Earthlink to Enter US Cellular Market
Earthlink uncovered plans Wednesday to enter the U.S. mobile market as a nationwide mobile virtual network operator (MVNO). SK-Earthlink, a joint venture between the company and South Korea-based SK Telecom, expects to begin offering mobile multimedia services later this year.
Each company will hold a 50 percent stake in the newly formed company, and the venture marks the first time SK Telecom is entering the U.S. market. However, the Korean company is not the first to cross an ocean - Germany-based Deutsche Telekom formed T-Mobile USA after buying wireless carrier VoiceStream in 2002.
"This partnership reflects 30 years of combined experience that EarthLink and SK Telecom have gained anticipating and delivering innovative Internet applications and wireless services," said Garry Betty, EarthLink president and chief executive officer.
"SK-EarthLink has the potential to reshape the mobile communications market by meeting the growing demand of U.S. consumers who are currently underserved by existing voice-oriented wireless operators."
Earthlink founder Sky Dayton will serve as the CEO of SK-Earthlink. Dayton says that "Americans are living in the past" by only using their phones to talk. He cited examples of how wireless users abroad are using mobile phones for a variety of multimedia uses, and that the new company's focus will be on bringing these services to the United States.
In order to make its foray into wireless, SK-Earthlink will utilize a CDMA network and purchase airtime from Sprint and Verizon. SK Telecom already uses CDMA technology in South Korea.
Although officials at the newly formed company have big hopes for breaking into the market with a bang, U.S. mobile consumers have been notoriously stubborn to accept new technologies.
Even a service as simple as SMS text messaging was slow to be accepted by consumers. While SMS had been around in Europe and elsewhere since the mid 1990s, it wasn't till the end of the decade when VoiceStream -- now T-Mobile -- made text messages a staple of its wireless plans did the technology take off.
The SK-Earthlink deal is expected to be finalized sometime within the next two months.