Disney Plans U.S. Wireless Phone Service for Families

BOSTON -- The Walt Disney Company's Internet Group, in partnership with Sprint, plans to establish a nationwide wireless phone service, dubbed Disney Mobile, in the United States, the company announced Wednesday. Using Sprint's PCS network, the service--which specifically targets families--is due to begin operations next year.

Simultaneously, Disney is planning to develop exclusive handsets and entertainment content aimed at families, the company said in a press release.

"We'll be in investment mode for the next several years, but expect that over the long run this initiative will generate solid financial returns for the company," Steve Wadsworth, president of Walt Disney Internet Group (WDIG), said in the release. Disney will be responsible for all aspects of the service, including customer relations, billing, and product development.

Disney had been rumored to be looking at Nextel Communications as the wireless carrier for Disney Mobile, according to Eddie Hold, an analyst at Current Analysis. That the company is going with Sprint reflects the different focuses of Nextel and Sprint as the companies get closer to completing their planned multibillion dollar merger. Sprint is clearly concentrating on consumers, while Nextel directs its attention to business customers, Hold said.

Expanding Service

The Disney Mobile deal will be the latest for Sprint in a number of MVNO (mobile virtual network operator) linkages where a company pays the wireless operator for use of its network while branding and managing the service itself.

In December 2004, Disney's ESPN sports media unit announced plans to launch a branded wireless service and cell phone, also running on Sprint's network.

"Pricing is flattening out on the voice side," making it extremely hard for mobile operators to make money, Hold said. So, instead companies are turning their attention to business opportunities where they can use an established brand or established content--or both--as market leverage. In the case of Disney Mobile, the company could provide Cinderella headsets with Cinderella content, including ring tones and screen savers.

"The downside [with the Disney deal] is that it also limits content to that from Disney," said Hold. He pointed to the planned Amp'd Mobile service, which is not tied to any specific content provider and targets Verizon mobile network users who are between the ages of 16 and 35. Due to launch this fall, Amp'd uses Verizon's mobile network and was previewed at the Cellular Telecommunications and Internet Association's Wireless show in March in New Orleans.