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Mobile ESPN Pulls Plug On Its MVNO Service

10/09/2006 02:00:00 AM Eastern

Mobile ESPN is pulling the plug on its MVNO (mobile virtual network operator) service less than a year after launch, but the ESPN division will license its sport-enthusiast phone applications to existing carriers and MVNOs.

The announcement followed the recent introduction of a second Mobile ESPN phone and a sharp reduction in the price of the company's launch phone to free after $29 rebate, down from an original $399 that was quickly dropped to $199.

The company has immediately discontinued sales of Mobile ESPN handsets and service plans but will continue to offer service to current subscribers until at least Dec. 31. Subscribers will also get a full refund of their purchase price when they pay their last Mobile ESPN bill. Customers who want to drop service immediately will be released from current contract obligations without early termination penalty, the company said.

In midyear, Merrill Lynch analysts estimated that ESPN Mobile would garner only 30,000 subscribers in fiscal 2006, below original forecasts of 240,000, and expected parent Disney to lose $135 million in fiscal 2006 on the service.

Analyst Seamus McAteer of M:Metrics said he believes the failure does not portend failures by other MVNOs. "In the end, asking consumers to view a brand with a connotation as purely a media company as a provider of telephony is too great of a conceptual leap. Brands like Virgin, a lifestyle brand, or brands that are already providers of communications services, such as a cable company or ISP, stand a much better chance as an MVNO, as do companies that are pure-play MVNOs," he contended.

Mobile ESPN applications may not disappear with the MNVO goes dark, however. ESPN has "been approached by well-entrenched carriers about a licensing model," said Salil Mehta, ESPN Enterprises executive VP. “We have decided to pursue it." He added, "With a redefined approach we have a greater opportunity to reach millions of fans while achieving our strategic and financial goals."

Mobile ESPN wireless network voice and data services were delivered over the Sprint CDMA 1x and 1x EV-DO networks. Mobile ESPN launched in four Best Buy markets last November and went nationwide through the chain on Super Bowl Sunday this year. ESPN also sold service through its Web site and telemarketing staff.