February 3, 2006 4:00 AM PST

Big brands go cellular

When ESPN's long-awaited cell phone service kicks off on Super Bowl Sunday, customers will get access to shows including "Pardon the Interruption," as well as breaking stories from ESPN News to fit the small mobile phone screen.

Video content will change throughout the day as stories develop, and highlights will be posted quickly when games are finished.

Sports fanatics may be pumped about getting "SportsCenter" on their cell phones, but they're not the only ones to score well-known brands via their handsets these days.

News.context

What's new:
Big consumer companies are extending their brands by providing phone service, largely in hopes of targeting a narrow market segment the big phone carriers aren't reaching.

Bottom line:
New cell phones and a faster cellular network that support music, graphics and video have created a perfect environment for content owners like ESPN to offer their own cellular service. But experts agree that doing so isn't the best strategy for every company.

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The new Mobile ESPN service is part of a growing trend in which big consumer companies extend their brands by providing phone service, largely in hopes of targeting a narrow market segment that the big phone carriers aren't reaching. ESPN Mobile, known in the mobile world as an MVNO or mobile virtual network operator, won't actually own cellular towers or the network itself. Instead it will buy air time over Sprint Nextel's wireless network.

"Our mission is to serve sports fans on any platform," said Manish Jha, senior vice president and general manager of Mobile ESPN. "What we realized a couple of years ago is that the cell phone industry is highly fragmented. Cell phone carriers are trying to reach 17 different groups of people, and the effectiveness of that is limited."

Analysts expect MVNOs to become a major force in the cellular industry, generating about $11 billion in service revenue by 2010, up from $1.9 billion last year, according to the Yankee Group. And while there are only about 14 million MVNO subscribers today in the U.S. out of a total of 200 million, the number is expected to grow to 29 million MVNO subscribers by 2010.

But experts agree that launching a cell phone service isn't the best strategy for every company.

"Not every Scotch or 3M needs its own branded cellular service," said Fedor Smith, director of strategy at telecommunications industry research firm Atlantic-ACM. "Companies need some sort of unique content or service, or even an established cool brand to make this work."

New cell phones and a faster cellular network that support music, graphics and video have created an environment that's perfect for content owners like ESPN to offer their own cellular service.

Mobile ESPN

Virgin Wireless, which also uses Sprint's network, was one of the first major brands to launch its own cell phone service in the U.S. The U.K.-based media company targets the teenage audience that shops in its music stores and offers users a prepaid calling plan.

A slew of other brands have followed in Virgin's footsteps by announcing plans for their own cellular services. Disney Mobile, for example, plans to launch a service later this year targeting families.

EarthLink and SK Telecom, a telecommunications company based in Korea, have teamed up to launch a new service called Helio, geared toward teens. Helio rival Amp'd Mobile is also going after young hipsters. It runs on Verizon's network and has the Universal Music Group as one of its funders.

Retailers such as 7-Eleven and Circle K, meanwhile, have launched their own cell phone services, as well. And Target and Wal-Mart are considering offering a service. Service providers that don't have their own cellular networks are also good MVNO candidates. Last year, Sprint announced plans to work with Comcast and other cable companies to provide wireless phone service.

CONTINUED: Not an easy business to enter…
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ESPN, consumer company, 7-Eleven Inc., The Walt Disney Co., Helio

 

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