Look Ma, TV! First broadcast TV phone appears on MetroPCS

Starting now, MetroPCS(s pcs) is in the free-to-air TV business, but the sets it’s selling are rather small, fitting not only into the palm of your hand but within the confines of a smartphone screen. MetroPCS on Friday began selling the Samsung Galaxy S Lightray 4G, the first U.S. smartphone to pluck local broadcasters’ TV signals out of the air.

You’re probably thinking you’ve seen this before in the guise of Qualcomm’s(s qcom) failed FLO TV service. But Qualcomm tried to create an entirely new digital multicast network for mobile phones and devices – and charge premium rates for the service. The Dyle mobile TV service MetroPCS is offering is the brainchild of the Mobile Content Venture, a consortium of local and network broadcasters, who are using their existing DTV airwaves and infrastructure to replicate their regular programming on the small screen.

So this service isn’t so much a new form of mobile TV as it is just regular TV miniaturized for your handset – without all of the bells and whistles such as DVR capabilities and on-demand programming we’ve become accustomed to having at home. Its biggest advantage, however, is price. It’s free – though Phone Scoop is reporting that Metro may start charging in 2013 – and it runs over broadcast frequencies, meaning you can watch as much as you like without incurring data charges.

The Dyle service is available in about 45 markets today, and within those markets only a handful of stations are participating. For instance, in Chicago you can get the Fox(s nws), NBC(s cmcsk) and Telemundo affiliates as well as the Qubo children’s channel, while in Columbus, Ohio, you can receive the signals of ABC(s dis) and CBS(s cbs) and NBC, but not Fox.

The MCV says its receiver chips and Dyle software will be available on other Android(s GOOG) phones and even iOS(s AAPL) devices (presumably with external hardware) soon. The venture may be too late to market to have any kind of impact though. Since participating in the Dyle program requires having local TV spectrum, only the networks, their local affiliates and independent broadcasters can participate. Meanwhile, consumers are not only shifting their viewing to paid cable programming, but also looking to new sources of streamed video on the internet, mobile phone and connected TV platforms.

The best thing Dyle has going for it is it’s free. If it’s true that the MCV and its carrier partners actually plan to start charging for programming, then there could be a big backlash from both regulators and consumers. Broadcasters aren’t using any kind of private cable network or mobile broadband spectrum to deliver this content.  They’re using public free-to-air airwaves, handed to them by the FCC.