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Small providers personalize cell-phone market

Published March 12, 2007 at midnight

Helio just opened a store in Cherry Creek.

What's Helio?

It's an example of a new breed of wireless providers that are targeting niche audiences.

Many of these "theme-based" providers don't have their own spectrum. Instead, they use another company's network. But the services they sell are under their own brand name, and many of the features they offer are unique to them.

Helio is targeting the social-networking crowd with features including the ability to post content directly onto one's My- Space.com page, share personalized content among subscribers and feed customized Internet content such as news and weather directly to one's cell-phone screen.

The cell phones Helio offers are dubbed Drift, Hero and Kickflip.

Other upstarts in this genre include Amp'd, which caters to intensive users of entertainment content such as live TV and radio, and Disney Mobile, which is targeting the family market with features that enable parents to track their children and monitor cell-phone use.

The upstarts have some big companies behind them, including South Korea's SK Telecom and EarthLink (Helio) and MTV and Universal Music (Amp'd). You can guess who owns Disney Mobile.

For consumers, some of these providers offer features - such as social-networking features, entertainment packages or parental control devices - that are a bit more robust than what one can get from a traditional carrier, such as AT&T (Cingular), Sprint or Verizon Wireless.

But consumers pay a price: Disney Mobile, for example, runs about 30 percent more than a typical monthly family calling plan, according to a recent report by the Yankee Group, a Boston-based research firm.

Collectively, these groups of wireless providers without their own networks are called mobile virtual network operators.

The Yankee Group reported last year there were 55 such wireless providers in the U.S., with 14 million subscribers. Qwest Wireless - which uses Sprint's network - is an MVNO, although it targets a broader consumer market.

These providers emerged in the mid-1990s, but until recently most were "offering simple, no-frill services," according to analyst Emma Buckland in a January report by the telecom research firm Analysys.

British-based Virgin Mobile, founded in the late 1990s, is considered one of the industry's first big successes.

Analysts don't expect all of the MVNOs to survive. After all, the wireless space is becoming increasingly saturated, with total U.S. penetration now above 70 percent, according to CTIA, the wireless industry's association.

One of the briefest entrants into the space was Mobile ESPN, which catered to the sports crowd. Mobile ESPN shut down last year after only a 10-month run, but its services are being relaunched through a partnership with Verizon Wireless.

Yankee Group says the key to success for this new breed of wireless providers is figuring out what their target audience really wants and is willing to pay for. With so many options, consumers need to evaluate whether one of these upstarts fits their bill - or whether they're better off staying with their current provider.

You ... aren't addicted. You're adept. Sure, you blast your radio and you're always online. Now you can stay tuned in more. You ... have young children who are always on the go. Now you can know where they are and who they're calling. You ... access your MySpace account more often than you make your bed. Here's a chance to tap into it more. You ... need a cell phone that's simple to use, and won't cost you an arm and a leg to keep around. This could do the trick. You ... don't want a monthly bill. But you want a phone in case of emergency, only paying for what you need.
The brand Amp'd Mobile Disney Mobile Helio Jitterbug TracFone
The target. Intensive users 18-34 Families Tech-savvy consumers The older crowd Budget-conscious
How does it fit the niche? This entertainment friendly wireless provideroffers Web browsing, video options, music player capabilities and walkie-talking functions. Surveys show men are especially interested in this niche, particularly those who spend more money on wireless services ($87) than the average user ($56). Parents looking for "family-friendly" features can use Disney Mobile to help locate their children, limit the hours they spend on the phone and put restrictions on callers. Moms are often the target audience, but surveys show dads are interested, too. One drawback: pricier service plans. Helio subscribers can share personalized content with others, making it a good fit for those interested in social networking online. Subscribers can program live feeds, like news or weather, onto their phone. Men maybe the target audience, but women could fall into this niche eventually. Jitterbug is known for its simple-to-use phones, handy for emergencies or keeping in touch with relatives. With large, backlit "Yes" and "No" buttons, users tend to be senior citizens. The "One Touch" phone is even simpler, with buttons to call an operator, 911 or a programmed number. TracFone, with its prepaid plan, allows users to budget their usage. Customers don't have to pay a monthly bill or sign a long-term contract. Instead they track their minutes on their phone, a feature handy for customers who may want the phone only for emergencies or occasional calls.
Price and availability $49.99-$119 a month or pay as you go; available at Best Buy and Circuit City. $59.99 a month (450 minutes) to $249.99 (4,500 minutes); available online. ! $65 a month (500 minutes, free nights and weekends) to $135 a month (2,500 minutes). A Cherry Creek store recently opened. $10 a month for the "SOS" service to $40 a month; available online. $19.99 airtime cards (must be used in 60 days or you lose the minutes); available at many stores.
Ownership Columbia Capital/ Intel/MTV/Qualcomm Disney ! SK Telecom/EarthLink Great Call Inc. American Movil
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