reseller channel: MVNO Monster Jam

By Tara Seals

New MVNOs are pumping up their retro Air Jordans to prepare for a season opening of intense proportions. Ever since the big brand wireless resale model began attracting U.S. attention in late 2001, rumors have circulated about a new game in wireless, where the consumer is the most valuable player and custom-tailored content and applications make the wireless experience the most fun technological pastime since blogging and MP3s. The next six months finally may see competition in the mobile rich-media league.

Existing U.S. MVNOs have done well by targeting large demographics with nichespecific marketing and branding Boost Mobile in the urban and hiphop segments, Virgin Mobile USA with teens, and Tracfone Inc. with truckers and other road warriors. The new wave of MVNOs will refine that approach of niche demographics by leveraging content and rich media to market services that fit specific lifestyles.

The first to make a play by the end of the year is expected to be Ampd Mobile.

We will offer voice, sure, but also a deep content catalog and customizable mobile entertainment services, says Don McGuire, chief marketing officer at Ampd. We want to deliver compelling entertainment services and applications to a 15- to 34-year-old group, with 18- to 29-year-old young professionals being the primary target.

Ampd is building a fixed and mobile broadband product offering users can customize. Phones will be delivered with no preconfiguration. Customers visit the Ampd Web site to select from a variety of free basics wallpaper, ringtones, screen savers and the like. Once the handset is built, users can purchase content channels with music, gaming, sports, lifestyle services and more, accessible both online via PC and via the Ampd proprietary mobile user interface. The company has announced deals with Universal Music Group, Snoop Dogg, THQ, Moderati, PRIMEDIA and others to date. Subscription and channel pricing is to be determined.

Meanwhile, recognizing the power of mobile as a distribution channel to consumers, Walt Disney Co. and ESPN have put the industry on notice this year with announcements of a 2006 launch of MVNOs. ESPN will take a classic MVNO approach using branding, exclusive content and a niche focus. Mobile ESPN will roll out nationwide on Feb. 5, 2006 Super Bowl Sunday. The first phone to launch on the service will be the Sanyo MVP. And to further solidify its ascendancy in the sports universe, ESPN has the rights to broadcast Monday Night Football to its mobile phones.

Mobile ESPN has defined a new wireless category and, with that, we are positioning the service and our marketing around the idea that life will never get in the way of sports again, says Manish Jha, senior vice president and general manager of Mobile ESPN. This is more than a phone it is like putting ESPN in your pocket.

Personalized sports content will include the ESPN BottomLine scores and headlines service; Gamecast, a live, graphical representation of games; player and team statistics; ESPN video clips and game highlights; ESPN commentary and analysis; and sports alerts and fantasy updates.

Mobile ESPN is taking no chances with its positioning, teaming with West Corp., a customer service provider, to offer on-message customer care to Mobile ESPN users. West representatives will help Mobile ESPN fans with issues ranging from purchasing and activating phones, to answering and resolving service or billing questions. Wests Mobile ESPN representatives, who must be sports fans themselves, will work in a replicated ESPN office environment and will undergo product and brand training.

When youre bigger than big, sometimes the market differentiator goes beyond content. Disney is an example. The House of Mouse revealed at Septembers CTIA Wireless IT & Entertainment 2005 event that its entertainment offerings will be sold through various distribution channels, including carriers and direct to consumers. And while it will retain some custom, premium content to be offered exclusively via its MVNO, the strategy for differentiation also will revolve around family calling plans, parental-control services and other whole family attributes.

Thus, while content is at the heart of MVNO plans, theres more to making it in wireless than signing licensing deals. For certain demographics, early adopters and youth, rich media is very compelling, says Elizabeth Brooks, senior vice president of marketing at GoTV Networks Inc., which creates its own content to license in its fullscale production facilities, and performs editing of existing content to repurpose it for mobile delivery. But the question is, What content is strong enough to get other people to switch from where they are? MVNOs, just like any other wireless company, have to have great carriage, pricing and customer service. Is a person swayed more by exclusive content, or 20,000 free minutes? They need to use content as brand definition, rather than customer bait.

