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Originally published Monday, October 16, 2006 at 12:00 AM

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With Mobile ESPN plug pulled, niche sees high-profile flop

It sounded like a can't-miss idea: An ESPN-branded cellphone that brims with scores and video highlights for sports fanatics. It missed missed. After...

The Associated Press

NEW YORK — It sounded like a can't-miss idea: An ESPN-branded cellphone that brims with scores and video highlights for sports fanatics.

It missed.

After less than a year, Mobile ESPN is ending its bid to compete with mainstream players like Cingular Wireless, raising doubts about the business logic behind the gold rush of other niche cellular brands offering their own mobile phones and calling plans.

These ventures have distanced their business models from ESPN's like politicians fleeing a comrade's scandal. They argue there's plenty of money to be made serving the unique interests of specific market segments, be they the Gen-whatever younger set (Amp'd Mobile and Helio), families (Disney Mobile), immigrants (Movida and TuYo Mobile) or the rich and pampered (Voce).

"Can someone give me another example of one that's fallen over?" asked Peter Adderton, founder and CEO of Amp'd, which opened for business in late 2005, and who started the Boost Mobile brand overseas.

"They basically pinned their hopes on one application and said people will suffer subpar devices and subpar pricing just to get" ESPN content on a phone, said Sky Dayton, CEO of Helio, a 5-month-old joint venture between EarthLink and Korea's SK Telecom.

But other industry players see the hasty retreat of a venture with so much going for it as very telling. Robert Dotson, chief executive of Bellevue-based T-Mobile USA, also noted ESPN and others would be more talkative about subscriber data if they had good news.

"I would say they're doing mediocre at best. I say that because nobody's reporting any numbers," he said.

The mounting skepticism has driven some budding carriers to start breaking their silence about how they're faring with customers.

Dayton, who also founded EarthLink and the Wi-Fi service provider Boingo, disclosed that Helio has been generating average revenue per user of about $100 per month. About $25 of that comes from Helio's mobile data offerings, including a custom link to the MySpace social networking service.

Amp'd, whose backers include Qualcomm and Viacom, recently announced that its users have been generating "a little higher" than $100 per month. That includes $30 from a wide array of edgy content, from popular video games to live TV and a made-for-mobile series called "Lil' Bush," poking fun at the president.

By contrast, the nation's biggest cell carriers, Cingular and Verizon Wireless, report monthly revenue per user closer to $50, with data usage accounting for slightly more than a tenth of that total.

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Globally, there are now more than 250 of these targeted cell ventures, including 42 in the United States, according to a new book by Christian Dippon and Aniruddha Banerjee, "Mobile Virtual Network Operators: Blessing or Curse?"

The book's title is taken from the industry name for these ventures, as none of them actually owns the wireless networks that deliver their services.

Instead, a Mobile Virtual Network Operator, or "MVNO," slaps its brand on another wireless operator's service, whose name doesn't appear on any of the phones or monthly bills

The MVNO business has its successes, and the most obvious conclusion to be drawn is that it takes very patient financial backing to make it work.

Qwest became an MVNO in 2004, selling its wireless licenses and network assets to Verizon Wireless and contracting with Sprint to provide service for Qwest's cellular subscribers. The business crossed into profitability in the second quarter with 777,000 customers.

Sprint remains the biggest U.S. proponent of the virtual model among network operators. Despite the loss of ESPN, which runs over the Sprint network, Sprint still supports the MVNO program, said Thad Langford, vice president for strategic partners.

"You have to give these new opportunities a chance to grow," he said.

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