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Helio Distribution Strategy Centers On Experimentation

Los Angeles — Helio, the renamed SK-EarthLink joint venture, is developing a distribution strategy that it contends will be as innovative as the planned MVNO (Mobile Virtual Network Operator) service that it will launch commercially next spring.

Helio service and Helio-exclusive phones are targeted to 18- to 32-year-olds for whom a cellular phone is the “center of their universe,” the company said. To reach them, Helio will pursue a “selective, balanced and innovative” mix of distribution channels, said Ali Zanjani, Helio’s sales and distribution executive VP and former Sprint PCS retail executive.

The channels will include a mix of Helio-owned stores, traditional cellular distribution and “untraditional” venues where target customers shop, Zanjani explained. “We are going to experiment a lot,” he said. “We will look at everyone who is a player today and everyone who isn’t. We may not be where traditional carrier offerings are.” Whether the venue is traditional or untraditional, “the channel partner must prove our customers shop there,” he added.

E-commerce will be “a very big piece of our distribution strategy” and will include a company site, he continued. “We are looking very hard at partnering with online retailers who market to our target.”

The target market consists of three segments in the 18-32 age bracket: young affluent trendsetters who want to get things first and will wait in line for them, people who are largely still in school and have “heavy entertainment and communications needs,” and fashion-conscious urban dwellers who see their phones as an expression of their selves, Zanjani said.

To these consumers, Helio will position itself mainly as “a media and entertainment services provider,” and “by the way, we’re also a phone company,” said business development VP Michael Grossi. Said Zanjani, “We want to bring them a communications and entertainment experience like nothing they’ve ever seen.”

“We know their unmet needs,” Zanjani continued. “They lack cool devices with awesome applications and services that can be used in their everyday lifestyles.” Various carriers offer bits and pieces of Helio’s full package of planned services, but overall, carriers “all go for the one-size-fits-all strategy because they must go for scale,” Zanjani explained. Helio, on the other hand, “doesn’t need 40 million subscribers to succeed,” Grossi said.

Although other carriers have launched audio, video and other advanced services, Grossi noted, “the takeup rates of premium applications are not as high as expected because they’re not easy to use.”

To solve this challenge, Helio will launch with exclusive, “very high-end and fully loaded” phones with “easy to launch media applications and services,” Grossi continued.

Joint-venture partner SK Telecom, a Korean carrier that until recently also manufactured handsets, has the experience to deliver innovative services, having offered CDMA 1x EV-DO service there for three years, the company contended. In Korea, Grossi noted, 70 percent of digital music downloads are stored on phones, whether the music is transferred from a PC or downloaded over the air, Grossi said. Over-the-air downloads will be part of Helio’s U.S. service.

Interactive and 3D games are also part of SK Telecom’s Korean offerings, as is mobile blogging and satellite-DMB [digital mobile broadcasting] service, which delivers video streams and live TV to handsets via a satellite service not available in the United States.

Grossi wouldn’t say whether live TV, over the EV-DO network or DVB-H (digital video broadcasting-handheld), would be available at launch. He also declined to say whether the launch would include video streaming in conjunction with or in lieu of video downloading. But, he said, “We have experience. A lot of U.S. carriers are still learning.”

SK Telecom, he noted, operates under eight brands, each targeted to different demographics.

Helio plans to offer service over the Verizon and Sprint PCS EV-DO networks, but the company declined to say whether its service would be available at launch over one or both networks.

When the company first unveiled its plans early this year, it had targeted a late-2005 launch.