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Over the weekend I got a copy of a note from investor meetings with Qualcomm (NSDQ: QCOM) CEO Paul Jacobs suggesting that the company was ab…

Paul Jacobs, CEO, Qualcomm

Over the weekend I got a copy of a note from investor meetings with Qualcomm (NSDQ: QCOM) CEO Paul Jacobs suggesting that the company was about to wind down or spin off its MediaFlo unit. Not so, says Jacobs. “We are not shutting down MediFlo,” Jacobs told paidContent during an interview this afternoon at D8. The company is in conversation with potential partners and exploring other alternatives — in part, because that was an option from the beginning and, in part, because Qualcomm isn’t happy with the performance.

Jacobs explained: “We’ve always said to our investors that we’re going to either sell it or spin it someday. It’s been that way from the very beginning so the question is to just find the right partners to work with and what’s the possibility to get more usage of it.” No hard timeline for any action, he said.

Where does Jacobs think MediaFlo is stuck?

“It’s a bit of marketing, it’s a bit of the number of devices, we had a lot of learning about what kind of content is interesting to people.” For instance, people don’t tend to watch episodic tv but they will dip in and out of old movies. The company just made a deal to carry all the Fifa World Cup games live — we know live sports is big, breaking news is big.”

MediaFlo USA was formed in late 2004; Verizon introduced the first mobile TV service from MediaFlo in early 2007, AT&T (NYSE: T) a year later. MediaFlo launched its own direct-to-consumer play last year, subscription-based handheld Flo TV. So Jacobs was a little surprised to read in the New York Times (NYSE: NYT) the other day that mobile TV is coming the U.S. “It’s been here for a few years.”

But the uptake isn’t what Qualcomm expected for the service or the device. In an effort to shift that, MediaFlo’s technology will be used for datacaching for a service run by the operator — downloading headlines or little video clips, other types of content. “It’s much. much more efficient. … if a download’s coming you don’t need to get it from start to finish to be cached.” That can happen through any number of devices.

And if Qualcomm can’t goose the service, the “cool thing” about MediaFlo is the company bought the original spectrum for what Jacobs calls “such a small price” it already has a dollar-value gain for just the value of the spectrum. “Say the whole thing blew up,” says Jacobs, “the spectrum itself is worth almost $2 billion based on the latest spectrum auction.”

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  1. The problem is that the Phones are validated and released by the Carriers ( AT&T, Verizon, Sprint and others) and they would like these devices to use video from 3G. Promoting any phones which enable off the net video ( e.g. via broadcast) conflicts with their core business. It is admitted that AT&T and Verizon are themselves providers of FLO TV which runs on the Qualcomm network,but the incremental revenues for them from this business are limited.
    The problems will be more when ATSC based mobile DTV starts to grow by end of 2010.

  2. The problem with MediaFlo is that it is a subscription based service. Consumers are sick and tired of monthly fees. The only way to fix MediaFlo is to remove the monthly fees and find someway to generate revenues through advertising. Frankly we have come full circle. Free TV for the most part is paid for by the advertisers.

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