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Earthlink, Korean telecom to launch cell service

Helio, a joint venture of Earthlink and SK Telecom, aims to attract young, tech-savvy consumers who want the latest mobile phone features and services.
/ Source: Reuters

SK Earthlink, a venture of SK Telecom and EarthLink Inc., changed its name to Helio Inc in a bid to lure young, tech-savvy consumers to a mobile phone service it plans to start selling early next year, the company said Wednesday.

Helio is one of several companies, including Disney Corp. and privately-held Amp'd Mobile, hoping to break into the competitive U.S. wireless market by renting space on existing networks to sell services for niche market segments.

Depending on how well its new service is honed for young adult consumers, Helio may have a chance to lure away customers from bigger services such as Cingular Wireless Verizon Wireless and Sprint Nextel Corp., which market their services for all age groups.

"I have a reasonable level of confidence they have the right level of precision in their targeting." said Forrester analyst Charles Golvin. "Its more of a problem for Verizon, Cingular and Sprint because their focus is more broad."

Chief executive Sky Dayton said Helio needed a separate brand from its parents — Earthlink, an Internet service provider and SK, the No. 1 South Korean mobile service — in order to position it firmly as a service for young gadget-loving cellphone users who want the latest handsets.

"Going after the wireless market and a very specific consumer, we created a new brand that's going to be specific to that," said Dayton, who chose the brand, which refers to the sun god from Greek mythology.

Helio will also combine its name with the SK brand to offer Korean-language mobile services to U.S.-based Koreans while Earthlink will continue to sell mobile phones to its Internet customers under its own brand.

Forrester's Golvin said it makes sense for the 50:50 venture of SK and Earthlink to have a distinct brand from its parents but that it is too early to say how well Helio would be received by its target market.

"Brands by themselves, and especially new brands, you can't really judge it on their own. It's how it's presented," said Golvin, who noted that many of the 18 to 32 year-old consumers Helio is going after may not be conversant in Greek myths.

There are already three large national services and several so called mobile virtual network operators (MVNO's), which piggy-back on established networks, like Helio in the U.S. market.

Disney will use its ESPN sports television brand to sell a mobile service to sports fans and it plans to use the Disney brand for a service aimed at families.

Amp'd Mobile, whose founder has already created one successful MVNO, plans later this year to sell a service for young consumers who want advanced features such as mobile television and music on phones, similar to Helio's aims.

But Dayton believes Helio can stand out by drawing on the technology, supply agreements and experience of SK Telecom, which since 2002 has been selling advanced high-speed mobile services that are only now taking off in the U.S. market.

He expects Helio, which has $440 million in funding, to gain 3 million customers by 2009 among people who are "tired of waiting for years for things to come over from Korea," which has long been a leader in advanced wireless services.

Without giving details, the executive promised a slew of services such as video and music on advanced handsets, similar to those found in Korea. Helio hopes to have U.S. exclusivity for these phones at its spring 2006 launch.