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The Mobile Fanatic

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In football, offensive linemen have a mission: Protect the quarterback. Running backs run the unmerciful gauntlet to learn how to protect the ball. In baseball, pitchers, called closers, are brought in late in the game to protect their team's lead.

MVNEs, or mobile virtual network enablers, also have a mission: Protect the brand. ESPN is putting that mission into the hands of Cincinnati-based Convergys and Los Altos, Calif.-based Visage Mobile as its 25-year-old brand goes on the line with the launch of a high-end mobile service.

ESPN announced in December 2004 that it would create the first mobile virtual network operator (MVNO), ESPN Mobile, aimed at sports fans using Sprint's PCS network. Since then, Manish Jha, senior vice president of ESPN Mobile, has lost more than a few hours of sleep worrying about how to deliver on the promise of the ESPN experience in a mobile environment.

“We are in the business of serving sports fans — with whom we have a passionate relationship — and our goal is to deliver a very good, quality experience in all formats,” Jha said. “It is a high standard we set for ourselves, and delivering on that is something that keeps me up at night.”

ESPN Mobile is by no means the first MVNO to be concerned with quality, but the outfit is breaking the mold on the MVNO model so far by going after a higher end of the market. Yes, the sports fan is at the high end. According to ESPN demographics for its ESPN.com Web site, 89% of its audience is college-educated, and 70% work full time. They have a median income of $77,000. More than half of them (57%) are professionals or managers, and 86% are broadband users. And, perhaps it goes without saying, 95% of them are male.

So ESPN Mobile feels comfortable offering a post-paid model rather than the prepay model used by most other MVNOs — including the industry's trailblazer, Virgin Mobile. ESPN also will be different in another way: While voice service will be important, the company also plans to make its mark with data services.

Jha said voice will continue to play an important role, because mobile phones are first and foremost voice devices. He also said that ESPN Mobile's prices will be competitive, because that's something sports fans also care about.

“But we believe they will quickly recognize that voice is not the differentiator for us,” Jha said. “It is the content services.”

Exactly what those data services will be, Jha is keeping close to the vest for competitive reasons. He said it will be “sports content at your fingertips” and will reflect editorial content “with the style and attitude of ESPN.”

Services will give customers the ability to track teams and players that they care about and will include Web access, messaging, downloads, audio and video.

Jha said he is confident in ESPN's ability to generate and deliver the unique content that will win over sports fans.

“But we felt the greater risk was in our ability to do some of the things that wireless carriers do all the time, which is to create infrastructure and [manage] billing operations,” he said.

For that, ESPN Mobile turned to Convergys and Visage. Convergys is one of the largest billing and customer care providers in telecom, and Visage is a MVNE that provides a full suite of back-office and fulfillment solutions for the MVNO market. The two companies already support Primus in Canada and will be announcing another operator soon in addition to ESPN.

Convergys and Visage formed a strategic alliance in August 2003 to support North American MVNO clients with outsourced billing services using Convergys' Infinys rating and billing component exclusively from a Convergys data center.

“It has been a fruitful relationship for both of us, and ESPN Mobile is a great example of that,” said Matt Johnson, Visage Mobile CEO. “We have combined the strength, weight and proven track record of Convergys with the functionality and capability of our platform to deliver the services ESPN wants to see in the marketplace.”

That weight and track record went a long way in selling ESPN on the idea of going with the partners that it chose for its back-office infrastructure. “Frankly, we didn't think we could find all the pieces at the quality level we were looking for from one vendor,” Jha said.

ESPN Mobile chose Convergys as its partner, as Visage was still building out its platform, Jha said. “Visage has terrific folks,” he said. “We felt that having a relationship with Convergys that still leveraged the focus Visage brought to the table was the right way to set things up in order to create the kind of customer experience we intend to create.”

Besides its billing system, Convergys is providing a lot of the necessary operational support by managing the system in its data center and working with Visage on tying together their platforms.

