about the content today, there is a lot of real- time, live content, such as CNBC, CNN, and ESPN. Breaking news, financial news, sports news. Those are the type of things that fall in the category that you need to get this now. Ten minutes later its possibly too late. A day later, it has absolutely no relevance. This is what you need to get through broadcast networks. You need to get it real-time. What's the value of the stock tickers you see on CNBC, if they are yesterday's stock tickers? There is no value in them. On the other hand, you have content that's more on-demand. On-demand can be clips from Saturday Night Live, or The Apprentice, or other things. And we can argue whether people are actually going to watch TV for 16 minutes on a mobile phone. I don't think they are. I think that you need to customize this content to have 2-10 minute clips. This is what you are going to watch, you are not going to watch more than that. But at the end of the day, those are two different ways of viewing content. And while I'm going to want to watch something that is more like a video clip, as I mentioned before, when I am ready to watch them, the real live content, on the other hand, I want to watch what's available now. To watch what's available now, real live, I need broadcast. To select content, I need Unicast and on-demand. Those are actually complementary, as you can see. Not only that, but this is where 1+1=3. Because you are going to take the broadcast content and you are going to plug advertisements and have the ability to chose something that is available off-line, or available through Unicast. You are going to click through to the ad and all of a sudden you go to Unicast, and vice versa.

One of the important things for OEMs is that this is a very small device that adds to the phone in an incremental way. This is where, for example, a component from Texas Instruments really plays well. The overall solution size is less than 100 mm square, its less than $10 for the overall solution. Its not a big burden, and it takes a lot of the headache off of them, and that is something that is important for the OEM. This is exactly the same product that you would use in a phone, or a PC, or the back side of the headrests in a car, so that people can see in the back seat. It doesn't have to have an uplink associated with it, much like a satellite radio. The only thing is that this is most likely, in most cases, at least here in the U.S., is going to be a pay-for service, so its not going to be free. There are areas in the world, like Japan, right now, where this is going to be a free service. If it is a free service, you definitely don't need any uplink. Here in the U.S., they intend to charge money for it and you need to be able to enable the service. How do you enable the service? There are 3 ways that come to mind. One of them is with the cellular back-end. So through the cellular network, you actually get this enabled. The second is through addressable activation, which is by the way, the way satellite radios work. When they activate it, your radio has to be on and over one channel they are going to transmit an activation signal with the device that you have. For that you don't need a phone. That's a one-way device, just a receiver. Your receiver receives that activation message and from that point on its going to be activated for a set period of time. The third way is simply by using a code. Your device is actually disabled, and the only way to activate it for a set period of time would be entering a code through a user interface, not down linked from the network, and you are going to have to call or go on the web to get that code. So for us the device doesn't have to be a phone. Mobile TV is going to show up, not only on phones.

Interestingly enough, one of the areas that DVB-H is going to go into is not necessarily just handsets but also PCs. And this is my guess of why Intel found it interesting enough to participate in, and we hear it from them every now and then. I think it was in The Innovators Solution, by Clayton Christensen, in which he addresses the Research in Motion, or RIM, Blackberry. He said that the reason that it succeeded so well is because it lets you use minutes that you don not have any other use for. When you are waiting for something and you have got 2, 3 minutes to burn. Not an hour, 2,3, minutes, what do you do? You reach for your blackberry, pull it out, type in your password, and then you check email and maybe respond to a few emails. That's what DVB-H is. same thing. Its a way to make use of minutes, of down minutes that you have.

5. Are you seeing different levels of interest in Mobile DTV by geographic region?

I am seeing not different levels of interest, but different ways of deploying this. One of things that is relatively consistent throughout the world, but not everywhere, is the DVB-H standard being an open standard. Which means that you have a level playing field. anybody can play, true competition, extract the cost out of it. You have to really compete on benefits and being cost-effective, rather than a closed environment where you have just one provider of a certain piece of the value chain commoditizing anybody else, except themselves. So I see a lot of global support for DVB-H. There are certain geographical areas, like Japan that supported ISDVB, and Korea that went with DMB, but the one standard that is the most accepted right now in the world is DVB-H.

Different levels of interest in the mobile DVB-H space in general? I think that the U.S. might be a little behind the curve right now, with the operators still trying to figure this one out. Trying to understand how they are going to make money, although its relatively easy to understand that they will. Italy was probably the first place that they launched the DVB-H service with one of the operators there.

I think that here in the U.S. they are still in the education mode right now. Verizon did make an announcement that they are going to adopt Mobile DTV. One thing about the U.S. is that they get it, they don't get it, but once one of them decides to do this, they all of a sudden get that they need to do that, they don't get why. And then all of a sudden everybody plays catch-up. Where they are right now is that they are starting to get it. Probably more important is that they are seeing that there is going to be competition in here and they are starting to think immediately, ok, how do I out-perform them. When we talk about Modeo and Highwire, there is an interesting point here in the model that the operators are using that is somewhat different here in the US and is associated with the fact that they are not certain about mobile DTV yet. What they are doing is they are outsourcing the network, the infrastructure, which has not been done like this before, and not a lot of carriers or operators in the world are doing that. Modeo's, Highwire's and Qualcomm's with their MediaFLO are now saying: you build out the infrastructure and the network and then we will use that and we are going to get the revenue and we are going to share the revenue with you, but we are not going to own the network or the spectrum. That is, in my opinion, until they realize that this thing is really successful. That the attach rate is not 5% of the 40 million subscribers that I have, but actually 20 out of my 40 million subscribers, in which case, how do I squeeze costs out of it? They will say, how did I get in bed with that broadcaster to start with? and how do I get out of this? Now, it is actually not that big a deal to insource the broadcast network into the operator, so I think that we are going to see a few phases. I think that in the first phase you are going to see companies like Modeo, and Highwire, and potentially even others, and maybe even MediaFlo, and then at some point when this market starts heating up, the operators are going to start asking to use a different piece of spectrum that they just acquired or already owned for that purpose. If you look at Sprint, Sprint has a 2.5 GHz spectrum that if you remember they used for rooftops, a broadband wireless network they used back in early 2000. They have the spectrum and they are not using it right now, at least in a way that is apparent. They can decide at some point to use it.

