Brand’s the Thing for New Mobile Service

Virgin Mobile USA launches its teen-oriented wireless phone service in two
markets on Sunday, marking the debut of the first mobile virtual network
operator (MVNO) on American shores.

The joint venture between Sprint PCS and the UK-based
Virgin Group is an experiment in the idea that some companies are good at
technology, and others are good at branding — and each should stick to its
core competency. MVNOs, including Virgin Mobile in the UK, have become a
regular part of the mobile scene in Europe, but this is the first time the
concept has been tried in the U.S.

The concept, in this case, is to reach the highly sought after teen audience
with a pre-paid service that’s easy on the technology-orientation and heavy
on the branding. The phones themselves, for example, are Kyocera models
tarted up and given a personality injection. The handset formerly known as
the Kyocera 2119 has been dubbed the “Party Animal,” while the 2255 is now
called the “Super Model” — apparently aimed at boys and girls,
respectively.

The demographic has long been a target for wireless carriers and handset
manufacturers. Verizon Wireless has attempted to reach the audience with its
pre-paid [FREEUP] service, for which it launched an aggressive advertising
campaign earlier this month. Handset companies have been eagerly creating
“customizable” phones with multiple potential faceplates — the idea being
that teens want to make their phones their own.

Part of the reason that teens are so desirable is that some analysts are predicting that cellular markets have reached a saturation point, with 44 percent of the population, or more than 130 million subscribers, being served. The teen market, however, is seen as being relatively untapped.

“Every traveling professional and twenty-something has a phone. Thus, carriers have begun to look for alternative subscriber bases to continue adding new customers,” according to a new report from the Yankee Group.

Virgin Mobile USA has made teens its sole focus and tailored the
entire company around them.

“We’re proud to be the first U.S. cell phone company to offer a cellular
service that is exclusively focused on the youth market,” said Daniel
Schulman, chief executive officer of Virgin Mobile USA. “We think our
straightforward pricing, entertainment-oriented features and the power of
the Virgin brand will be an exciting combination for the youth segment.
We’re here to change the game.”

The pricing is the first feature that’s been tailored for teens, who most
likely haven’t yet established credit. It’s a pre-paid service that charges
25 cents per-minute for the first ten minutes each day, and then 10 cents
for every minute thereafter. Any customer who uses $50 of airtime in a month
will receive another $10 of airtime free of charge. By contrast, the
cheapest bulk buy package for Verizon’s [FREEUP] includes a 25-cent
per-minute day rate, and a 10-cent per-minute evening rate.

The calling features are also designed to appeal to the youth market. The
“Rescue Ring,” for example, allows users to program the phone to ring at a
particular time — giving them an escape hatch from a bad blind date or a
loser party. There’s a “Wake Up Call” feature, a variety of ringtones, and
services that allow teens to keep up with — and share — information about
the latest music and movies. A “groups” feature taps into teens’ notorious
desire to hang out with others in their age group. Text messaging — a
capability that’s proved popular with European teens — is included in the
service, although it won’t be interoperable with other carriers until
August.

The company is starting out with the Kyocera “Party Animal” phone ($99),
which features interchangeable faceplates and games, and the “Super Model”
model ($129), which also has interchangeable faceplates, voice-activated
calling, games, and screen savers.

These will be distributed through retail outlets like Best Buy, Circuit
City, Sam Goody, Target Stores, and Virgin Megastores. The company’s
“Top-Up” cards, which allow people to refill their phone plans, will be
available in Circle K, 7-Eleven, and Winn-Dixie stores. They’ll also be
available through the company’s Web site and its call center.

The Sunday launch will include only the Sacramento, Calif., and Columbus,
Ohio, markets, with a nationwide rollout planned for August.