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Disney Pulls Plug On Cellular Service

10/08/2007 02:00:00 AM Eastern

Disney will shut down its second mobile virtual network operator (MVNO) cellular service in as many years when it shuts down service to Disney Mobile customers at the end of the year.

Last year, Disney shut down its Mobile ESPN service less than a year after launch, then licensed its sports-enthusiast content and brand for access by data-enabled Verizon Wireless phones. Disney Mobile is also looking to license its content and services to existing carriers to market. Mobile ESPN and Disney Mobile used the Sprint Nextel network to offer content and services.

Disney Mobile will turn off service on Dec. 31, but as of Sept. 27, existing subscribers could no longer buy content or applications. The company plans a reimbursement program covering handsets as well as accessories and content purchased through Disney Mobile. Details of the reimbursement program will be announced by Oct. 8 through the company's Web site. Disney also said it would waive early termination fees if subscribers want to drop service earlier.

"The MVNO model has proven, as we've seen with other companies this past year, to be a difficult proposition in the hyper-competitive U.S. mobile phone market," said Steve Wadsworth, president of the Walt Disney Internet group. "In assessing our business model, we decided that changing strategies was a better alternative to pursue profitable growth in the mobile services area."

The alternatives include offering content and services and its Family Center service through a partnership with a major U.S. carrier, he said. Family Center allows users to display the location of a child's handset on a map appearing on a PC or on their own Disney handset, to limit when and how the child's phone is used, and set limits on their child's voice and data usage.

"It's been clear since we launched the MVNO that we were offering something both unique and useful for families that wanted to provide their kids with a mobile phone with suitable content and features while retaining a measure of control on how and when it would be used," Wadsworth claimed. "Our feedback from customers and critics from the beginning has been that we exceeded the mark in that respect.

Since Disney launched its service, however, other carriers and handset suppliers began to offer their own Family Center-type services, although the other carriers didn't offer the Disney-themed downloadable ringtones, games and applications.