This would be a small but notable recovery for a sector that has had trouble catching on with consumers and that actually saw revenue declining two straight years in a row after peaking at $522 million in 2008. PwC forecasts that those losses will level off this year, with revenue staying at $486 million and growth returning to the sector in 2012.

Granted, we are still talking about a market that is pretty small overall, only catering to 5 million paying subscribers by 2015 (up from 2.7 million in 2010). However, there could be a bigger story behind these numbers: Past mobile TV efforts, like Qualcomm’s now-defunct FLO TV service, were based on subscription-only offerings. PwC predicts that mobile TV will mostly be free, with only a smaller subset of viewers subscribing to extended premium offerings. From the report:

We expect mobile television to be offered principally as a free service for standard television programming. We also expect that specialized content, such as live broadcasts of sporting events or the availability of movies from premium television channels, will become an appealing application that would command a subscription fee, although we do not expect such models to generate significant interest for at least the next few years.

In other words: Mobile TV may not be a subscription gold mine for the next few years, but the fact that subscription revenue is projected to double in four years could be the sign of a much wider adoption of free and ad-supported mobile TV offerings. PwC predicts that this uptake will be driven by wireless network upgrades and a mobile DTV standard, which could kick in by 2012 or 2013.

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Video requires a lot of bits to create the moving pictures in such fine detail, and it’s also sensitive to latency and packet loss. Unlike an email that can be reassembled piecemeal at the end of its journey across the pipes and routers that make up the web, video packets generally have to travel in a preordained order. Adaptive streaming technologies can help break down video into smaller chunks to compensate for network quality, but video content is essentially a linear stream. So with a lot of bits and a need for those bits to arrive in line, ISPs, be they wired or wireless, have to dedicate enough bandwidth to make sure the streams aren’t interrupted.

On wireless networks where bandwidth is limited by an operator’s spectrum holdings (you can always add more backhaul for a price, but spectrum is more challenging) video delivery can clog a cell site with only a few users. How few? Thanks to Steven Crowley, a networking engineer and consultant, I learned of a Motorola study that shows that a cell site could support up to 5 users that require a 1 Mbps stream. Halving the bit rate to 512 kbps supports 20 users, but as Crowley point out, “that’s not HD by any standard or convention of which I’m aware.”

So why are Verizon and AT&T (even MetroPCS) pitching HD video on mobile networks? The physics of the spectrum don’t support it, and from an economic perspective, the current pricing plans offered for cellular data make it expensive for consumers. Since I don’t see that pricing going down anytime soon, I’m puzzled. Joseph Ambeault, director of media and entertainment services for Verizon, told me that given the on-demand nature of video on mobile devices, he believes that the network can handle it — especially given some technical tweaks Verizon can offer.

For a look at those technical tweaks, Crowley offers a primer on cellular vs broadcast spectrum use, and notes LTE supports broadcast technology. He also explains that broadcasters are reworking the over-the-air transmission standard and may adopt a different technology. However, since most broadcasters are planning to use their existing airwaves for mobile television, and the FCC wants some of that spectrum back, the technology built to support HD video suddenly becomes a matter of hot debate. Which may be the best way to deliver what consumers want when it comes to mobile video?

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Ahead of its time
FLO TV launched at a time when most consumers were still getting used to having the Internet on their mobile handsets, let alone viewing broadcast television. Unfortunately for Qualcomm, this was probably the biggest reason its mobile video aspirations failed. By the time media companies actually started streaming on other devices, FLO TV was an afterthought in consumers’ minds.

People don’t watch live TV on their phones
There are very, very few times when people watch TV on their phones; mobile viewing happens when people are stuck somewhere — like waiting for a plane or on public transportation — or when there’s an important sporting event going on that they can’t see anywhere else. Services like Netflix and Hulu Plus have made their videos available on smartphones, but even those providers admit that viewing on mobile devices runs a distant third, behind viewing on connected devices like TVs and on PCs.

Users needed a dedicated device
You’d think that Qualcomm might have been able to capitalize on first-mover advantage when media companies began streaming on the iPhone or Android phones. But for many years, FLO TV was only available on dedicated devices, before becoming available on select AT&T phones. Even when consumer behavior changed, and mobile streaming became (more) mainstream, consumers realized they didn’t need another device for a single service.

The hardware and service were too expensive
In addition to buying a dedicated device, generally for about $200, FLO TV users were expected to pay $15 a month for use of the service. For many consumers, that was simply too much to ask, especially in a rough economy when they were already seeing their cable bills rise year after year. It seems that $10 a month is the breaking point for supplemental consumer video services. FLO TV eventually lowered its price, but by that point, it was too late.

Qualcomm isn’t a media company
Let’s be honest; Qualcomm’s core competency is in making mobile devices. It believed that it could create consumer demand for more of its mobile gadgets and chipsets by launching a new service that required its hardware. What didn’t register was that it would have to create a service that consumers would want to pay for. Qualcomm might have been better served by selling hardware used by different services as opposed to trying to run its own.

