Helio to hit 100k subs, and to be hit by Earthlink's 10K

According to Helio / Helio powered by SK Telecom, the Hollywood MVNO is "on the path to surpass 100,000 subscribers by early in the second quarter of 2007" (NB : 10 month after launch) and claims an "ARPU of over $100 per month", 25% of which from data services. The proof of concept for their device driven innovation strategy reads in some interesting figures :
- a WAP penetration of over 85%, an average 400 SMS per customer (merry Xmas - those were the stats for December 2006 so you won't get any data regarding the recent launch of Helio Music) - over 70% of Helio members use MySpace Mobile
- over 80% of Helio Drift members have downloaded GPS-enabled Google Maps™ for mobile and about 70% have downloaded Buddy Beacon


According to Earthlink's 10-K, Helio Inc as well as Helio LLC (the opco) are Delaware corporations. This isn't Tinsel Town and the balance sheets are not unleaded. Up to now, each partner has spent $214M in cash and non cash assets ($40M for Earthlink's 27,000 wireless subscribers transferred in 2005, along with equipments and other assets). Each partner will spend 6 more millions in August but beyond that, there is a big question mark.

One thing is sure : the company will keep losing money for a while. Big time, because this is cellular business and even for a M-VNO with a low CAPEX, S curves tend to develop fat bellies. FYI, 2006 revenues reached $46.58M with a full launch in July (68.7% service, 31.2% equipments and other) and accumulated deficit stood at $233.7M. Provided ARPU remains at the same high-usage-low-hanging-early-adopter level, 100,000 subs would mean $120M, and an average customer base of 150,000 over the year would barely match 2006 OPEX ($186.5M). Not only does EY have "substantial doubt about the Company’s ability to continue as a going concern", but even a massive success of HELIO would only make things worse in the short term (acquisition costs).

SK Telecom and Earthlink own each 47.8% of the operation. Earthlink can't afford losing money at this pace for long, and SK Telecom could seize the opportunity to take a clearer lead. Or to bring in one ov'em "potential outside investors" (up to now, "outside investors" represented "approximately $8.0 million of funding").

At this stage and especially after the recent US-Korean FTA, I don't see SKT pulling the plug that early. Even with such a fierce competition, it wants HELIO to "achieve or maintain adequate market share or revenue or compete effectively". One one hand, we should see more "Helio powered by SK Telecom" (MySpace's exclusivity is over and the Cyworld brand could blossom beyond the platform). On the other, SKT won't wait 25 years to welcome HELIO's 3 millionth customer.

The fun is just about to start.

Helio live at last

That's it. The party is on at Hollywood - Santa Monica where SKT - Earthlink launched Helio, their much awaited* M-VNO. Celebs, hot air and an empty blog mark the first day of operation.


I'm not exactly in a mood for West Coast hype. So if you don't mind I'll leave it up to you guys (another thing I don't quite like from that area : being youguyzed). Good luck and let's just see how you perform.


* For over one year - see previous posts on Helio (last one : "Another good fairy over Helio's cradle" - 20060414)
** Heliomag : http://www.heliomag.com.

Hello HELIO - here comes the sun

SKT released their Q3 data. Since January the 1st, they've spent 50% of their overall CAPEX target ($1.5bn), but 60.7% of their W-CDMA CAPEX target ($359M for the first 9 months). That's for the MNO part of the job.

Regarding the virtual part, SK Telecom are also over-mega-hyper-teasing the future services of their SKT-Earthlink JV, which they branded Helio in honor of the young god of sun Helios. The drop-shaped logo and the website's iconography rather remind me of an utility company, but the company is claiming futility for the younger generation : innovative devices, entertainment, movies, music, you name it. Thanks to innovations 2 year ahead of the competition, no less than 3M of 18-32 year-old are supposed to bring a $2 bn annual turnover by the end of 2009. Well... that's what HELIO staff members have been selling to potential partners during a ten day roadshow across the US. Who said I was overhyping ?*

I'm not worrying about technology, nor about marketing know-how. I'm just anxious to hear about their key content partnerships. I understand not much of their $440 M will be invested in networking... but for social networking, that is.

To be continued, as usual.


* see "SKT-Earthlink - Postponing and podcasting" and "From Hallyuwood to Hollywood" or "2005 : how about Europe ?".

