A few days back I had a few minutes to join Chris Houston, President of Amp’d Mobile Canada, for lunch. He talked to me about what their deal is like with Telus, the challenges of setting up in a Country, what they’re going to be offering the market and just what the heck an MVNO even is.
Some of the highlights that you’ll find are that Chris mentions the fact that Amp’d Mobile Canada is definitely going to have different handsets than are available in the US right now, and that they’re even going to be coming out with their own PDA.
MobileMag: You’ve previously worked on setting up Amp’d in the States, and worked with Boost Mobile as well. So you’ve gotten quite a bit of experience with MVNOs. How do they generally work for our readers, and what kind of agreements have to be made with carriers like Verizon in order to piggy back on their networks?
Chris Houston: So essentially an MVNO is just a fancy way of saying that you’re in a wholesale relationship. It stands for mobile virtual network operator. Really, the relationship is that you buy minutes and Megs from a carrier and then you repurpose it and rebrand it. So for a traditional MVNO, like Amp’d in the US, we essentially plug into Verizon’s pipe, and it gives us the network for all the basic services. And then we build our own backend infrastructure for the core wireless components like billing and customer care, plus product differentiation. For example, some do a brand-based product, where basic minutes and Megs are offered, just like the carrier, and then it’s wrapped in different packaging.
For Amp’d in the US, what we’ve done is focus on content, so we’ve built a bunch of backend proprietary solutions from scratch because we didn’t see anything that we liked available on the market. This allows us to deliver data in a very different way to the customer and gives us what we think is our competitive advantage, and something that is a lot more sustainable.
The key is content. No one ever worries about television content providers going out of business because the content is always new, the device and the portal may change, but the content is what keeps it fresh and interesting. So in turn, that’s where we really focused most of our development efforts, and our money, and where we’ve really built our own stuff based on how we wanted to see the content presented, from both the client side on the handset back to the server side.
MobileMag: Amp’d in Canada is going to be less of an MVNO and more of partnership with Telus though. How is this going to differ?
Chris Houston: So like I said, an MVNO is essentially a separated relationship between your MVNO and the carrier partner. And really, their relationship is just a wholesale one with minutes and Megs. Other than that, it’s really a church and state separation, in that you compete in the market for the same customers, and they’re going to do their business and the retail side stays very separated. There are good things and bad things about that.
One of the bad things is that it’s very expensive to launch that type of relationship. In the US there is a huge population, a big economy and you make your money back. In Canada, we’re very excited about it, and it’s a great market for a number of reasons, but it’s small. I’m Canadian and I know it’s just a smaller market. So you have to evaluate whether or not you’re going to spend the quarter of a billion dollars to invest in all the backend infrastructure that’s needed to do that. You also have to look at where your core competencies are, and what makes the most sense.
So when we did that kind of soul searching, we determined what we’re really good at is marketing and content, and that’s our thing. So that’s where we’re really focusing all of our efforts, and where we’re adding value. Anybody can build an infrastructure, and there are other companies like Telus that can do customer care, and retail distribution.
So what we decided to do when we began our discussions with Telus was to frame it as more of a partnership. We’re going to handle what we’re good at, like marketing and content and the things that surround that, and they’re going to handle the billing, the customer care, the retail, and that sort of stuff. So to the consumer the end product is pretty much the same [as a traditional MVNO], they end up with a phone that says “Amp’d Mobile.” They call customer service they say, “Thanks for calling Amp’d Mobile.” Get your bill, it says “Amp’d Mobile.” In the end, it’s all the same content, we control the marketing, and we get to do what we want from how we present the brand. But the backend infrastructure and business relationship is setup a little bit differently. But overall to the consumer it looks like the same thing.
MobileMag: Okay then, but Telus already offers content on their network via Spark. How is Amp’d going to provide something that sets itself apart from that?
Chris Houston: The difference between Amp’d and Spark is who we’re targeting. Amp’d goes after a specific lifestyle segment. Generally most of our customers are under the age of 35. We target people that are interested in maybe a little more aggressive mobile content than what Spark is necessarily doing. If you’re carrier, whether it’s Bell or Rogers or Telus, you’ve got to appeal to a pretty broad audience, and one of the things to Telus’ credit is that they recognize the importance of maintaining their brand identity, but it’s hard for a carrier to take a brand that’s designed to appeal to the masses, and appeal to a youth segment in a meaningful way.
So that’s where we differentiate, we’re using the same pipe, but our user interface has a lot of advantages in how it presents the data, and is more intuitive. But really, what separates us, and why Telus is interested is because we can go really narrow, and really drive deep into that segment of the market and that’s our target.
MobileMag: What types of media are going to be available? I’d assume we have music and ringtone downloads, but what about TV shows, or movies?
Chris Houston: We’ve got hundreds of different content providers, but kind of have a couple different categories for content. How it works is we aggregate the content for you, and in the US that means NBC, FOX, MTV, you know, you name it and we’ve got it, all the major record labels and things like that, and obviously we’ll be bringing a lot of that to Canada. In addition we’re going to work with Canadian content partners to bring that content, both English and French into the mix. Being Canadian I certainly know how important it is to have The Hip on there and all the stuff we want to do with Canadian content.
