Growth Wireless
Why is INSP's Jeff Davis being quoted
by: datsun310 (37/M/the real one) 10/16/01 08:37 am
Msg: 310140 of 310146
here? hmmmmmmm........
Virgin Mobile Looks For A Revolution
By Deborah Méndez-Wilson
October 15, 2001
Wireless Week
American consumers are in for another British invasion. This time, however, the protagonists aren't wearing red coats, Nehru jackets or spiky Mohawks. They're telecom executives–led by a globetrotting billionaire–who are dressed in digital duds and promising to ignite the American wireless scene.
After months of speculation, Virgin Mobile and Sprint PCS made it official: The duo next year will launch a U.S. virtual wireless network that will focus on the undertapped under-30 market. This promises to be a British invasion for the mobile, Web-connected, information-hungry 21st century.
Industry analysts are cautiously optimistic about the implications for the U.S. wireless industry and U.S. consumers. They say the partnership could finally stir a mobile youth revolution and ignite mobile commerce, or it could fail miserably if American youths are not drawn to the Virgin label. Either way, most agree Sprint PCS is making a gutsy move to create the nation's first mobile virtual network operator.
After confirming the MVNO initiative a little over a week ago, Sprint PCS enveloped itself in a quiet period, declining to offer further details about the deal.
Virgin is expected to launch service in the United States over the Sprint PCS network next year. Sources say the launch is likely to coincide with Sprint PCS' national unveiling of 1XRTT network upgrades.
Under the terms of the agreement, Sprint PCS and Virgin initially will have equal interest in the partnership. Sprint PCS will contribute $50 million in services to the joint venture and Virgin will invest $50 million in cash. The new company, Virgin Mobile USA, will have a six-person board of directors that includes the eccentric Sir Richard Branson, creator of the Virgin brand, and Sprint PCS President Charles Levine.
The MVNO model has worked well for Virgin in the United Kingdom, where it has a 50-50 partnership with One2One. Virgin appears confident it can replicate that success in the United States, where wireless carriers have failed to penetrate the potentially lucrative youth market. Virgin plans to draw young American consumers to the Sprint PCS network by offering Virgin-branded handsets, competitive pay-as-you-go voice services and value-added wireless data offerings and m-commerce capabilities.
Virgin has not disclosed the details of its so-called "Virgin Xtras," but analysts say they might include MP3 music downloads, ring tones, instant messaging and services that will enable youths to purchase goods through their phone accounts.
Strategis Group analyst Adam Guy says Virgin's offerings are likely to be a younger, hipper version of Sprint PCS services for business users. He says Sprint PCS may not have been first in offering next-generation digital service, but it is "trying to have the coolest devices and more ubiquitous availability."
Still, most industry analysts agree that Virgin has its work cut out for it. The company's brand is not as well-known here as it is in the United Kingdom and doesn't yet have the same edgy cachet in the United States. Experts say the model will work only if the brand used by the MVNO is strong enough to attract widespread interest. Yankee Group wireless analyst Knox Bricken says if Virgin can sell its concept to U.S. youths, "there is an opportunity for the joint venture to establish a strong subscriber base in the United States."
Meanwhile, Virgin reportedly is negotiating content partnerships to offer future subscribers a techno-palette of wireless voice and data offerings. Observers say InfoSpace Inc. is well positioned to help Virgin meet its objectives. The Bellevue, Wash.-based provider of Web-based applications already works with Virgin Mobile in the United Kingdom. Jeff Davis, InfoSpace's senior vice president of new business development, says in order for the MVNO model to work, service providers must offer the right combination of entertainment, gaming, messaging and niche content to differentiate themselves.
"Any potential MVNO will have to demonstrate that it can provide value to wireless carriers by helping them target a niche market they could not reach otherwise without targeting the carrier's existing subscriber base," Davis says. |