That definition may become easier with more bandwidth available in the air. Disney and Mobile ESPN will use the Sprint Nextel network, which is upgrading to EV-DO. Ampd will use the Verizon Wireless network, including 3G, where available. The availability of higher bandwidths in certain markets is central to the new MVNO strategy.

We are looking for a category break, to take mobile to the next level by leveraging that bandwidth, says Ampds McGuire. One example is mobile video blogging; Ampd will host a video blog community, open to all for reading, while only subscribers will be able to post messages.

The latest pack of MVNOs [is] interested in launching on 3G and that implies richer services, says Ian Blaine, CEO at thePlatform, a media publishing software company that brings content in from various sources, formats it for the phone and delivers it, with content and policy management. The software integrates with carrier sign-on systems and billing. One thing that will get interesting is broadcast spectrum. [Handset maker] Qualcomm, for instance, has a high bit rate to the handset that will allow a new set of services and entertainment channels.

We will see more broadcast-oriented MVNOs in the next year. Accordingly, mobile-specific formatting is on the rise. For instance, distance shots dont work on a mobile screen. Mobisodes of major shows and mobile productions of sports and news should be two-to-fiveminute clips with larger text and different framing to make it easier to consume.

We dont believe the phone is the third screen, says McGuire. People want burst entertainment and timewasters on that tiny screen. So were looking at repurposed TV clips from top shows, with highlights, behindthe- scenes features, bloopers, uncensored stuff think DVD extras.

Competition from network operators and other MVNOs is a potential foul ball for new market entrants, but in its role as a channel partner, MVNOs can play a complementary role to the network operator. Mobile network operators, or MNOs, certainly are able to provide content on their own without having to resort to a partnership with an MVNO, but what has emerged is an environment where MNOs and MVNOs can mutually benefit from the MVNOs entrance into the market with content-rich and strongly branded wireless services, says Mark Sloan, vice president of IMG Professional Services Group at Convergys Corp., which is supporting Mobile ESPN with its Infinys platform for billing and order management.

To keep out of the network operators way, MVNOs should target niche segments the carrier is unlikely to serve, offer complementary products and unique service bundles, enhance customer relationships that lessen the operators churn, and generate additional network traffic.

The new wireless game looks like a winner from the cheap seats, but is not without risk of injury. Blaine says he has talked to several big brands looking at mobile TV and other rich-media offers, and notes the risk. If that kind of content is part of the play, you will have to subsidize the cost of the phone, he says. Thats significant capex, but the payoff is huge, depending on subscription uptake. And subscription uptake depends on how well theyve targeted that content.

Further, 3G is only available in major markets at the moment. If your strategy hinged on 3G penetration in the U.S. market, you cant go after a mainstream audience right now, says Brooks. So your content looks great in a handful of markets, but what about the rest? Anyone whose business depends on having 3G up and running has his work cut out.

With the rush of new MVNOs in the United States expected in 2006, including more big brands and established Internet companies such as SK-EarthLink, the bleachers of speculation will be hopping with analysts, journalists, with back-office enablement companies as well as content/applications providers sponsoring the face paint. But without the business end of things wrapped up, playing on the wireless court could mean airballs instead of monster jams.

Many industry analysts predict that MVNOs will capture a sizable portion of the total market in the next few years, and that scenario appears reasonable to Convergys as well, says Sloan. It is a cutthroat competitive market, and even companies with incredible brand recognition may find it a difficult place to thrive over the long term. Our biggest caution is that many MVNOs who are racing to market may ultimately fail if they do not adequately address strategic and business plan considerations, and have an effective plan on how they will operationalize this plan to come to market.

Its game time for big-brand and bigcontent MVNOs, and most are ready to hit the court. People and consumers are not one-dimensional, says McGuire. Weve taken every precaution to make sure were positioned for our market. We have learned from other markets and other players, and we feel ready.