|
A Mickey Mouse Cell Phone Service Might Not Be
Goofy Idea |
 |
|
2 hours, 24 minutes ago |
By Reinhardt Krause
Fast starts in the U.S. wireless service field by Virgin Mobile USA and Boost Mobile have sparked speculation that others - most notably Walt Disney Co. - could enter the market.
|
||||||||||
Virgin has signed more than 1 million subscribers in 18 months, while Boost has nabbed more than 250,000 in just two states, California and Nevada, in 15 months.
They've both targeted young mobile phone users, a market that's a Disney strength. Virgin Mobile's partners include music channel MTV, which among other things provides news alerts to Virgin Mobile subscribers. Boost focuses on youth-oriented sports events.
Disney - parent of Mickey Mouse, ABC, the ESPN sports network and movie studios - has cross-marketing pacts with wireless carriers in the U.S. and Japan. Just this month at the Consumer Electronics Show in Las Vegas, a Disney executive said the company is investigating the idea of offering wireless service.
"Yes, we are looking into it," said Steve Wadsworth, president of Walt Disney Internet Group, during a CES panel discussion. "This particular business is a very difficult and complicated business to get into. So we're being very diligent in our review of its potential for both the Disney and ESPN brands."
One need not be a phone carrier to offer phone service. Virgin Mobile USA rents network capacity from Sprint PCS. Boost uses Nextel Communications Inc.'s wireless system.
An entertainment firm like Disney might be a good candidate to resell wireless services, but it would be a bold move by Disney Chief Executive Michael Eisner. He's been under fire by some shareholders, who question his strategy for growth. Still, Disney's shares have almost doubled since August 2002.
Eisner has a track record of diversifying Disney. Wireless services could help promote Disney's retail stores, theme parks, movies and TV networks with text messages, Web site ads and in other ways, some observers say.
Disney's challenge would be to figure out whom to target and how to get to them, says Martin Dunsby, head of consulting firm inCode.
"Disney is very broad," he said. "You really have to narrowly define who you're going after."
Some people close to the company say Disney could launch a wireless business this year, but no one would go on record with that theory.
Last month, Disney quietly launched Disneymobile.com. Web site visitors can download graphics, games and ring tones for cell phones or other handheld devices. But, says Disney spokeswoman Kim Kersher, the site isn't a precursor to offering wireless service.
"It's unrelated," she said.
Disney also is exploring wireless in other ways. The company late last year rolled out MovieBeam, an on-demand movie rental service, in a few markets. It plans a national rollout this year. Movies are transmitted via a digital wireless signal to a MovieBeam set-top box.
Disney has a strong brand with families and soccer moms, but it's also such a broad company that it might have trouble focusing on one group of customers, Dunsby says.
A focus on the prepaid youth market has been a strong point of Virgin Mobile USA, owned by billionaire Richard Branson. His London-based Virgin Group includes the Virgin Megastores music chain and Virgin Atlantic Airways. With prepaid, customers buy airtime upfront, rather than being billed monthly.
In the U.K., Virgin Mobile has signed up almost 3 million users. There, Virgin uses a wireless network owned by T-Mobile, part of Deutsche Telekom AG.
But Virgin Mobile and T-Mobile have squabbled over money, resulting in court battles. Observers say Disney and others mulling a move into wireless service are being cautious. They don't want contractual disputes with carriers.
Companies like Virgin that rent airwaves are called mobile virtual network operators.
"When a MVNO talks to a carrier, one number is most important: what the carrier is charging per minute of use," said Derek Kerton, a consultant who once worked for Disney on earlier wireless projects. "That's because the MVNO is reselling minutes to its customers."
Virgin Mobile USA charges customers 25 cents a minute for the first 10 minutes each day. Customers pay 10 cents a minute after that. Virgin Mobile gets a wholesale rate from Sprint PCS.
One drawback to anyone getting into wireless service is that prices are falling fast amid tough competition and improving technology.
"Just because airtime is getting cheaper wouldn't make it a bad decision for Disney," said Adam Guy, an analyst at the Yankee Group. "Wireless can be a very personal channel for them to promote and distribute products. They wouldn't be looking at wireless as a huge profit center. For them to break even could be enough, if it solidified relationships with Disney fans."
Aside from Disney, others that reportedly have mulled reselling wireless services include Nike, Sony, Time Warner and Wal-Mart.
Some analysts expect cable firms to team up with wireless partners in order to combat product bundles offered by local phone companies.
In any case, more resellers will enter the field, says Dunsby.
"MVNOs are by definition a niche offering," he said. "We could see something in prepaid, or in a language segment with someone like (Spanish TV firm) Telemundo."
The wireless market has fragmented as carriers seek growth. Nextel, whose core customers are business users, teamed up with Boost Mobile last year to pursue consumers. Spokesman Andrew Colley says Boost plans to disclose expansion plans when Nextel releases fourth-quarter earnings next month.
Indeed, even carriers are doing more niche marketing. In June, Nextel announced a 10-year deal to sponsor Nascar auto racing. Nextel sells phones with team racing logos. European firms sponsor soccer teams.
Referring to the Nextel's Nascar deal, UBS analyst Uberto Ferrari wrote to clients, "What a wireless company sells is essentially a commodity, and branding will become increasingly important in what is a rapidly maturing industry."
If branding rules the day, that likely is a big point in Disney's favor, analysts say. Consolidation, though, would not help Disney.
It today's six U.S. wireless firms are whittled down to four, prospects for resellers could dim. The survivors might not be interested in selling wholesale network capacity.
"Consolidation plays against the MVNO space because what you need is a defector, a carrier that has excess capacity and says I'm going to do business with MVNOs," said Kerton. "Right now, it's Sprint."
Sprint PCS sells network capacity to Virgin Mobile and Qwest Communications International Inc.
The wireless wholesale market is still young, says consultant Booz Allen Hamilton in a report that implies Disney will enter the market.
"As new players such as Disney and major retailers enter the market, wholesale will take off," the report said. "It's now increasingly feasible to acquire factory minutes and then repackage and sell them to customers."
I came, I saw, I deleted all your files.
_______________________________________________ Sndbox mailing list [EMAIL PROTECTED] http://a8.mewebdns-a8.com/mailman/listinfo/sndbox_sandboxmail.net
