October 25, 2004 4:00 AM PDT

For cell phones, it's TV to the rescue

SAN FRANCISCO--Can television save the cell phone industry?

Yes it can, say executives gathering here for the CTIA Wireless I.T. & Entertainment 2004 show, one of the industry's largest. In two years, technology prognosticators say, about 70 percent of cell phones will have built-in digital television receivers. By then, phones will have enough memory and processing power to handle a whole new set of services--making it possible to create a TiVo-like video recorder that fits in a pocket.

"TV in a handset is a whole new paradigm," said Bill Krenik, manager of wireless advanced architectures at Texas Instruments. "The whole face of TV is likely to change. On your living room TV, prime time is at night. Prime time on a mobile phone might very well be commutes."

News.context

What's new:
Processor gains and new screens mean cell phones are getting closer to bringing TiVo-like video recorders to the palm of the hand.

Bottom line:
Cell phone executives say new data-oriented services like television will help bolster an industry in a precarious state.

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Some of the biggest names in Hollywood and television are generating content for cell phones. Media giant News Corp. is experimenting with "Mobisodes," which are episodes of shows whittled down in size and scope to work best on cell phones, according to Lucy Hood, senior vice president at News Corp.

The Walt Disney Internet Group has expanded its own mobile content distribution business to include videos and other mobile contents based on non-Disney-owned brand champs Trivial Pursuits and National Lampoon, WDIG Executive Vice President Larry Shapiro said here Sunday. "These are big brands that wouldn't necessary use start-ups doing the same thing we're now doing," said WDIG Executive Vice President Larry Shapiro.

But carriers have been slow to jump in, preferring to wait instead until they have built fast enough networks to make watching television on a phone palatable. There are to date just two U.S. carriers offering live television on phones, AT&T Wireless and Sprint. On Monday, Sprint said it added programming from the Cartoon Network and Adult Swim cable channels to its TV offering.

The wireless-television buzz highlights the somewhat precarious state carriers are in as their representatives gather here over the next few days. Though they generate revenues in the billions of dollars, carriers have been forced by hypercompetition to dramatically lower prices on voice calls and virtually give away handsets that cost them hundreds of dollars each. "I don't think we're even done with the race to the bottom," said one source familiar with carriers' plans. Meanwhile, network usage is soaring, raising day-to-day operating costs.

With voice calling all but a commodity nowadays, and handset sales no longer a reliable source of revenue, carriers are committing as never before to data services to make up for lost revenue. This attitude has sparked a hectic push to find new, killer applications for phones, a quest that will be in full display at the CTIA Wireless show. Major new services to be highlighted at the confab include wireless broadband, mobile music, multiplayer gaming, photo sharing from camera phones, Wi-Fi hot spots and geotracking services for finding lost children.

Tryout for new Treo
Among the most notable devices to be unveiled this week is the Treo 650, an update to PalmOne's smart-phone family. The gadget will have a high-resolution screen and a higher-end processor, according to sources.

With the release, PalmOne is looking to increase its leadership over Hewlett-Packard and others in the gradually shrinking handheld market. It also has set the pace for the emerging smart-phone industry by successfully combining phone and organizer capabilities, something rivals such as Nokia have yet to match.

While carriers strain, handset makers are also experiencing their own problems--most notably Nokia, which comes to the Bay Area a little hobbled and wearied.

The world's No. 1 cell phone maker still reigns, with 36 percent share of the handset market, more than twice that of its closest rival Motorola. And Nokia still has the power to shake up the market.

The company is expected to introduce a new way for carriers to sell downloadable software, which will compete with Qualcomm's BREW, or Binary Runtime Environment for Wireless, technology. A Qualcomm executive said, "We're extremely flattered" by what she described as a copycat service.

Still, Nokia is keeping a relatively low profile at the CTIA show. It's not unveiling any new phones, something that's all but required from a phone maker at a cellular show.

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