On the Late Show some years ago, David Letterman slipped into his cranky-old-man persona to lament the notion of video on the Internet. Closing his eyes to his trademark squint, he looked at the camera and wondered why anyone would want to watch some herky-jerky picture “that’s the size of a postage stamp.”

Of course, as a technology prognosticator, Letterman was off the mark. Video quality on the Internet has vastly improved, and viewership has exploded in recent years (see last week’s column on the subject). But his assessment is would still be accurate for most of what passes as video on cell phones these days, crunched into an impossibly small screen and struggling (in the United States, anyway) to present live motion over balky networks.

Will TV on cell phones improve as quickly as Internet video did? Cellular networks, manufacturers, and video providers are spending plenty of money to ensure that it does, with near-future technology improvements expected to increase the quality significantly.

So far, companies are exploring three major business models, which offer subscriptions to pre-recorded video clips, live network television, or customized content prepared specifically for cell phones.

Verizon is putting a big marketing push behind its video-clip subscription service, VCast. The service offers fare such as sports highlights, comedy shows, and CNN segments, along with various games, and is currently available in more than 60 metropolitan areas in the United States.

Verizon offers the service within its high-speed EvDo wireless networks. To subscribe to VCast, Verizon users must first sign up for the company’s EvDo service ($60 per month), then pay an additional $15 per month. The clips are downloaded at speeds typically around 500 kb/s– less than half the speed of a home DSL modem, but almost ten times faster than existing cellular data networks.  

Meanwhile, Berkeley CA-based Idetic offers subscribers live television content through its MobiTV service, with programming such as news, sports, and a 24-hour comedy channel. The company’s long-term goal is to build a live, streaming television service that pulls feeds directly from networks either live or on-demand, emulating the cable industry’s mix of subscription access, pay-per-view, and TiVo-like digital recording functions.

MobiTV shows are available through partner cellular carriers such as Cingular, Verizon, and Sprint PCS in the United States and Orange in the U.K. On Monday, September 26, the company will announce that it has reached 500,000 subscribers since it started up almost two years ago. “TV on the cell phone is okay now,” says Clay Owen, a Cingular spokesperson. “But it’s going to get dramatically better later this year when the networks are upgraded.”

The folks at GoTV Networks in Sherman Oaks, CA, have yet another take on cell-phone video. In addition to repurposing network television content, the company is creating customized–and sponsorable–on-demand channels. The offerings range from a women’s health and fashion channel, called Diva, to Pure Phat (“your daily source for everything hip-hop”).

Meanwhile, the networks themselves are looking at ways to create their own mobile content for sale to cell-phone subscribers. ABC, for example, has an entire division devoted to mobile content. (Updates on the ABC hit series Lost and Desperate Housewives are also part of GoTV’s offerings.)

But finding the right kind of content for mobile TV is not just a business problem. It’s also a delivery problem. Nobody knows which standard for broadcasting video signals over cellular networks – with names like DVB-H, DMB, and MediaFLO – will emerge as the leader.

In order to reap economies of scale, phone manufacturers need one standard to dominate – which means the standards fight is a much more than just an alphabet soup war.

Last month, Finnish cell phone giant Nokia concluded the largest trial to date of one standard, DVB-H (Digital Video Broadcast-Handset). Five hundred mobile subscribers in Helsinki tested the live streaming service for six months. According to a report from Nokia, 41 percent of them said they’d be willing to purchase mobile TV services.

Average participants in Nokia’s trial watched television programming on their handsets for 20 minutes per day. DVB-H tests are taking place now in the U.K., Spain, Germany, France, Switzerland, and Pittsburgh.

Another standard, DMB (Digital Multimedia Broadcasting) is gaining traction in Asia, with backing from big South Korean companies such as Samsung and LG. DMB piggybacks on an existing standard, called Digital Audio Broadcasting, whereas DVB-H requires governments to release additional spectrum. Analysts say DMB will probably win in South Korea, but not outside Asia. The South Korean manufacturers are far from giving up on international markets, though. “There is a very strong battle between Korea and Europe,” Jorma Laiho, director for Technology at Finnish broadcaster YLE, told MobileTV News in early September.

Back in the United States, it seems that the major battle will occur between the open standard DVB-H  and Qualcomm’s new proprietary standard, MediaFLO. Qualcomm is the leading provider of communications chips for cell phones using the CDMA (Code Division Multiple Access) standard, which is slowly being leapfrogged by EvDo and other faster communications standards. To stay in the game, Qualcomm plans to roll out a one-way wireless “multicasting” system that allows 50-100 content channels to be broadcast in the same frequency range occupied by a single conventional UHF television channel.

MediaFLO networks could be cheaper to operate than other video distribution systems, since Qualcomm’s standard is a one-way system, similar to conventional radio or television. That way, it avoids the bandwidth shortages that could arise if thousands of on-demand video subscribers all want to watch different content at the same time. The company says phones with MediaFLO communications circuits (built by Qualcomm of course) will also acquire streaming TV signals faster and burn less battery power than other technologies.

Partly because of the lack of a unified mobile phone network standard in the United States, and partly because true broadband mobile networks have yet to be implemented in most areas, it’s not clear whether mobile TV will take off as quickly stateside as it’s expected to elsewhere. In a survey by research firm InStat in early 2005, only 13 percent of U.S. respondents said they were “very” or “extremely” interested in watching television on their cell phones. Conversely, 42 percent said they were “not at all” interested in such an application.

Despite these kinds of surveys, though, Paul Scanlan, chief operating officer and co-founder of Idetic, remains bullish about the concept. “Television is the 75-year-old killer app,” he says. “I wouldn’t bet against it.”