SK-Earthlink - postponing and smartcasting

Gustavo Cisneros elected MIPCOM Personality Of The Year 2005 ? Great news, but it doesn't make for the lack of data from Movida Communications (still "strong" of a "potential" of 40M Hispanics. period).
MIPCOM Personality Of The Year 2006 ? He/she could have something to do with wireless as well.
Why not with SK-Earthlink ? After settling near Beverly Hills, CA (see "From Hallyuwood to Hollywood"), the M-VNO-to-go seems to have learned the basic tips from great filmmakers : a flashy casting can compensate deviant TTMs.
TTM : now we're talking spring 2006 instead of Q42005, which could lead to a clash with another blockbuster, ESPN Mobile (also on Sprint). I'm not so sure such M-VNOs as Amp'd Mobile can make it, even if they start earlier (and especially with online subscriptions only on time for Xmas).
Casting : SK-Earthlink built a strong roster with experience in the wireless field as well as beyond (Nike, NewsCorp...) :
- Michael Grossi (VP, Business Development) brought some pieces of advice to VirginMobile, Boost or OnStar (through Adventis). I'm not sure SKE can reach 3M subs within 3 years like a Virgin, but it wouldn't be Grossi's very first time.
- Sky Dayton (CEO) brought Skype to Boingo. What on Earth can he do with a 3G EV-DO / WiFi combo ?
- Mathias Duarte (VP, Experience Design) brought the hiptop to Danger. He can bring danger to the competition, and fun to the market.
- Robert Gelick (Head of Music Strategy) brought i-Tunes to Motorola (and came with Moto's Stuart Redsun, now executive VP, Marketing). What on Earth can he do with a 3G EV-DO / WiFi / MelOn combo ?
But the best part of the casting could be Korean : beyond the COO (Sul Won-hee), expect Lee Jae-hwan (VP, Products and Services) and Shin In-ho (VP, Technology) to deliver the goods.

Handle with e-care - China-aware pro gaming

Still keepin' an eye on SKT's stats, and especially TU media (following Slomobile TV) : now covering 84 cities, the mobile TV service claimed 200,000 subs after almost 5 months of operation. That's about 1,400 customers a day, but this average is supposed to be 2,400 nowadays (the first 100k took 2 months and 22 days, the last 2 months and 6 days). 90 more days at this pace would bring them over 400k subs at the end of the year and I guess they can push to an average 3,500 with the high season coming but they'd need a strong 4,500 to reach their original 600,000 target.
More impressive : last summer and 5 years after launch, e-Station (SKT's e-CRM portal) signed its 10th million customer. The service averages 160K users per day (70% being in their 20s-30s) and 16.4M acts per month (about 3 times as much as over the phone). Many MNOs would die for such figures.
For those as well : over 94% of SKT's customers are equiped with cdma2000 phones, now dubbed "2.5G"*. 84% have color screens and 52% are active Nate users. The mobile portal keeps improving and proposing new services, but the operator knows "wireless internet" is not the only field beyond voice. Hard to tell how m-finance and banking are contributing.
As far as international is concerned, I'm still expecting some juicy fruits from the SKT-Earthlink partnership, but the only news came from the MNO's professional gamers' team, T1, which drafted two Starcraft players from China. I don't know whether these hardcore gamers are ready to die for their new bosses but the mobile arena could be safer than a PC Bang : a 23 year old Briton, Darren Prior, was recently saved by his LG U8210 during a bank robbery, the handset stopping the bullet.
Welcome to Korea, the country where operators become bankers and handset manufacturers life insurers.

* still no specific statistics for EV-DO, but good news for 3G UMTS : since SKT are preparing commercial launch of HSDPA early 2006 (Nortel-LG to deliver the goods), they are pushing W-CDMA as well in the South : commercial launch this November for Jeju-do, Jeolla-do and Gyeongsang-do + Busan.

