Helio is Changing Hands - Not Just Another MVNO Saga

Implications: Earthlink's participation was predictably a significant mistake. SK Telecom has a broader agenda which justifies continued participation and funding. Earthlink acted as an appropriate partner to launch the venture but brings little to the operational phase.

Analysis: After significantly contributing to Earthlink’s downturn in profits, Helio has finally returned to it’s rightful owner – SK Telecom. Although a large gamble for Earthlink, initially a 50-50 partner in the venture, to SK Telecom this represents only a foray into the lucrative US wireless market. Although the stated mission of Helio was limited to a well-defined demographic market, lessons learned by SK will undoubtedly equal or surpass the cost of footing the bill for continued operations.

Can an MVNO work on anything scale less than the carriers they compete with? With the possible exception of Virgin Mobile, the historical answer appears to be no. Limited capital, enormous equipment subsidies, compressed handset cycles and expensive distribution channel partners all conspire to stack the deck against an MVNO in the current sense of this business model. Rapid commoditization of airtime, morphing distinctions between handsets/internet devices/computers and the eventual convergence of the wireless spectrums’ evolving technologies certainly offer the insight that there will be soon be leverage for an adequately-capitalized competitor to take on the entrenched US carriers – herein may lie SK’s continued interest in well-documented startup failure to date.