Tuesday, September 05, 2006

Success of Helio, ESPN Mobile, Disney vital to US MVNO market

Business Week today published a story on Sky Dayton, the founder of Earthlink (an early US internet service provider) and currently chief executive of Helio, a Mobile Virtual Network Operator which is a joint venture of SK Telecom and Earthlink. Dayton is placing big bets on alternative wireless, both via Helio and Boingo, the WiFi hotspot aggregator he also heads.

Helio has gotten a lot of press recently, mostly unflattering--see this story from CNET.com. After one quarter, they are getting crucified for missing their numbers. (Question: what startup ever made its first quarter numbers? Answer: the one that didn't advertise its projections.)

Ditto Mobile ESPN and Disney Mobile. The gleeful headlines smack of schadenfreude ("US MVNOs Fail To Capture Market Imagination," "Merrill Lynch: Time To Pull The Plug On Mobile ESPN").

These three are the highest profile startups from the US MVNO market, which has been around in some form for many years, but which accelerated with the success of youth-oriented MVNOs Virgin Mobile and Boost Mobile.

Why should we care if ventures like Helio succeed or fail? After all, large parent companies finance them and have plenty of other profit options if their MVNO plans wash out.

To put it succinctly, do we want a wireless market in the US with roughly four players providing very similar services at similar prices? That's what we have now. Or do we want one with eight, ten, twenty vibrant choices, challenging each other to deliver better services, faster, at good price points?

If ESPN, Disney and Helio give up the fight, we have little chance of the latter result. People will find other ways of investing their money , so new MVNOs will stop emerging. The carriers will stop enabling MVNOs. And while Verizon, Cingular, Sprint and T-Mobile provide fine service, innovation in wireless services will suffer unless the MVNO market in the US stays with us for the long run.