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.

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