Virtual wireless carriers face tough times

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Mobile ESPN is going after sports fanatics with a service that offers video clips, alerts and messaging related to sports content. And Helio is targeting ultra-hip young people by offering high-end phones that can access interactive games, high-quality videos and the MySpace social-networking Web site. Disney Mobile is trying to win over families with features that allow parents to keep track of their kids and limit their mobile spending. But customers interested in these services are also likely potential customers for the big carriers' multimedia and mobile data services.

Big cellular operators have a leg up on the MVNO competitors because they have bigger marketing budgets and well-established retail channels.

But Helio and the Disney MVNOs say they also have a strong retail presence. Helio said it will be in more than 2,000 retail locations by the end of August. And the company is also getting ready to open five retail stores in cities around the country that Helio hopes will create buzz around its brand.

"We know we are offering a differentiated product," said Rick Heineman, spokesman for Helio. "And we're very focused on the retail strategy. We're already in over 2,000 locations. And now we're adding our own branded stores, which will also get our product out to more customers."

Homing in on a market
Mobile ESPN also said it feels strongly about its retail presence, which includes large retailers such as Best Buy. It also shares a couple dozen kiosks in malls throughout the country with Disney Mobile. The service is also being sold in more than 500 independent wireless stores. And Sprint Nextel is even featuring Mobile ESPN and Disney Mobile phones and service in many of its stores as well.

In order to compete with the large cell phone companies, Mobile ESPN changed the way it sells its service. When it launched in February, the phone service was already bundled with unlimited data service and sports content.

Now Mobile ESPN offers basic phone packages starting at $39.99 for 400 minutes with some of its sports content included. Most of its video content and text messaging services are sold as add-on packages.

Mobile ESPN also reduced the price of its phone from $199 to $29. After a mail-in rebate subscribers can actually get the phone for free. And it has recently added a new phone to its lineup, the Samsung ACE, Motorola's thin Razr phone look-alike, which costs $99.

While these new MVNOs recognize competition for subscribers is tough, they believe their services are differentiated enough to make them appealing.

"Mobile ESPN never claimed to be all things to all cell phone users," said Rebecca Gertsmark, spokeswoman for Mobile ESPN. "We are a mobile service for avid sports fans. And we see our users wanting a highly personalized service."

Helio also believes its audience is well defined. "Our customers don't want their mom and dad's cell phone company or their mom and dad's cell phones," Heineman said.

Analysts agree that the service and features offered by the new MVNOs are superior to what users can get from the big carriers. They simply question whether this strategy will actually entice ultra-hip urbanites, families or even sports nuts to actually switch their phone service.

"These are all great services," Strategy Analytics' Kendall said. "There's no question the sports content from ESPN looks better on the Mobile ESPN phones than it does on Verizon Wireless's V Cast service, for example. But how many sports fans are really going to cancel their existing cell phone service to subscribe to Mobile ESPN?"

[TV James]

Costly added features and crowded marketplace

I was surprised to see Helio the other day in a magazine. While I'm mostly happy at Verizon, I like to learn about new choices. Helio seemed interesting, but it wasn't cheap.

I'm guessing if you're reselling someone else's service and adding more features, you really can't charge less than what you're reselling, and therein lies the problem.

It's hard enough finding an affordable cell plan that works effectively for making simple phone calls.

Plus, most re-sellers are using Sprint which is notoriously bad to begin with.

[jamesreb]

They put it on themselves.

When you look at the devices from MNVO Helio, sure its neat looking but the device really sucks. There's not even Bluetooth available on their $200+ (with contract) handsets. That's another thing, the price.

$200 is a little pricey to not have high tech features like Bluetooth. Woo hoo, MySpace mobile. That's be great, if I was teenager. But the teens are going for companies like Virgin because of either costs or contracts.

If you look at Amp'd, their handsets have the "basic high-end features" that high tech phones should have, like Bluetooth. Also Amp'd has launched a prepaid service and its still cheaper than Helio. You still get one of their good phones (with a slightly higher price) and the phone doesn't scream its a prepaid.

Some of the old legacy wireless carriers like Verizon try to mock the teen-oriented prepaid services like Virgin or Boost. Unfortunately if you look at their INpulse, you can tell they have a temp doing their marketing. $1 a day, which includes unlimited nights (but not weekend days) and mobile-2-mobile. The stinger of the whole thing is you get charged your dollar even if you don't use the phone that day.

So the MNVOs aren't dead. As long as there are teens who want to have a cell of their own and people who've hosed all the post-paid wireless companies and couldn't get on a regular phone plan if their life depended on it, there will still be MNVOs.

As for Boost Mobile, Sprint is shuttering the Nextel iDEN network in about 5-7 years. Unless they screw over their partnership with Virgin on the CDMA network, Boost could be dead.

[eric404]

Do people know it's on the Sprint network?

I've probably seen at least 300 ESPN Mobile commercials over the past year, and although I'm way too cheap to consider getting it, what always bugged me was that they NEVER mentioned anything about the service.

Until reading this article, I had no idea the ESPN Mobile leased cell service from the Sprint/Nextel network. From the lack of information in their commercials, I had assumed Disney had set up a high-speed cell network by themselves in the major cities, and I'd be out of luck with an ESPN phone as soon as I head home to New Hampshire.

They say "it's not your current phone, it's a whole new phone service from ESPN." Why don't they say, "it's not your current phone, it's a whole new phone service from ESPN, backed by the reliable Sprint network"?

[TV James]

"reliable"

I think the word "reliable" in that context could get them sued for false advertising. Sprint's the only reason we haven't signed up for the Disney service, even if it does cost more. It's cool and my wife and I are some of those crazy people who will buy anything Disney.

Except my permanent lifetime boycott of all things Sprint trumps that.

[TV James]

'reliable'

I think the word "reliable" in that context could get them sued for false advertising. Sprint's the only reason we haven't signed up for the Disney service, even if it does cost more. It's cool and my wife and I are some of those crazy people who will buy anything Disney.

Except my permanent lifetime boycott of all things Sprint trumps that.