SK-Earthlink’s plans to launch a mobile virtual network operator service have been pushed back until at least early next year, but despite the delay, the company is not scaling back its roadmap to sign up 3 million customers by 2009.
“We are looking at an early 2006 time frame,” said Ali Zanjani, SK-Earthlink executive vice president of sales and distribution, when asked about SK-Earthlink’s updated launch plans.
The company originally planned to launch service in the second half of this year when it first announced its MVNO plans in January.
Analysts note the delay could spell trouble for the company as other MVNOs targeting a similar market are expected to launch service later this year.
“The delay could be a problem,” said Yankee Group analyst Marina Amoroso. “Amp’d [Mobile Inc.] looks like they are on track for an end-of-year launch and will be targeting a similar demographic.”
Amp’d, which will rely heavily on Verizon Wireless’ high-speed CDMA2000 1x EV-DO network, has announced several initiatives since the company reported plans earlier this year to launch service, including extensive content agreements, and it already announced a branded handset from Kyocera Corp. SK-Earthlink has not yet announced its network operator.
“Amp’d looks to be SK-Earthlink’s biggest competitor, though it’s still hard to gauge SK-Earthlink’s plans since they have not released much information about the service,” Amoroso added.
Zanjani also stuck with SK-Earthlink’s initial forecast of signing up 3 million subscribers by 2009. SK-Earthlink previously said it expects to generate $2 billion in revenues by 2009 and will generate sufficient cash flow to fund continuing operations beyond its initial $440 million in funding.
Analysts noted that it took MVNO market leader Virgin Mobile USA L.L.C. nearly three years to sign up its first 3 million customers, and that increased competition for both youth and prepaid customers has recently slowed its growth.
SK-Earthlink also will be attempting to reach those numbers without the benefit of signing up prepaid customers, who have been a catalyst for much of the recent wireless growth and a target market for most MVNOs.
“Prepaid is not in our cross hairs,” Zanjani said.
Instead, SK-Earthlink said it will target more profitable postpaid customers who generally spend more money per month on wireless service and are more open to advanced data services, even if that means targeting current wireless customers.
“We will not specifically target a carrier’s customer base, but we expect we will take customers from other carriers,” Zanjani explained. “If not in terms of head count, in terms of usage.”
Zanjani also said the company will look to exploit the ties to SK Telecom by targeting the Korean-American market.
“SK Telecom has a strong link with the Korean-American community and we think we can offer devices and services that will take advantage of that connection,” Zanjani said.
When SK-Earthlink finally does launch service, Zanjani said it will not use the SK-Earthlink brand name, but instead a new name that the company is still trying to pin down.
Analysts previously have questioned the lack of name recognition SK-Earthlink has beyond individuals either familiar with SK Telecom or with Earthlink Inc.’s broadband service.
“We will focus on the youth and young-at-heart demographic who have been ignored by traditional wireless carriers,” Zanjani explained. “We want our brand to not only talk to that demographic, but to mean something to that demographic.”
Zanjani added that the company will use an extensive branding campaign to broaden its name recognition fueled by the deep pockets of its parent companies. That campaign will rely on national third-party locations that target a similar demographic to what SK-Earthlink hopes to attract as well as a heavy presence through the Internet.
“We want to use the Web as not only a sales channel, but as a communications style that we think our target demographic is ready for,” Zanjani said.