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The bet Qualcomm made on personal, mobile, video content simply didn’t pay off, even though in theory, the idea was sound. The company leveraged its core competency in wireless technology to build a small television network using 716-722 MHz spectrum it gained through auction. But as our own review showed, $14.99 per month for limited content on yet another device to carry around didn’t appeal, especially when that network only covers 68 million Americans. Given the growing amount of video content on the web that can be watched in more places and companies such as Hulu, Netflix and YouTube now providing it, FLO TV was the perhaps right idea at the wrong time and not in enough places.

In Qualcomm’s defense, it’s relatively rare for a technology company or content provider to offer refunds when it fails to deliver on its promise. My colleague Stacey pointed out the demise of the laserdisc some 30 years ago and how customers who invested in fancy players were left with relatively little content to enjoy. I experienced a similar “laserdisc moment” more recently: I bet on HD-DVD over Blu-ray in the high-definition packaged content wars and I lost big. Instead of hardware to watch beautiful movies on my television, I’m left with a small paperweight, with no chance at recouping a single penny. So if you own a FLO TV, take solace. Sure, there’s no more FLO TV, but at least you’re likely to get a little something back for your new paperweight.

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FLO TV delivered live and on-demand broadcast TV programming from a number of big-name content providers, including ABC, Fox, NBC and others for $15 a month, but its big failing was requiring a dedicated device to watch the video on. Because FLO TV was run on dedicated wireless spectrum, only FLO-enabled devices would be able to connect to the service. That was a big drawback for the direct-to-consumer market, especially as some of the devices that could play FLO TV content, such as the FLO TV Personal Television, weren’t ready for primetime.

Qualcomm tried to remedy the business by white-labeling the MediaFlo service and offering it as a platform for other providers to deliver mobile video, using the content rights that it had already acquired. As a result, FLO TV was available on some AT&T and Verizon mobile handsets. Even so, the service wasn’t able to fully take hold. And it faced competition from Hulu Plus and Fox Mobile’s Bitbop, which offer subscription and pay-per-view access to on-demand video content from many of the same providers that FLO TV had signed up.

In a conversation with Stacey Higginbotham over at GigaOM, Qualcomm CEO Paul Jacobs said the company never intended to be in the business of running a cable TV platform via mobile, but had mainly started MediaFLO as a way to sell chips. But that didn’t pan out.

With all this in mind, Jacobs had said during its second-quarter investor call that the company was considering selling off the unit. But without a clear buyer stepping up, it appears Qualcomm might just shut the MediaFlo unit down instead.

That could be a poor omen for the Open Mobile Video Coalition, which is looking to launch its own mobile video service based on analog TV spectrum left over from the digital TV transition. Launching a video service that doesn’t live on existing handsets but requires a separate device will be a tough sell, especially as smartphone users are becoming increasingly used to finding content on the devices they already have.

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7-Eleven Web Series Has 2 Million Views; the 7-11 Road Trip Rally generated nearly 2 million views over three weeks. (Beet.tv)

Qualcomm Looking To Sell Off FLO TV; Qualcomm CEO Paul Jacobs said during yesterday’s earnings call that it has begun discussions with other companies regarding “alternatives” for the business. (CrunchGear)

RapidShare Scores Another Win Against Movie Studio; German court decides that one-click hoster does enough to prevent infringement. (TorrentFreak)

Canada Welcomes Netflix With… Lower Broadband Data Caps? Canadian ISPs lower their monthly data allowances just as Netflix announces its streaming-only service. (Ars Technica)

BBC News iPhone and iPad app launches in the UK; regulators finally the Beeb the give go-ahead to publish apps in the U.K. that have been available to international users since April. (BBC News)

FreeWheel Lands Univision and Scales Up for Live Events; the ad monetization provider dynamically served up to 64,000 simultaneous ad requests for ESPN3.com during the World Cup. (VideoNuze)

YouTube Play jury selected and ready to view your work; the search for the world’s most creative online video continues. (YouTube Blog)

Katzenberg, Cameron Foresee Slow Adoption Of Home 3-D; two of Hollywood’s top 3-D cheerleaders expect relatively slow adoption of 3-D TV, despite their strong faith in the value of the extra-dimensional medium. (Multichannel News)

FLO TV Fails to Attract, Qualcomm CEO Says; Qualcomm’s service for delivering TV shows to mobile phones and other portable devices hasn’t found the audience the company had hoped for, according to CEO Paul Jacobs. (Wall Street Journal)

MSN Partners With GrindNetworks To Launch A Comedy Channel; the online network has struck a deal with GrindNetworks to launch a new comedy channel called theBubble. (paidContent)

Iger: Programmers Walk Fine Line on Fee Increases; Disney CEO said said programmers are focused on obtaining carriage fees that reflect the value of their content, but by doing so they may attract unwanted scrutiny from Washington. (Multichannel News)

Online Advertising Startup LucidMedia Raises $4.5 Million; the startup, which provides an online advertising demand-side platform (DSP) with integrated real-time bidding, has secured $4.5 million in funding. (TechCrunch)

