A former Microsoft exec is starting a service that lets just about any group—from churches to sports teams—become its own cell-phone provider
Fans of the Long Island Ducks baseball team are about to get a whole new choice in wireless—one designed just for them. Ducks Mobile ads will adorn the home-field scoreboard and its handsets will sport the team's logo. Users will get game updates sent via text and even ringtones that go "quack."
In fact, a host of groups, from the National Wildlife Federation (NWF) to the Chicago Bandits women's softball team, are about to get their own brands of wireless services—all thanks to a new company called Sonopia, founded by Juha Christensen, the former Microsoft (MSFT) executive who helped launch that company's wireless software efforts and co-founded the powerful Symbian industry consortium (see BusinessWeek.com, 5/1/00, "So Much for this Microsoft Rival").
Mobile Virtual Networks
Sonopia, launched publicly on Apr. 2, promises to turn any group—be it a church, sports team, or nonprofit—into what's known in industry parlance as a mobile virtual network operator (MVNO).
Setup is simple, says Christensen. Working through Sonopia, a group signs up online and can offer wireless service delivered via the Verizon Wireless network and can provide branded handsets and a wide selection of calling packages. Sonopia also lets operators offer personalized content and tailored social networking features such as blogging and photo-sharing.
Adding to the appeal, a would-be wireless provider can register quickly online and Sonopia doesn't charge a dime. It handles billing, credit management, shipping, and customer support. The sponsoring group gets 5% of the revenue collected from its subscribers. Sonopia shares the remainder with Verizon Wireless, owned by Verizon Communications (VZ) and Vodafone Group (VOD).
Groups and Their Members Win
For the NWF, that slice can add up quickly. If just half of one percent of the group's 5 million members sign up for NWF Mobile, the program stands to generate more than $100,000 a year, says Greg Griffith, director of cause-related marketing at NWF. The organization's other affinity programs and corporate outreach generate some $3.5 million a year today. Based on the response to NWF Mobile's first ad, Griffith expects as many as 5% of NWF's members to sign up&—more, in fact, than the number currently using the group's affinity credit cards. "People will say, 'I spend this much on a phone anyway, I might as well spend on the cause I care about,' " Griffith says.
Another reason for organizations to join the Sonopia bandwagon is that it provides an added platform for outreach. "I saw that there was an opportunity for us to have another communications channel with our members," Griffith says. He envisions notifying NWF's 3,000 volunteers via text messages to show up for a beach clean-up or a rapid-response call encouraging the group's activists to contact Congress.
If successful, Sonopia could change the way legions of users get wireless services. "There are a lot of people who don't have any affinity to the guy in the horn-rimmed glasses," says David Chamberlain, an analyst with consultancy In-Stat, referring to Verizon Wireless's "Test Man." Instead of signing up for vanilla wireless, members of high-school wrestling teams, church groups, fraternities, book clubs, and cooking schools might opt for a group-specific service. "They are very good customers, they are very loyal," says Chamberlain. There are also a lot of them. Charles Golvin, an analyst with Forrester Research (FORR), believes that in a few years, as many as 10 million U.S. wireless users—just under 5% of all Americans with cell phones—will receive their service from Sonopia and others.
Niche Players May Lose Out
So if nonprofits and Sonopia win, who loses? In the long run, as the number of providers proliferates, the biggest losers may be carriers, especially niche players. In recent years, a number of companies, including Virgin Mobile, Amp'd, and Helio have spent tens of millions of dollars to establish their brands and attract particular user segments—be it teens, hip professionals, or globe trekkers. But Sonopia's user organizations already have loyal followings. They'll have to spend hardly any money to get the service off the ground. Sonopia "enables much smaller brands to enter the market in a very low-cost way," says Golvin.
The business model also enables Sonopia to book fatter margins than other resellers and even some service providers. An average carrier today spends upwards of $300 per subscriber for marketing to sign up a new user. That's a cost Sonopia will avoid. The company's ongoing operating costs will be low, as its user sign-up is automated, and most of its developers are based in Kiev, Ukraine, where labor costs are low. "We are profitable from the first subscriber," says Christensen, whose venture has raised more than $10 million in funding from venture capital firms ComVentures and Sevin Rosen funds.
Initial tests of less complicated wireless affinity programs appear favorable. Take Web-based wireless phone reseller InPhonic (INPC): Whenever United Airlines Mileage Plus members buy a Motorola (MOT) Razr and an accompanying service plan from a traditional carrier through InPhonic, those customers get an extra 5,000 miles on United (see BusinessWeek.com, 4/2/07, "Motorola: Cut Icahn’s Interference"). When teachers purchase their wireless plans from Verizon Wireless, AT&T/Cingular (T) or another carrier through the InPhonic site, InPhonic donates $50 to $100 to the National Education Association. "What's great about these programs is you have a captive audience that cares about what you do," says David Steinberg, InPhonic's chief executive officer. "We are selling thousands of phones a month through [these affinity programs]."
Where InPhonic's numbers are in the thousands, Christensen is hoping for users in the millions through Sonopia. No doubt your favorite club or group will soon be asking its members to do their part.