We also produce a lot of our own content. We make made for mobile TV shows, and music videos. We have a production studio in our LA office, and are planning on doing something very similar in our office here in Toronto so we can bring in artists all the time to record sets specifically for us, like concerts in front of an audience that we’ll broadcast, and then a clip to make available for music videos or ringtones.
We even produce games ourselves. Our own in-house developer just released a game called “Homeland Security: Kim Jong Il Edition”… it’s a first person shooter that’s PS1 quality. We’re also doing stuff in partnership with other companies in the US as well, and one is called “Phone Tag” with Matt Damon’s company, which is pretty interesting.
So we’ve got Music, we’ve got Video, we’ve got Games, full track downloads as well as ringtones (not polyphonic). One thing I can say though, if you look at what we’ve done in the US with pricing on Music, most of the carriers are gouging consumers on their music pricing. Why would you pay more than $0.99 a song for music you download on your phone? You wouldn’t.
MobileMag: Is the music you download transferrable?
Chris Houston: Yeah, in fact we actually do dual download delivery. All of our phones are compatible with PlaysForSure, so it goes both ways. If you buy a song from us not only does it go to your phone, but we give you a little application that sits in the background of your computer and downloads the song there as well, and you can transfer it to any PlaysForSure device you want. The nice thing about that is that it works the other way around as well. If you buy a song from say Napster, you just tether your device, throw it on there [your phone] and you’re all set.
MobileMag: What’s the pricing going to look like for Canada?
Chris Houston: To be honest, we haven’t completely figured out what we want to do in the Canadian market yet, but if you look at what we’ve done in the US we’re going to keep a similar methodology. Our customers are split 50/50 between taking a package and going a la carte. We do offer package deals in the US which are similar to cable bundles, in that you can pick and choose what you’re interested in. If you know that you want this type of content, but you don’t want to pay for this type, no problem. If you want everything we’ve got a bundle for that too. Music prices are the standard a al carte price of $0.99 a song. Other things are pay per use special events like UFC, or Moto-cross which are a 1 time charge.
MobileMag: What are some examples of US prices?
Chris Houston: Our biggest data bundle I believe is about $20.00 a month for all the content you want, and we also offer linear TV channels. We have over 20 channels right now in the US, and we also have 20 audio-only channels, and that’s about $10.00 a month, and it’s live streaming TV. Turn on your own TV at home, and what you see on your phone will be the same. MTV, MTV-U, History and Biography channels, Fox, Fox news… it’s an ever expanding list of channels. So we’ve got that in addition to the made for mobile content such as made for mobile downloadable clips, or tie-in games.
MobileMag: Communities are a huge deal nowadays. Is Amp’d going to have any tie-in’s with sites like MySpace?
Chris Houston: Can’t announce anything for MySpace just yet. But we do have our own blogging company, we’ve bought blog.net in the US and we’ve got a lot of integration in the phones already. We definitely recognize MySpace and their role in the blogging community though.
MobileMag: The content as you said is aimed at a certain market, but doesn’t seem to fit in the usual “youth market” definition, what with content from Playboy and others. Why is that?
Chris Houston: We don’t get really focused on youth market as a single direction. I’ve never really understood why carriers in general get obsessed with the idea of targeting youth, what is so special about a 15 year old? And when you say you are going to market towards youth, well, that doesn’t make sense either, because let’s say that you have a very narrow definition of youth, say 14-18 year olds. Well a 14 and an 18 year old are incredibly different people, and even within the 18 year olds you got so many different lifestyle segments. So we really market our product to a lifestyle type. People who are interested in mobile applications, people who are a little more media hungry than the average person. So we don’t get too caught up on the youth, and are definitely looking to support anyone that is interested in our product.
MobileMag: Amp’d in the States basically (apart from a few small differences) offer 2 handsets, Angel and Jet being variants of the Kyocera KX18, and Hollywood being the Motorola E18. What handsets are going to be available here in Canada?
Chris Houston: Handsets move very fast. We won’t be launching with those handsets, we’ll be launching with a new line-up of handsets for Canada. We haven’t disclosed which ones those are yet, but I can guarantee you that they will be compelling.
MobileMag: Different from Telus’ offerings?
Chris Houston: Yes. And just to make note, all of our handsets in the US include 256 MB of memory… one of our new handsets is coming with an adapter so you can plug it in to your car, and every handset comes with stereo headsets. So we bundle media accessories with the phones above and beyond what most people are used to.
MobileMag: Your phones are some of the most advanced out there, and besides attracting the “media junkies” they’re also going to bring forth the gadget freaks and business types who just have to have the newest and greatest. So are your phones really going to be locked down to doing just one thing really well, or can I say, use them as an EV-DO modem for my laptop, or do other business and productivity related tasks with them too?
Chris Houston: That’s a tricky question, because there are some technical things, and some pricing things about that, but for the other part of the question, in general we believe in having an open UI. For music, like I said, put your own mp3′s on there if you have other music that you’ve bought already. Applications themselves get a little tricky because of the OS and things like that, but look for us to be announcing a PDA device in the near future that’ll let you work with a lot of productivity apps and unique customization.
MobileMag: So the big question. When can we get our hands on one?
Chris Houston: We’ll be launching very early in 2007.