From Hallyuwood to Hollywood

Remember when WAP emulators were all the rage ? They kind of fell into oblition because of that WAP thing and because of that 3G fade (I'm so customer centric I do have to film the damn guy holding the device, even if it saturates the surfer's not-so-broad-band connection.
Now SK Telecom just released an emulator for their new services and it sounds like the perfect remote control. For the enduser (in order to control the said services) as well as for the operator (in order to control the said enduser).
SKTWorld provides a good start to the victim of their massive ads : Nate, June, Moneta, NateDrive, 1mm, PlayOn, Moville, TU dmb + direct links to the new stars on the block (MelOn for music lovers, Cizle for moviegoers on the go, GXG for mobile gamers). As one could have suspected, they leverage on the entry point to get you straight into their databases - they don't care whether you're already a customer or not : they presume the customer experience is so much fun you can't resist and go for the actual thing. You're a customer and you have the required device ? You can download the app at once and enjoy a free trial on it ("Free Experience Tour"). You don't have the device yet ? Order it, and customize it while you're at it ("Peripherals Mall"). You're not a customer yet ? No sweat : shopping or portability are just one click away.
SKTWorld goes further thanks to an Amazon-like collaborative filtering system : beyond the usual tailor suited piece of advice ("My Type Mobile" guesses the best service after your usage patterns), a "Mobile Together" feel-good concept (this goes too far for you not-so-early-adopter you ? don't worry : here's what fits people your age and sex).
But SKTWorld is bound to go even further. Just like the juicy MelOn, this is a dotcom website, not a dotcodotkr nor even a dotnatedotcom one... And by the way, SK-Earthlink just announced new headquarters in Westwood, Los Angeles. We're not talking Koreatown but Hollywood / Beverly Hills lads, the expected next step for SK "Hallyuwood" Telecom (from the beginning we expected business oriented SK-Earthlink to enter the multimedia arena). And the company is hiring. Staff for a start. Consumers should follow soon.

Mavericks and Spurs

Celebration day for Texas :
- From Irving, Exxon announce record profits for 2004 (about 19.5 bn euros)
- The San Antonio Spurs complete a 3 game winning streak and lead the Western Conference (the Dallas Mavericks a distant second in the Southwestern Division)
- Dubya celebrates the elections in Iraq... yeah, the guy was born in New Haven, CT and majored Binge Drinking 101 there (not to mention 102 at Harvard in Massachussets) but he damn well managed to catch the Texan brawl and some oily connexions in Midland
- and last but not least, Oedipus Rex in San Antonio : in the Bell family, ma AT&T falls in the arms of baby SBC
Well, the old lady has been massively losing some weight lately. In a rather indecent strip tease, she got rid of wireless, cable and even consumer services, barely keeping a brand and some debts. But still, imagine Word purchasing Microsoft 20 years from now. Or Symbian wolfing Nokia down (wish I held a monopoly, laments Jorna Ollila)...
When you consider the US pond, it looks like all the alligators are about to take a nap on their big bellies. Good opportunities for those who haven't feasted yet (Comcast ?), but the swift and hungry ones could also take a bite (SK-Earthlink ?).

2005 : how about Europe ?

So 2004 is over, with WCDMA reaching the 16M user mark globally (up 60% since end of Q3), essentially thanks to three players : DoCoMo (migration speeding up in Japan), 3 (cheap voice sells and there's no better way of attracting stupid European men than displaying some soccer action) and Vodafone (at last at ease with marketing). As expected, the technology is starting to catch up with CDMA2000 (145M users end 2004, up from 100M in july, thanks to 107 operators covering 53 countries) : WCDMA just represents 10% of the total 3G customer base, but already 32% of Qualcomm's Q4 royalties (up from 12% one year earlier). And doc Jacobs is speeding up on HSDPA.
But Qualcomm are also investing in Europe, and a much clever way than they did with Dolphin (a genuine TETRAgedy). The cdma family is saved, Brew enjoys its own market like any Microsoft me-too product, and the battle may well move closer to the enduser. Look how Mr Q purchased Europe's Trigenix, a specialist in user interface. Look how they sell their mobile broadcasting MediaFLO techno in the US : it's all about user experience (no progress bar, less consumption, easy shuffle...), at a time when Orange marvel at the daily 25 mn their Orange Intense early adopters spend on live TV in France... but don't realise yet this may not be the best technology to perform this basic task.
Another interesting move, from Asia to America this time : the SK-Earthlink JV, a MVNO projecting 3M subs and a $2bn turnover by the end of 2009. Smart move from both players - a perfect match in a coopetitive world. The days of the merger with Mindspring long gone, Earthlink claims about 5M subs and its wireless MVNO experience shows a strong focus on business and data services. SKT has it all, plus the wireless expertise, the consumer focus and the entertainment touch. Wireless internet services represented 20% of their 2004 ARPU, almost 24% during Q4 (24%, that's about the percentage of the mobile users who had some mobile multimedia experience beyond sms in France !). Yet if they want to implement all their success stories in the US, SKT should expect some resistance from powerful lobbies (ie banks vs Moneta, music majors vs MelOn...). But they survived portability and managed to gain more than 400K customers last year. And succeeding in the US is a strong commitment.
How about Europe ? There was a time when its players ruled 2G. Before the 3G licensing madness, a few did have some vision but much too early and with the wrong priorities (remember Telefonica ?). So forget about an aggressive agenda in Asia or in the Americas. But who knows ? Sometimes it pays not to be the first to blow a bubble.