November 10, 2004 12:12 PM PST

New wireless reseller to aim at 'urban ethnic' market

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SmartServ Online's ring tone division, Uphonia, plans to launch a U.S. cell phone operation targeted at urban ethnic consumers, more proof of how easy it has become to provide wireless services in the United States.

Companies as diverse as 7-Eleven, Qwest and SmartServ are becoming mobile virtual network operators, or MVNOs. Rather than build a network of base stations, they buy network usage minutes from existing U.S. carriers, then stock retail outlets with phones made by others that carry the MVNO's brand name.

Like other virtual carriers, Uphonia won't force subscribers to sign contracts or undergo credit checks; its service is paid for up-front and phones are sold separately at prices from $80 to $130. About 11 percent of U.S. cell-phone users are on such prepaid service plans, predominantly financially fragile young adults, or parents buying phones for their teen-agers.

One of the biggest benefactors of these "instant" cell phone carriers is Sprint, which is supplying airtime to the cell phone operations--not just to SmartServ, but Qwest and Virgin Mobile USA. Handset makers also benefit, but SmartServ has yet to name a handset supplier, according to Chief Executive Robert Pons.

While it has been a boon for Sprint, along with Virgin Mobile USA--the original MVNO, which recently passed the 2 million subscriber mark--other virtual carriers are having trouble differentiating themselves, and as a result, surviving.

As with Uphonia, MVNOs have taken to targeting thin slivers of demographics. Uphonia's typical customer will be the "urban ethnic consumer," Pons said. SmartServ's press release on the upcoming network emphasizes Uphonia's lack of monthly plan commitment or credit checks, and highlights the service's "flexibility" and "personalization." Uphonia also plans to reward loyal customers with free wireless games, ring tones and graphics.


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