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What the Helio? MVNO Is Back After First Flop

Sarah Thomas
7/6/2015
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If you go back a decade, MVNO used to be a dirty word in the wireless industry with high-profile flops from the likes of Disney, Amp'd Mobile and ESPN discouraging others from attempting to wholesale wireless access.

Fast forward to today and MVNOs -- mobile virtual network operators -- that offer branded wireless service they wholesale from established wireless operators, are common and, in some cases, giving the networks they use a run for their money. (See FreedomPop Grabs $30M More in Funding and Sprint Builds an MVNO Factory.)

The changing market dynamic is probably the reason one of the most high-profile MVNO flops, Helio Inc. , is resurrecting itself.

Helio was one of the very first US MVNOs, a joint venture between SK Telecom (Nasdaq: SKM) and EarthLink Inc. (Nasdaq: ELNK) that began targeting US youth with wireless voice, messaging and data service on Sprint Corp. (NYSE: S)'s 3G network in May 2006. It still ranks in the top five for the biggest venture capital financing rounds ever, having raked in $440 million before its launch in 2005. (See Helio Launches in US and Baby, You Can Fund My Car: Uber Drives August VC.)

But, in August 2008, the cash-rich MVNO was merged with Virgin Mobile USA Inc. (NYSE: VM) and eventually shut down in May 2010 when Virgin was acquired by Sprint. (See SKT Plans $2.2B Spending Spree and Helio, Goodbye.)

Now, according to Helio's website, South Korea's UBI Telecom has reopened the Helio prepaid wireless service with a $29 monthly plan for unlimited talk, text and data capped at 128 Kbit/s on Sprint's network with the option to roam on to Verizon Wireless when needed.


For more on the colorful history of MVNOs in the US, visit the dedicated mobile content section here on Light Reading.


The landscape for MVNOs in the US has changed dramatically in the last decade. While initial attempts -- like those from Helio, ESPN, Amp'd and Disney -- focused on young people or brand cachet, most MVNOs today serve the cost conscious and rely heavily on WiFi. They've been successful enough at attracting interest that big players like Google (Nasdaq: GOOG) and cable companies like Cablevision Systems Corp. (NYSE: CVC) are taking a run at the space as well. (See Google's WiFi-First Mobile Service 'Fi' Is Here, Cablevision's New WiFi Try – Freewheeling Enough?, Mobile Mouse Shut Down and Amp'd Switches Off.)

Helio is hoping its combination of Sprint and Verizon networks, low costs and a BYOD handset policy will set it apart in the once-again crowded MVNO space in the US. (See Sprint Policy Change Spells Trouble for MVNOs.)

With a new backer and a free month trial offer, Helio should have a fair shot in its second life, but only if it has learned from the mistakes of its first, expensive flop.

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

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mhhf1ve
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mhhf1ve,
User Rank: Light Sabre
7/7/2015 | 4:03:50 PM
Sprint with VZW backup?
I sorta wish Google Fi had this combination of networks rather than Sprint and T-Mobile. Or T-mo with a VZW backup network? I'm not sure who else has a Sprint + VZW MVNO setup -- maybe Tracfone?
mhhf1ve
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mhhf1ve,
User Rank: Light Sabre
7/7/2015 | 4:02:08 PM
Re: Value
Yah, 128 kbps is hardly a connection at all. You can check email... and.. I'm not sure what else. Perhaps download ebooks? I forget how fast the Kindle connection speeds are.

 
mhhf1ve
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mhhf1ve,
User Rank: Light Sabre
7/7/2015 | 4:00:23 PM
Re: You say goodbye, I say helio
The big guys don't want to undercut themselves! They can't offer more flexible plans that potentially look better than their "standard" inflexible ones, but they can effectively re-brand their networks with these MVNOs and let the little guys take the risk of marketing and not making it back.

 
KBode
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KBode,
User Rank: Light Sabre
7/7/2015 | 3:24:53 PM
Re: Value
I can see this as an ok deal for those who don't really use data, but that 100 kbps throttle is pretty painful!
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
7/6/2015 | 6:14:50 PM
You say goodbye, I say helio
I'm surprised the bigger carriers don't grab the markets from the MVNOs themselves. 

I suspect the margins are too thin -- requires a speciaist to make a profit from it. 

Still, by reducing the margin of paying the larger carrier for bandwidth, I should think the larger carrier itself could undercut the MVNOs. 
msilbey
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msilbey,
User Rank: Blogger
7/6/2015 | 4:32:54 PM
Re: Value
Wow. Blast from the past. I remember Helio from about the same time period when Motorola was selling a text-messaging-only device called the IMFree. Neither lasted long. 

This is an interesting play, but 128kbps is really, really slow. Almost makes you wonder why they bother with mobile data at all rather than just making this work with WiFi for Internet services.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
7/6/2015 | 3:37:58 PM
Re: Value
Yeah, UBI isn't really positioning this as a WiFi-first play, but it really has to be with only 128kbps of data each month...that's pretty weak.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
7/6/2015 | 1:26:31 PM
smartphone selection
Helio won over some customers with its snazzy smartphone offers the first time around, and it says this time that it will soon begin offering its own Helio smartphones. I wonder if it'll be able to work through Sprint's BYOD program, which has been an issue for its MVNOs of late.
danielcawrey
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danielcawrey,
User Rank: Light Sabre
7/6/2015 | 1:12:39 PM
Value
Helio sounds like a hardcore value play: We'll give you talk and text and a low amount of bandwidth for cheap. I think it is a good strategy.

There are still a number of people that don't really need smartphones, just a phone for basic communication. And for cheap. 
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