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New MVNO SK EarthLink Promises Cellular Advances

1/26/2005 03:18:00 PM Eastern

New York — Disparaging U.S. cellular carriers as way behind the times, ISP EarthLink and Korean carrier SK Telecom announced a joint venture that they contend will deliver advanced wireless services not currently available to U.S. consumers.

The two companies’ joint venture, SK EarthLink, will be a mobile virtual network operator (MVNO) that will use service platforms and handsets developed by SK Telecom and already deployed in the Korean market, where SK offers location-based services, videoconferencing, music and video services, and delivery of satellite-TV programming to handsets. The advanced services and handsets, initially made by SK Telecom’s handset subsidiary, will be launched sometime toward the end of the year.

SK Telecom brings its 3G marketing experience, service platforms and handsets to the joint venture, and EarthLink brings billing and other systems as well as a subscriber base that fits the target customer group, the companies said.

The joint venture did not detail the specific types of services that would be launched here, but it did say it will use existing CDMA and Wi-Fi networks to deliver its data and voice services. The company noted that in many households, in-home Wi-Fi networks reach parts of the house where cellular service falls short.

The joint venture also said it would leverage EarthLink’s existing retail distribution to market phones and services. EarthLink offers wired Internet access through 18,000 store fronts and will “leverage those relationships where it makes sense,” EarthLink Wireless VP/GM Brent Cobb told TWICE. A few of those outlets also offer EarthLink’s wireless services. “We’re going to find potentially a small number of large retailers and some specialty retailers to distribute our products,” he said. EarthLink will also sell the new phones and services online.

EarthLink entered the MVNO market on its own in 2000, when it began offering wireless e-mail through one of RIM’s earliest Blackberry handhelds. It currently has 30,000 wireless subscribers. In September 2004, it launched its first wireless voice and data service through a Blackberry 7750 CDMA 1X PDA phone.

The 50/50 joint venture, capitalized with $440 million over three years, aims to have 3 million subscribers by 2009 and annual revenues of about $2 billion. Initial customer targets also include other customer segments that the company declined to describe, but whoever they are, they represent a group of people for whom “the cellphone is a way of life,” not just a device to make phone calls, a spokesman said.

Cobb noted that the advent of wireless local number portability “makes it easier for companies to enter the market,” but he said U.S. population growth and growing cellular penetration rates were the primary factors responsible for SK EarthLink’s decision to enter the market.

Cobb declined to say which CDMA technology would be used to launch the new services or the number of markets that would participate in this year’s launch. The joint venture, however, will continue to offer EarthLink’s current 2.5G CDMA 1X voice and data services, which are available “almost fully nationwide,” Cobb said.

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