6. Do you see Mobile WiMAX applications overlapping in the Mobile DTV application space?

I think that mobile WiMAX would probably be more competitive with the 3G network than it would be with Mobile TV, although they do have some unique characteristics that kind of position them in a sweet spot. What mobile WiMAX has is the ability to all of a sudden deliver a whole lot of bandwidth and then deliver nothing. Because that is the way you consume data. You consume a whole lot all of a sudden, and then nothing. I will always remember being amazed by having a hundred people in one room sharing a WiFi link with lots of trouble and at the same having a 128 Kbits per second phone that seem like you have all 128 Kbits to yourself simply because we are not all using the bandwidth at the same time. So I think Mobile WiMAX is going to address data transfer applications better than anything else. And the 3G networks will address multiple users consuming consistently a smaller amount at the same time. And broadcast TV is going to be just broadcast a whole lot of bandwidth to everyone at the same time on a consistent basis. The technologies, when you go into the air interface specifications, are planned and designed to do that. I think that if you need to move a lot of data, WiMAX is going to be better than 3G. One of the values that the group that I am with here in TI offers is the answer to a major coexistence issue. When you are on your cell phone and you get near a radio, you hear a little chirp. That is when your cell phone is 3 feet away from your desk phone. Now what happens when those different radios are not 3 feet away but 1/2 an inch away. Its the same problem multiplied by several different orders of magnitude. So what happens then? Well, you have to address coexistence in a much more complex and big picture-type approach. And that's what we do here at TI. And that is what a very strong advantage we have. If you try and take a Bluetooth device from Broadcom and a DTV device from TI, and a WiFi device from Marvell, and you slap them together in the same phone, I hope you know how to solve the coexistence issue. Whereas if you take them all from TI, we already solved the coexistence on our side for you. You its funny, but you can overwhelm an active receiver with just the power of the transmitter next to it, even though they are on completely different frequencies. You don't fall off an edge when you get off frequency. There is still something being transmitted there. Is it feasible, yes it is. It is definitely feasible to put all those radios in one phone and have them work in harmony and without interference with one another. Just so long as they are all from TI.

7. Is there anything else you would like to tell our readers as a final note?

What will make this take off? When you ask people "how many of you are willing to pay $15 per month to get broadcast?", 8-10-20 channels including CNBC, CNN, ESPN, and maybe MTV, and so on. You will get numbers that vary and between 5 and 11%. However, if you get people to use this, and this is where the trials come into play. In trials, what we found was that the number of people that after the trials, after they got exposed to real service, and we are talking about a matter of days, not months. This percentage went up dramatically and all of a sudden we are in the 25, 40, and even 60% of people said "oh, I am going to pay $15-20 per month for this". And the thing is that we typically find it very hard to visualize what this is going to look like until we get really exposed to it. The best example I like to use is that I bought a new car, the first Bluetooth device that I bought was a car. Not only did it have a Bluetooth device in it, but it had Satellite radio as well. The Satellite radio was free, and it came with a free year of service. I am sure I paid for this, but it was very well hidden in the car invoice price. My perception is that I didn't pay for it and even if I did, its there. I already have it. So, will I use it? Well, of course I'll use it! Its there, why wouldn't I use it? After a year I realized that probably 100% of my radio listening is done to Satellite radio. It has 180-something channels, good channels, channels that are focused on content that I want to hear. And then I get the letter that says "your free subscription has expired, would you care to renew it?" Guess what, I couldn't even wait one day, I couldn't have the service drop down for a day, because that was the only thing that I listened to - that radio. Same thing. If you have got a phone and the handset manufacturers have subsidized that phone. And by the way, TI announced a few months ago with our Hollywood chip that the overall incremental cost, not just our components, the overall incremental cost of putting DVB-H in a phone is less than $10 We announced that publicly. So if the handset manufacturers subsidize that cost, and then, the very nice thing about a broadcast network, there is no incremental cost in supporting more subscribers. Its broadcast, once you have transmitted, it doesn't matter how many people are receiving it. If they give it to you for 3 months, maybe 6 maybe 12 months for free, are you going to use it? Of course you are going to use it. Every now and then, you are going to have 2 minutes. "Lets just check the service" And you are going to like the service. And now all of a sudden we are in the 25- 60% attach rate, and not 5-11. If I am asking you up front, right now, its hard for you to visualize it, you are starting to do the tradeoff calculations, well $15 a month is, money, its $180 a year. Do I really need that? But, if I give it to you for free for 3 months? that is it, you can't stop that service.

The only thing I have left that I would like to say is that the weather today here in Dallas is better than in California. I get three days like this in a year, so work with me here.

This interview ran in our June 1, 2006 newsletter issue.