Project Canvas Could Be Known as YouView; If the much-awaited multichannel online TV service Project Canvas gets the go ahead, then it is likely to take on the brand name of YouView. (Tech Watch)

With Leanback, YouTube Could be the First Big Beneficiary of Google TV; converting YouTube — the king of short online video clips — to a more conventional TV experience might seem like a surprising ambition for Google, but in the context of Google TV, it’s actually quite strategic. (VideoNuze)

ESPN Bullish on 3-D Uptake; ESPN 3D will launch on the top cable operator and the top satellite TV provider on June 11, with access to more than 40 million homes. (Multichannel News)

Survey: ‘Online Video on the Increase’; almost half of young adults now split their video and TV viewing time equally between the computer and the television screen, according to a new survey. (DigitalSpy)

Video Search Engine RAMP Integrates with Facebook; the white label video search engine for a number of leading publishers now has a system to allow publishers to post rich metadata on customers’ Facebook walls. (Beet.TV)

Online Buzz Doesn’t Equate to Ratings; only four of the 10 shows in the social media ranking were also in the top 10 for ratings, while many popular shows on the social media index were not even in the top 40. (NY Times)

Cable Wants Open Windows; the cable industry is hoping that an industry proposal to secure on-demand access to Hollywood movie titles within a month after their debuts in movie theatres will become reality this year. (Multichannel News)

FLO TV launched the Personal Television late last year, but the company has been providing mobile TV service via cell phones for a couple of years now. FLO TV service is delivered over a dedicated mobile TV network; it doesn’t piggyback on existing 3G networks used by cellular carriers. The company says this allows it to deliver a higher-quality television experience, one that is more like the TV-watching experience that people are used to having at home.

But using the Personal Television did not quite live up to that standard, even though the $200 device makes a great first impression. It’s small (4.5 inches wide by 3.1 inches tall by .5 inches thick); at first glance you could mistake it for a portable GPS. It features a 3.5-inch touch screen for watching TV, and a neat little kickstand that flips out for propping it up on a table or desk. 

The Personal Television relies on FLO TV’s service for content, and the service is a bit expensive for what it delivers: it costs $14.99 per month (though you do get six months of free service when you purchase the device). FLO TV delivers about 15 channels to the Personal Television, including ABC Mobile, CBS Mobile, NBC 2Go, ESPN Mobile TV, FOX Mobile, FOX News Channel, MSNBC, Disney Channel, and Nickelodeon, among others.

Some of the content is simulcast with what the networks are broadcasting to regular old TVs. If you turn on CBS Mobile at 11:30 at night, for example, you’ll see David Letterman. But some of the content is also “timeshifted,” according to FLO TV. Letterman’s show, for example, is shown again the day after it airs at 11:30 am, so that people can watch it on their lunch break.

The timeshifting serves a couple of purposes. One, it fills gaps that might occur because FLO TV does not broadcast your local programming, like the news you might see at noon every day. It also allows you to watch programs that you’d miss because the Personal Television does not offer any DVR-type recording features, nor does it offer access to any sort of on-demand library — yet. FLO TV says on demand features are likely to be added to future products.

The absence of a DVR and an on-demand library is not a deal breaker for me. But the poor reception I often experienced when testing the Personal Television would be. According to FLO TV’s coverage map, I live in an area with relatively good service. Yet, in some areas of my house, reception ranged from poor to nonexistent. Programs often looked pixelated and smeared, and sometimes the video froze up completely while waiting for a signal.

Reception did improve when I moved around the house, and got even better when I drove to a neighboring town to test the device. At its best, the picture looked as crisp and clear as anything you’d see on a standard definition TV. The 3.5-inch screen can feel small, though, so expect to squint if you’re trying to make out the text in a news report, for example.

The Personal Television is FLO TV’s first dedicated device, and the company says it does not consider itself a “device company,” but rather a company committed to bringing the experience of mobile TV to consumers. To that end, FLO TV is currently working on both an in-car TV system and an iPhone add-on.

The Personal Television is hampered by its high price and mixed reception, but it could also benefit from more programming. I think the idea behind it has promise, though, and I’m very interested to see how well the iPhone add-on works when it’s available later this year. Using a device I already own to watch TV on the go could be a lot more convenient — and affordable — than purchasing an additional device just for that luxury.

Flo TV pushed their mobile TV viewing device to hen-pecked men dragged out who miss football games because they’ve been dragged out to go shopping, but they also got behind will.i.am’s My Generation remix.

Google had a relatively clever ad in the second half pushing their search ability but, um, did anyone need to be told that Google is a good search destination? Was this the manifestation of some crazy Bing paranoia?

There were also two homages to the Dramatic Chipmunk — Carmax replicating the original video twice in 30 seconds (though with different animals):

And Vizio brought in the rodent as well as a bunch of other viral stars (including Tay Zonday and “the Numa Numa guy”) to push their web-connected TV.

As for commercial hosting — the ads weren’t even findable on CBSSports.com (to be fair, they were also talking a lot about this football game that was also going on today). And while Spike TV was definitely the game leader when it came to getting the ads online, Hulu’s clever voting interface should probably give them a long-term advantage.

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