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floBill Stone, president of Qualcomm’s FLO TV division, is making a huge bet that users won’t mind paying for mobile TV subscriptions to view shows on their tiny screens.

Speaking at the Streaming Media West show in San Jose, Calif. today, Stone said Qualcomm has collectively invested more than a billion dollars in lining up the digital spectrum license and other infrastructure to make the company’s live mobile digital broadcast TV service a reality. That investment includes the launch of FLO TV Personal Television (pictured), a handheld device that can play live and prerecorded broadcasts of news shows, sports, movies, and TV shows. The device went on sale Friday for $249.99. That comes with six months of free monthly service, which costs $10 a month.

It remains to be seen if FLO TV, which Qualcomm has been trying to kick start since 2005, will take off. The company doesn’t say exactly how many people are using the service on the Verizon and AT&T phone networks, but it does say the number of subscribers is in the millions. Stone said the service will also generate advertising revenue over time.

If all goes as planned, the market could be big. ABI Research estimates mobile TV will have 43 million subscribers by 2013.

One of the advantages that FLO TV has is its higher video quality. FLO TV can squeeze 20 channels into its bandwidth — which was previously the UHF channel 55 — and there is no buffering or lag time that frustrates users of most cell phone video services. Stone said that the Michael Jackson memorial service was FLO TV’s biggest event so far and that the average viewer watched for 49 minutes.

Any FLO TV-enabled device (including Qualcomm phone models on the Verizon and AT&T networks as well as the dedicated Personal Television) can pull the TV programming in over the air from Qualcomm’s digital broadcast network. They don’t, therefore, need to have a specific dedicated video stream sent from one place on a network to another. It is a one-to-many technology, not one-to-one. That’s the problem with current video services that are sent over cell phone networks. When the connections have to be made on a one-to-one basis, it’s easy to overwhelm the networks. That’s because video often consumer about 100 times more data networking bandwidth than a simple phone call.

On average, viewers watch FLO TV for 30 minutes a day while commuting, sitting at their desks, or waiting in line. The service is available in more than 100 U.S. cities now.

In the next month, FLO TV will also launch an auto entertainment service for devices that can be placed in the back seats of cars. Over time, FLO TV will launch more local and original programming and proliferate to a larger number of devices and smart phones, Stone said.

Here’s a video of Stone talking about FLO TV and showing off the new handheld device.

Bill Stone, president of FLO TV, talks about mobile TV handheld from Dean Takahashi on Vimeo.

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