“ESPN is very well-established from a brand perspective, and protecting that brand is extremely important,” said Bob Lento, president of the communications industry solutions group for Convergys. “We feel that a big part of what we brought to the table is based on our experience and the maturity of our solutions.”

Lento said that based on ESPN's market potential and the importance of its brand, the brand still needed Tier 1 capabilities right from the start, despite the fact that ESPN is a start-up when it comes to wireless. With Convergys, he said, scalability is not an issue.

“Our system can go far beyond what ESPN or any other MVNOs can push it to, even if they hit a home run,” Lento said. He pointed out that Convergys will be using the same type of systems for ESPN that currently supports 44 million subscribers for Verizon Wireless.

The difference in supporting ESPN, however, will be in the rating and billing of large volumes of data content. Citing its work with other data-heavy providers such as Sprint, Lento said, “We know how complex the rating and billing can be, as well as the upfront customer service systems,” he said. “So with Visage's help, we packaged up Tier 1 capabilities that MVNOs can start with on day one without enormous investment.”

Most of the solutions provided by Convergys and Visage are germane to all service providers, and with each new MVNO added to their platforms, those platforms become increasingly cost-effective for the vendors. However, with ESPN and other new MVNOs that want to provide unique customer experience, there are specific configurations and the integration of new third-party content providers to address.

In addition to Primus, Convergys and Visage have a pipeline of MVNOs soon to be announced. “By the time ESPN goes live, we will have three or four others on our platform,” Lento said.

Visage also expects to launch another MVNO on its platform soon and is close to completing its integration with another North American Tier 1 operator. While ESPN may have originally seen Visage as a start-up under construction in their early talks, Visage has invested about $50 million into its platform, which centers around what the company calls its Business Intelligence Process Engine.

“All systems are in place. They are live and operational,” Johnson said. “And at $50 million, we feel that we have invested more in our U.S. MVNO platform than anyone else.”

Visage has made only slight modifications to its business model since starting up, and it makes the company more flexible. “Our vision has remained steadfast in our goal of enabling MVNOs,” Johnson said. “[But] through our evolution, we have become much more modular so people can come in and pick the pieces they need.”

Visage will be supplying solutions for what it calls all the touch points, from self-service to customer relationship management to campaign management. It provides a management dashboard that handles the workflow relationships between such activities as order management and activation, as well as in to the billing functions.

Johnson said that despite the long wait for the MVNO market to take off, he never lost faith. “We have always been big believers, but we were seeing progress that wasn't as visible to the outside marketplace. We saw the trend going in the right direction,” he said, adding that even he was surprised at the explosion of interest in the last 90 days.

A new report by the Yankee Group indicates that they were not surprised. It also indicates that while the market may be explosive, the window of opportunity for new MVNOs is a narrow one.

This market will be worth $10.7 billion by 2010, the report said, which sounds like a long way away but is a mere 18 quarters. However, the market will be dominated by Tier 1 MVNOs, and there will be little room for new entrants to the market. Yankee says that the market will split into three tiers, all sharing 29 million subscribers. Large, or Tier 1, MVNOs will take 24 million of those and leave 2.5 million for each of the medium and smaller-sized tiers.

Those are big numbers. However, as a religion and philosophy major from Colgate University, Jha said his education taught him not to take anything for granted. It also taught him that anything was possible. “Those lessons are very valuable in trying to figure out how to get a media company into the telephone business,” he said.

If he and his team are successful in doing so soon, the prospects for the future look promising. The Yankee report said, “Successful large MVNO players that currently dominate the market will continue to experience growth and fuel the industry by segmenting the host carriers' target subscriber base and distribution channels.”

Jha said it helps to be partnering with companies such as Convergys. “They are also fans of ESPN,” he said. “They got what we were trying to do.”

Given the anticipated launch data of early 2006 — after testing late this year — most sports fans would expect the launch to coincide with or precede the greatest spectacle in sports: the Superbowl. Any doubt what company will be competing with Bud Light for the top spot with commercial advertising fans?

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