Monday, March 26, 2007

A free mobile phone carrier?!

Blyk, a Helsinki-based startup may soon become the world's first free mobile phone carrier. Yes, you read that right! A free carrier! No more mobile phone bills!

And how exactly do they plan to do that, you ask? Well, how else... Blyk, which launches in UK this summer, will be completely supported by advertising.

Now, these guys are not traditional mobile phone operators a la Starhub or Singtel... These guys are actually MVNOs (Mobile Virtual Network Operators). What this means is that they resell wireless services under their own name, using the network of another operator. This usually allows MVNOs to focus on providing other value added services. What is different about Blyk's approach is the fact that MVNOs like Ampd Mobile have tried to position themselves in the upper end of the market by providing premium services, whereas Blyk seems to be doing exactly the opposite. Blyk will be focusing on the 16-24 year old market and they hope to provide advertisers a way to reach out to this group of people through an "innovative mobile media channel".

According to Red Herring, Blyk has signed up some major advertisers for its service, including Coca Cola. However, I am still doubtful if this service can actually be supported completely by ads. Take me, for example. I pay a monthly bill of about S$50 to Singtel. Now, assuming that Singtel makes a tidy 40% profit on that, the cost of providing that service to me is about 30$. If ads were going to replace my bills, then companies like Coca Cola are going to have to pay at least 30$ per person per month to keep a company like Blyk alive. Now this would mean that the advertiser expected me to purchase something valued at much >30$ from that company (else the advertising would be a waste). Right?! Isn't that a bit of a long shot?

Well, I'm not too sure if that logic up there is correct. In any case, I'm a little bit sceptic about how Blyk might pull this off. And if it does, I couldn't be happier (no more phone bills!).



sherene said...

similar service to be introduced in an asian country soon :) for high end users though...3G only.

sirpsycho said...

I'm sorry i dont really understand what you mean by '3G only'. Are you talking about an MVNO? Or are you talking about a mobile phone based advertising platform?

DOm said...

does that mean only a limited amount of users will be allowed to sign up to their services due to the fact that they will cover all charges?

sherene said...

Ya, an MVNO is posed to launch itself in an Asian country, providing free mobile plans but they cater only to 3G phones.

Being deliberately ambiguous here because I am not sure if this tidbit is in the public arena or some market intelligence Roy dug up ;)

sirpsycho said...

Hey, they probably will not limit the number of users - it doesn't make sense to do that. With each additional user they get more ad revenue. Its just that, they probably need quite a bit of ad revenue per user to make this sustainable.